Hero Moto Net Up 19% on Record Sales

Co confident of maintaining tempo despite inflation Hero MotoCorp, the country's largest two-wheeler maker, clocked a better-than-expected 19.3% rise in its quarterly net profit driven by record sales, and said it is confident of maintaining the tempo despite concerns over rising inflation and fuel costs. The net profit of the Munjals-controlled company rose to . 604 crore in the three months to September from . 506 crore a year-ago, the Delhibased company said in a statement on Tuesday.  Hero, which donned a new brand identity this quarter after its split with Honda, its partner of 26 years, sold a record 15.44 lakh two-wheelers during the July-September period, a growth of 20% over a year-ago. The festival season, which begins a month-and-a-half before Diwali, boosted sales of Splendor and Passion to a record for the third straight quarter.  Rising inflation and high interest and fuel costs benefit two-wheeler makers as firsttime car buyers hold back their purchases, preferring the cheaper option of a motorcycle or scooter. Two-wheelers sales are expected to grow 12-14% this year, according to the Society of Indian Automobile Manufacturers.  "Our performance improved despite rising food inflation and fuel prices, which are the two major areas of concern for the industry and might adversely impact consumer spending in the coming months," said Hero MotoCorp managing director and CEO Pawan Munjal.  The company has targeted sales of over six million vehicles in this fiscal, Munjal had said in July. But analysts say Hero sales may slow in the coming months.  "Hero MotoCorp sales may slow down as the company has itself said that inflation and interest rates are a major concern. It may face pressure on sales with disposable incomes getting hurt by these macro economic indices and RBI's upswing in lending rates," said Mahantesh Sabarad, senior vice-president, research, Fortune Securities.  Hero's net sales jumped 28% to . 5,784 crore from . 4,511 crore a year ago. During the quarter, it reported a record total income at . 5,909.07 crore, up 27.62% from . 4,630.30 crore a year ago. Its operating margins, an indicator of operational profitability, grew to 17.13% from 15.08%. Munjal said sales are expected to remain buoyant during the festival month of October. The company is betting on new launches to grow demand. Hero launched a new 150cc sports bike on Monday.

Car Sales Fall 16% on Higher Rates, Fuel Costs

    Domestic car sales fell 16% in July, the sharpest decline since November 2008, weighed down by high interest rates and fuel prices, and an output cut at the country's top car maker. Auto sales in India, an important gauge of the country's economic health, are led by a middle class that mostly bases its decision to buy a car on the price of fuel and loans. The industry body expects a revival from this month, driven by a flurry of new car launches and resumption of full production at Maruti Suzuki. 

Carmakers sold 1,33,747 units in July, compared with 1,58,767 in the same month last year, data released by Society of Indian Automobile Manufacturers (SIAM) showed on Wednesday. "The overall sentiment in the market is negative due to high interest rates and fuel prices. People want to buy cars, but they may be postponing purchases hoping for a drop in interest rates, as well as to choose from new car models that will hit the market during the festive season," SIAM director-general Vishnu Mathur said. The drop in sales in July was the steepest since November 2008, when it had fallen over 19.34% in the midst of the global financial crisis.  Maruti Suzuki, India's top carmaker by sales, in which Japan's Suzuki has 54.2% stake, had reported a 26% drop in production, its sharpest-ever monthly fall, due to production disruptions and re-scheduling of its new models of 'Swift' hatchback and the DZire sedan. The company produced 17,000 fewer vehicles in July.

Auto Slowdown Ind India:Dealers woo customers with cash benefits, lower interest rates

Four Years on, Bike Cos Drive in Discounts, Freebies

After a gap of more than four years, freebies are slowly entering the two-wheeler market. The dealers are wooing customers with cash benefits and lower interest rates to get some traction on sales. The two wheeler market is still going strong reporting doubledigit growth as sales grew 17% to 31.87 lakh units in April-June quarter, unlike cars where crawling sales has forced companies to dole out discounts running into lakhs of rupees to bring customers back to the dealerships. 

