Even as private sector banks anticipate negative growth and scale back their lending in the auto sector, it is public sector banks that are coming forward and pushing ahead with car and two-wheeler loans. In fact, some PSU banks expect growth of up to 20-25% in this fiscal, with regard to loans being given out for the purchase of passenger vehicles.
Consumers are also moving towards PSU banks because of lower interest rates being offered there. While car loan interest rates are at around 15% and above at private sector banks, PSU banks are giving out car loans at as low as 11.75 to 13.75 percent.
State Bank, for one, has recorded a 30% y-o-y growth in its auto loans portfolio, while Union Bank of India has reported 25% y-o-y growth in the same segment. However, unlike some private sector banks, which used to employ direct sales agents (DSAs) to get business, PSU banks only deal with customers directly and/or through auto dealers, which allows for better screening of potential customers.
Hyundai Motor India has reached a landmark figure of two million cars, which the company has sold in India over the last 10 years. ‘Since its inception, Hyundai Motor India has always brought the best and the latest in automotive technology and design, backed by the best of warranty, competitive pricing and a huge sales and service support network.
This new record of producing two million cars will further empower Hyundai to play a vital role in the growth of the Indian automobile industry,’ said HS Lheem, MD, HMIL.
Suzuki India plans to invest Rs. 150 crores in India. It has massive expansion plans to capture larger share two-wheeler market in India. It will invest the money in its operations which will be functional by 2010.
“So far we have invested Rs 400 crore. We will be looking at an additional investment of Rs 150 crore by 2010 to expand our capacity. We will launch new bikes in different segments to diversify our portfolio,” said Atul Gupta, Vice President, SMIPL. “We have designed the bikes in the sporty style for youngsters and utility for commuters. It has wolf-eyed headlamps and a muscular fuel tank with wider seats for longer, comfortable ride. We are also introducing several industry features like engine RPM indicator and gear positioning indicator to attract customers moving up the value-chain from 125cc bikes,” he added.
The company has recently launched its GS150R at Rs. 59000 (ex-showroom, Delhi). It also plans to launch a new bike in India by January next year which will be pitted against Hero Honda Hunk and CBZ, Bajaj Pulsar, TVS apache RTR, Honda Unicorn and Yamaha FZ16.
Car and two wheeler sales in India took a dip in the month of October. Although the companies had been eyeing the festive season to move their stocks and clear their inventories, but the ongoing economic scenario compelled the small car segment buyer away from the market. The auspicious day of “Dhanteras” marked sales of 15000 units across the country which was lesser than last year’s sales of 17000 units on the same day.
MarutiSuzuki and TataMotors have already reported a drop in sales in the month of October 2008. These two car manufacturers have stated that the market is seriously hurt by the rising interest rates and the overall credit crunch in the market. Maruti reported sale of 64,490 units in October 2008 as against 69,415 units last year.
On the other hand, the major two-wheeler manufacturers, Hero Honda, Bajaj and TVS Motors have also reported a decline in their sales in the month of October 2008. On the brighter side, the exports figures have lent a serious support to the sales figures of especially Bajaj and TVS Motors.
Tata Motors has reported a 6.1% increase in revenues (net of excise) to Rs 7,078.85 crore for the quarter ended September 30, 2008, compared to Rs 6,672.65 crore in the corresponding quarter last year. Profit before tax (before notional loss on foreign exchange valuation) was Rs 643.03 crore, an increase of 8.9%, compared to Rs 590.34 crore in the corresponding quarter last year.
After considering notional exchange valuation loss of Rs 285.02 crore (compared to a notional gain of Rs 30.85 crore in the corresponding quarter last year), reflecting the volatility in foreign exchange rates impacting the company’s long-term funds raised through issue of foreign currency convertible (FCC) instruments, profit before tax was Rs 358.01 crore, a decline of 42.4%, compared to Rs 621.19 crore in the corresponding quarter last year. Profit after tax (after notional loss on foreign exchange valuation) was Rs 346.99 crore, a decline of 34.1% compared to Rs 526.84 crore in the corresponding quarter last year.
TVS Motor Company has reported a 23.2% increase in its revenues for the July-September quarter, FY2008-09, at Rs 1,034 crore, compared to Rs 839 crore in the corresponding quarter of the previous year.
Despite increasing input costs, the lack of availability of retail finance and a general downturn in the economic scenario, TVS posted profit before tax of Rs 13.9 crore and profit after tax of Rs 10.4 crore, compared to Rs 16.9 crore and Rs 11.9 crore in Q2, FY2007-08 (which had the benefit of Rs 10.2 crore (net) on account of exceptional items.)
TVS also recorded a growth in its two-wheeler sales, with 181,000 bikes being sold in Q2, compared with 144,000 units sold in Q2 last year. TVS scooters clocked sales of 77,000 units, compared to 76,000 units sold in the corresponding period last year. The company reached a significant milestone in July this year, when it reached the two-million mark in the sales of the TVS Scooty.
TVS exported 55,000 two-wheelers in Q2, an increase of more than 50% over the corresponding period last year. The company now exports its two-wheelers to more than 54 countries worldwide.
Eicher Motors has posted a net profit of Rs 429 million for the July-September quarter, FY2008-09, up from Rs 140 million for the corresponding period last year. The 205 percent growth in net profit was mainly on account of the Rs 393.5 million which Eicher received from Volvo, as part of a non-compete arrangement.
Eicher and Volvo signed a joint venture agreement in May this year, for manufacturing light and medium commercial vehicles. As part of the pact, Eicher relinquished its own medium and light commercial vehicle business and hence received the non-competing amount.
Eicher’s total operating income, however, came down from $1.23 billion in the second quarter of the last fiscal to $1.09 billion in the second quarter of the current fiscal.
In another recent development, Eicher Motors has approved a proposal to buy-back its equity shares, following a request to this effect from its promoters. The board of directors of the company approved the buy-back offer upon request of its promoters and principal shareholders - Eicher Goodearth Investments Ltd. (EGIL).
The buy-back would in the same proportion as sale of promoter holding to global auto major Volvo (ratio of promoter shares sold to Volvo to the total holding of shares by promoter), at the same price of Rs 691.68 per share.
Despite increased sales, Apollo Tyres has reported a steep fall in its Q2 FY 2008 profits due to increases in raw material prices. India’s second largest tyre manufacturing company, Apollo Tyres posted a consolidated net profit of Rs 151 million, on sales of Rs 12.6 billion in the quarter, compared to a profit of Rs 576 million on sales of Rs 10.8 billion in Q2 FY 2007.
The company’s consolidated net profit margin for the quarter came in at 1.2 percent, compared with the preceding quarter’s 4.4 percent. ‘It has been a testing quarter for the company and the industry, but I do believe that the worst might be behind us,’ said Onkar Kanwar, chairman, Apollo Tyres.
The company, which had last raised prices by about seven percent in July, is likely to raise prices again by 3-4 percent over the next one month. Apollo Tyres, however, stands by its forecast of 15-20 percent growth in FY09, and will also go ahead with its planned capacity expansion in India and South Africa, investing up to US$320 million towards this.
