Author: Alisha Sachdev

Maruti Suzuki to recall over 40,00 WagonR cars to rectify potential safety fault

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Maruti Suzuki, India’s largest passenger carmaker, on Friday announced that it will recall over 40,000 units of WagonR, one of its bestselling models, due to a fault that’s causing two parts to rub against each other, a potential safety concern.

Maruti Suzuki said it will recall 40,618 WagonRs manufactured between November 15, 2018, and August 12, 2019. The fault is causing two parts—that is, the fuel hose and the metal clamp to rub against each other, Maruti Suzuki told CNBC-TV18.

“Starting 24th August 2019 owners of the suspected vehicles will be contacted by Maruti Suzuki dealers for inspection and replacement of the faulty parts, free of cost,” the company said in a statement. The Company will inspect 40,618 vehicles of WagonR (1 litre) for a possible issue of fuel hose fouling with metal clamp”, it added.

Recall campaigns are undertaken globally to rectify faults that may be potential safety defect, said the statement.

Maruti has also advised the customers of the suspected WagonR (1 litre) to visit the company website’s ‘Important Customer Info’ tab and fill in the chassis number followed by a 14-digit alpha-numeric number) on the computer screen to check if their vehicle needs any attention. The chassis number is embossed on the vehicle ID plate and is also in the vehicle invoice/registration documents.

A Maruti dealership CNBC-TV18 contacted said they haven’t had complaints from customers about the fault, as the cars in which the fault is suspected are relatively new and haven’t clocked enough mileage for the fault to show significant effect.

“There’s a problem with the fuel pipe mounting bracket in the engine compartment, which is causing the fuel pipe to vibrate and touch the engine when it’s in start position. MSIL has advised replacement of the hose and bracket,” the dealer told CNBC-TV18.

The WagonR has consistently been one of the country’s top-five best-selling models and is a popular choice for fleet operators.

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At Rs 9.69 lakh starting price, Kia’s Seltos is going after its own sister brand

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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In a dull market the launch of South Korean carmaker Kia’s feature-rich SUV, Seltos, is a rare moment of excitement. With over 32,000 bookings already and a production capacity of 3 lakh units, Kia’s competitive pricing has surprised the industry and has put it squarely in competition with its own sister brand Hyundai in India.

Starting at less than Rs 10 lakh, the Seltos beats Hyundai’s Creta, with the 1.5 l petrol variant at a price of Rs 9.69 lakhs, versus Rs9.99 lakh for Creta. The Seltos, one must note, offers a BS-VI engine at the price of an old BS-IV Creta.  It also leaves behind Morris Garages’ Hector, which was launched in June with a price range of Rs 12.18 – Rs 16.88 lakhs. Deliveries for the car will begin immediately.

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With Tata Motors’ Harrier, MG’s Hector, and Hyundai’s Creta all competing in the same space, the feature-loaded, BS-VI compliant Seltos’s is the price to beat. MG’s Hector so far has received 28,000 bookings (the company isn’t accepting any more bookings) and has dispatched around 1500 cars so far. Kia on the other hand has said it has ample capacity to cater to demand, and continues to accept bookings for the Seltos.

PICTURES: SUV Kia Seltos: Check out design, interior, other features

Hyundai sold only 6,585 units of the Creta in July this year, down 36.82% at 10,775 units from the same month last year. With the hype around the Seltos which comes packed with never-seen-before features and styling in the segment, the positive surprise on the pricing front only makes a stronger case for the carmaker, in which Hyundai owns a majority stake, albeit at the cost of its own parent brand’s rival product.

So far, Hyundai’s Creta is the bestselling model in the mid-sized SUV segment, comprising 70% of the sales in the market. But with Kia’s new offering and a 3,00,000-strong production capacity, the game looks poised to change.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Anand Mahindra: Investments can make India a global electric vehicle hub

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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There is a tectonic shift in the auto industry, and the time is right for a shift to electric vehicles, Anand Mahindra, chairman, Mahindra & Mahindra Ltd (M&M) said in his address to shareholders at M&M’s 73rd annual general meeting, where the dominant theme was electric vehicles.

He added that as the government puts all its weight behind electric vehicles, the question isn’t whether or not the country transitions to EVs, but how.

M&M has presence in every segment of the auto industry — two-wheelers, three-wheelers, cars, commercial vehicles and farm equipment, but it has only one electric car — the electric Verito — in the Indian market so far.