Few bikes are, however, facing heat from different manufacturers and have joined the discount bogey due to declining customer interest. 
Honda Motorcycle and Scooter India's (HMSI) premium 110cc bike, the CB Twister, priced at the exshowroom price of . 49,775 in Delhi now comes with some exciting discount of up to . 3,500 in select markets as dealers claim that sales on this model have been sluggish due to bigger competitors like Splendor that comes at a lower price of . 41,350 and is eating up into its sales. 
"We are offering some benefits to reduce our stocks as the market has been slowing with retail sales getting impacted and the cautious customers are postponing their purchase decisions," a central Delhi-based Honda dealer said. 
The two-wheeler market has not been much impacted by the rising fuel prices because the quantum of . 5 hike in petrol leads to a marginal increase in the running cost as fuel efficiency of most vehicles is very high. The market has been directly impacted by the surging interest rates which have shot to over 22-24% in the past one year, rising by around 4%."The interest rate for two-wheelers has risen more compared to cars as the risk is high though the total value of vehicle is much lower. There have been a few models where dealers are vying for customer's attention by discounting interest rates on few models," a top executive of HDFC Bank said. 
The benefits to customers are mainly coming from dealers as companies maintained they have not initiated any freebies yet, and said these could be marketing initiatives dealers are looking at to net higher sales. "The two wheeler market is still going strong and we do not see any reason to offer any benefits now," said Milind Bade, head of marketing at Bajaj Auto. However, the company's 100cc entry level bike Discover is coming at 0% rate of interest as dealers are offering interest subvention to improve retail sales. 
Analysts tracking the market said discounts from dealers are precursor to what the companies may offer in the next few months. "As the ticket size of two wheeler purchases is less, they are not immediately impacted by the macro economic sentiment. But if dealers are giving benefits to consumer, companies may not be far behind," said analyst with a Mumbaibased brokerage. 
The dealers of Chennai-based TVS Motors are luring customers with few insurance and road tax benefits in certain markets on their 110-cc Star City bike with deal benefits of up to . 1,500. Hero Honda, the market leader, has not changed its marketing strategy since 2006 when it stopped any kind of discounts and benefits on its entire product range. 
"There is no scope for any freebies as we are chasing huge demand for our bikes and scooters and there is hardly any inventory at the company or the dealer level," the Hero Honda spokesperson said. The company's sales grew 24% to 14.91 lakh units in the April to June quarter.

TATA- AIR POWERED CAR IN INDIA

Air Powered Car Tata Motors is ready to introduce Air Car - Will it be the next  big thing?Tata Motors is taking giant strides and making history for  itself. First the Land Rover/Jaguar deal, then the world's cheapest car, and  now it is also set to introduce the car that runs on compressed air. With spiraling fuel prices it is about time we heard some breakthrough! India's largest automaker, Tata Motors, is set to start  producing the world's first commercial air-powered vehicle. The Air Car, developed by ex-Formula One engineer Guy N'gre  for Luxembourg-based MDI, uses compressed air, as opposed to the gas-and-oxygen  explosions of internal-combustion models, to push its engine's pistons. Some 6000  zero-emissions Air Cars are scheduled to hit Indian streets by August 2011. The Air Car, called the "MiniCAT" could cost around Rs.. 3,47,523/- ($8,177.00) in India and would  have a range of around 300 km between refuels. The cost of a refillwould be about Rs. 85($2..00) The MiniCAT which is a simple, light urban car, with a tubular chassis that is glued, not welded, and a body of fiberglass powered by compressed air. Microcontrollers are used in every device in the car, so one tiny radio transmitter sends instructions to the lights,indicators,etc. There are no keys -  just an access card which can be read by  the car from your pocket. According  to the designers, it costs less than 50  rupees per 100 Km (about a tenth that of a  petrol car). Its mileage is about  double that of the most advanced electric  car (200 to 300 km or 10 hours of  driving), a factor which makes a perfect  choice in cities where 80% of motorists drive at  less than 60 Km. The car has a top  speed of 105 Kmph. Refilling the car will, once the market develops, take place  at adapted petrol stations to administer compressed air. In two or three minutes,  and at a cost of approximately 100 rupees, the car will be ready to go another  200-300 kilometers. As a viable alternative, the car carries a small compressor  which can be connected to the mains (220V or 380V) and  refill the tank in 3-4 hours. Due to the absence of combustion and,  consequently, of residues, changing the oil (1 litre of vegetable oil) is  necessary only every 50,000 Km). The temperature of the clean air expelled by the exhaust pipe is  between 0-15 degrees below zero, which makes it suitable for use by the internal   air conditioning system with no need for gases or loss of power.

