(This story originally appeared in on Jan 15, 2021)
NEW DELHI: The auto industry moved in reverse gear during the nine months of FY21 as Covid-induced shutdowns as well as pressures on the economy and jobs saw sales of cars, two- and three-wheelers and commercial vehicles go down to historic lows.

According to numbers released by industry body Siam, sales of passenger vehicles — a cumulative of cars, SUVs, MPV/UVs — stood at 17.8 lakh units in April-December, the lowest in a decade since the 18.1 lakh units sold in the same period of FY11. Two-wheelers sales in nine months of this fiscal stood at 107.7 lakh units, lowest since 109.4 lakh units seen in 2013-14. Threewheelers sales stood at 1.3 lakh units. In 2000-01, the industry sold 1.4 lakh units.

In commercial vehicles, the volumes stood at 3.6 lakh units (last lowest at 4.8 lakh units in fiscal year 2010-11), and contraction here clearly points out that the broader economy is still in deep trouble, and lacks confidence.

“The industry has to work hard to get to better volumes and better business,” Kenichi Ayukawa, MD of Maruti Suzuki NSE -1.35 %, who is also the president of Siam, said.

Ayukawa said that demand has been coming back, which was evident through sales over the past few months, but added that it is too early to call it a turnaround. There has been a shortage of key components such as semiconductors and also the coronavirus situation still persists even though vaccination drive will be beginning soon. “The sales growth that we saw during the third quarter of the current fiscal contains some of the pent-up demand from the first quarter. So, the standalone sales performance of the third quarter may not be a true reflection of the industry’s overall sales,” he said, adding that some more time is required to make a fair assessment of where the industry is headed for.

“The industry is facing a shortage of semiconductors, steel and other materials. These may lead to supply and production disruptions. There is also an impact of the price increase of steel, logistics and other raw materials. In such kind of fluctuations, it is very difficult to predict the demand scenario going ahead.” Asked about his expectations from the upcoming Budget, Ayukawa said the industry awaits the introduction of the scrappage policy, which would help weed out older polluting vehicles through incentives.

However, he said there is no immediate need for a GST rate cut and this remains a medium- to long-term request. “We can understand the government has major responsibilities and limited resources as of now. So, presently we are not pushing for a GST reduction.”

New Delhi: Japanese auto major Honda’s Indian two-wheeler arm could take around two-three years to start production on the third line of its Gujarat plant, as demand has shrunk in the wake of coronavirus pandemic, according to a senior company official. Honda Motorcycle & Scooter India Pvt Ltd (HMSI) had gone ahead with the construction of a third line to add 6 lakh units per annum at the Gujarat plant, having a total capacity of 12 lakh units per annum.

“As for our new line which we had made in our fourth factory in Gujarat, we call it our third line. The construction activity and other activities went on as per schedule. However, we have put on hold the decision on when to start production at that line because the overall market has shrunk.

“In terms of demand, the existing lines and existing capacity are good enough to take care of the demand, which is currently in the market and in the coming next two years or so,” HMSI Director – Sales & Marketing – Yadvinder Singh Guleria told.

At present, HMSI has four manufacturing plants in India located at Manesar (Haryana), Tapukara (Rajasthan), Narsapura (Karnataka) and Vithalapur (Gujarat) with a total annual production capacity of 64 lakh units.

When asked by when the company is likely to take a call on starting production on the third line in Gujarat plant, Guleria said, “It depends on how quickly the market rebounds and the new demand shoots, green shoots visible to us. That is the only time we will decide to start production in the third line… From today’s point of view, since the overall market condition is very fluid and a lot of unpredictability around, it looks like two to three years”.

Guleria said while the two-wheeler industry has been hit hard by the coronavirus pandemic, HMSI has had its own challenges considering the fact that scooter sales happen mainly in urban India, which had been in the lockdown for a considerable number of days compared to rural India, where mainly motorcycles that too entry-level models are high.

“In terms of our product mix, we are basically selling 60-65 per cent our scooters and the rest of the business is coming from our motorcycle business. This was another challenge for us because urban India took more time to open (from lockdown). That is also reflected in our figures since our major business is coming from scooters, they were impacted more,” he said.

Although the overall industry number is down 25 per cent, the motorcycle is down 22 per cent, and scooters are the ones that had negative growth of 33 per cent, he said, adding “so that also impacted HMSI overall. Against the drop of 25 per cent for the industry, HMSI drop was more than 30 per cent. That was basically because of our product mix and our dependence on urban India, which was under lockdown (longer)”.

Amid challenges of the pandemic, HMSI has last week initiated a VRS scheme for permanent workers as a part of Honda’s overall production realignment strategy across all four factories to improve its operational efficiency with the objective of ensuring long-term business sustainability.

Tyre maker CEAT NSE 2.81 % on Friday said it will supply its Zoom Cruz tyres to niche bike maker Royal Enfield for its 650cc Interceptor range.

With the Zoom Cruz tyres, CEAT marks its entry in the 650cc segment for any two-wheeler as well as the twin-engine cylindrical motorcycles segment, the company said.

The tyres will be available in two sizes — 100/90-18 and 130/70-18, it said.

CEAT has associated with Royal Enfield in the past by supplying tyres for Royal Enfield Bullet, Classic, Himalayan, Meteor motorcycles, among others.

The company is the first Indian manufacturer to supply tyres as original fitment for the Interceptor 650cc range.

“We have a strong relationship with Royal Enfield as bikes like Bullet Classic and Himalayan are already using our products.

“This launch also marks our entry into the premium Cruiser 650+ cc segment and reiterates our commitment to be the preferred choice for Original Equipment Manufacturers (OEMs) in India,” said Amit Tolani, Chief Marketing Officer, CEAT Tyres Ltd.

The cruiser segment is growing steadily in the last few years and CEAT’s entry into the 650+ cc category is a great opportunity for it to grow in the premium segment, said Jyoti Banerjee, Vice President, CEAT OEM Business.