Auto Sales Enter the Slow Lane

Companies post single-digit growth in April sales, expect interest rate hikes to hit demand further

The first month of the fiscal year showed signs of a tough year ahead for the Indian auto industry as major companies like Maruti and Hyundai posted single-digit sales growth in April. The slowdown in sales can be attributed to rising interest rates on auto loans and higher sticker prices.
The country's largest carmaker, Maruti Suzuki, reported a mere 4.4% increase in sales at 97,155 units. Its domestic sales grew 8.8% to 87,144 cars in April over 80,034 cars sold last year. Its largest volume segment comprising hatchbacks like Alto, WagonR, Estilo, Swift, A-Star and Ritz witnessed a lower 1.8% growth in sales at 57,443 units in April 2011. Company executives said that demand has been tapering off with sales of its basic models impacted by declining customer demand in the past two months. However, stronger demand for its sedans comprising Dzire and SX4 jumped 39% to 13,899 in the same period, they added.
The country's second-largest carmaker, Hyundai Motor India, reported almost a flat month of its total sales for April at 52,058 units, with the domestic sales rising 11% to 31,636 units while exports plunged 13.2% to 20,422 units.
Arvind Saxena, director (marketing & sales), Hyundai, said: "Rising interest rates have led to reduced enquires and the conversion rate of customers from enquiry to purchase of cars too has slowed down. We expect the same trend to continue in the coming months." ET had reported in its April 30 edition that the growth in passenger cars is tapering off in April after a high of 30% jump in the FY11. Analysts tracking the sector said the car sales would be moderated in the coming months. "There will be an impact of the higher prices of cars and fuel. Customers are taking into account the overall rising costs of ownership that will only increase in the coming months," Abdul Majeed, analyst and partner with PriceWaterhouse, said.
There were also companies that posted negative sales in April. Honda Siel Cars India reported 44% fall in sales at 2,012 units in April against 3,578 cars sold during the same month last year. General Motors India sales, too, declined 5.19% to 10,050 in April 2011 over the same month last year. Ford India also reported 2.5% fall in sales at 7,319 units.
A few carmakers also posted a higher jump in April sales on the back of smaller base of 2010.
Toyota Kirloskar Motor posted a 61% jump in sales on the back of huge demand for its latest sedan Etios. "This growth can be directly attributed to the great customer response to Etios sedan. We have so far sold 12,758 units since its launch in December last year," Sandeep Singh, deputy MD (marketing), Toyota, said. The Czech carmaker, Skoda Auto India, almost doubled its sales at 2,446 unis against 1,285 cars last year.
Two-wheeler companies continued to have a steady run in the domestic market. The country's largest two-wheeler maker, Hero Honda, posted its highest-ever sales in its 27-year history at 5.17 lakh units, registering a 39.1%rise over the last year.
This is the second consecutive month of high sales for the company with its previous best sales at 5.15 in March this year.
"The strong sales performance comes on the back of robust demand across all domestic territories and our different two-wheeler segments," Anil Dua, senior VP, Hero Honda, said.
The country's second-largest two-wheeler maker Bajaj Auto has a muted performance with a 16.7% rise in motorcycle sales at 3.22 lakh units in April, including 1.26 lakh exports. Japanese twowheeler maker Suzuki Motorcycle India also reported a 41% growth at 29,369 units on the back of strong demand for its 125 cc Access scooter.
Bumpy Ride

• Maruti Suzuki reported
a mere 4.4% rise in sales while domestic sales grew 8.8% in April

• Hyundai Motor posted a flat
sales for April at 52,058 units, with the domestic sales rising 11% to 31,636 units while exports plunged 13.2%

• GM sales, too, fell 5.19% while
Ford India reported 2.5% decline in sales

• Analysts say car sales would
be moderate in coming months as customers are taking into account the overall rising costs of ownership