Admitting that there is a great amount of concern in how dramatic the shift to EVs will be, Mahindra said that there will be a long period of co-existence for internal combustion engines (ICEs) and EVs. He called for a collaborative effort between the government and industry to move towards electrification, encashing the “one-time” opportunity before India currently to become a global hub for electric vehicles.

“I see a one-time opportunity for government and industry to work together to invest in manufacturing, R&D [research and development] and the supply chain and make India the undisputed global hub of the EV world,” he said.

Assuaging concerns that the auto ancillaries industry will not be able to cope with such a transition, Mahindra said that component manufacturers form a resilient industry and that they’ll adapt to changing technology, given they are provided adequate time and a fair warning.

Can M&M make India adapt to expensive EVs?

With over 5,000 electric vehicles on the road having clocked over 13,000 kms, M&M is already pioneering the EV space, according to Mahindra.

However, he said that the company will not over-manufacture EVs and will keep production aligned to demand.

M&M is the largest supplier to the ministry of power-run energy service company EESL, and has its own e-mobility pilot platform called Glyd, which was flagged off in February with a fleet of ten electric Veritos.

The e-Verito, M&M’s only electric offering in the passenger vehicle space, comes at a cost of approximately Rs 12 lakh.

The company has planned three more electric cars in the next two-three years, including the eKUV to be launched by the end of the year, the S210, and the E-Aspire, whose launch dates haven’t been formally announced yet, according to Pawan Goenka, managing director, M&M.

Goenka also announced that the company is investing in capacity in the EV space and the upcoming launches, and has a plant dedicated to EV production coming up in Chakan, Pune.

Goenka said that with FAME II subsidies and the goods and services tax (GST) reduction on EVs from 12 percent to 5 percent, the business case for EVs is now becoming positive. If the Li-ion cells become duty-exempt, said Goenka, the costs would come down further.

For M&M, the priority is to invest in electric three-wheelers, as they’re “low-hanging fruit”, Goenka told reporters at the company’s Q1 results press conference.

Mahindra, later in the AGM, told shareholders that California-based GenZe, which it owns, sells electric scooters in affluent markets in the USA currently, but the vehicles are “a very expensive proposition” in India. The GenZe 2.0 comes with a price tag of over Rs 2.5 lakh, more than double the cost of the Ather 250, the country’s most expensive e-scooter yet.

However, Mahindra said, India will be an attractive market for electric two-wheelers and the company will draw up plans to sell them in the country.

On expanding the e-mobility platform Glyd, Goenka said the company wants to ensure they have the right business model, and won’t expand in haste.

“Glyd is working well. We have 30 vehicles running on the platform and will soon order 30-40 more. We’re currently only on one route in Mumbai, but we will soon do the Delhi route too.” Goenka said, adding, “We’re doing this as much to demonstrate to others that EVs can be run profitably. We want to make EVs accepted by service providers, not just customers.”

“The prime minister in 2018 shared a holistic vision for the future of mobility and committed to it publically… it is heartening to see a government propelling the industry to an envisioned future that’ll improve all our lives”, Mahindra said, adding that EVs were gentler on the planet, and free us from dependence on expensive, imported fossil fuels.

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Tata Motors, Tata Power announce JV to install 300 fast EV charging stations

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As the government pushes for adopting electric vehicles, Tata Motors and Tata Power have announced a joint project to install 300 fast-charging stations in five major metros by FY20 end.

However, in conversation with CNBC-TV18’s Alisha Sachdev, Shailesh Chandra, president of electric mobility business and corporate strategy, Tata Motors, admitted that there are multiple hindrances for retail electric vehicle (EV) buyers and that there is a need to make affordably priced electric cars.

“We do think that for private buyers it’s a more anxiety issue than reality because the daily run for a private buyer is not more than 40-50 km a day. If you have more than 200-250 km car, you would charge once or twice in a weak,” said Kumar.

“Therefore, the anxiety has to be taken care of and a private consumer would at least like to see some of the chargers on the roads and so it has to be taken care of and that is the reason why we have partnered with Tata Power to take care of that,” he further added.

Talking about battery cells, Kumar said, “Battery cells is definitely imported because there is no cell manufacturing plant in the country, but as far as we are concerned we have started a battery pack module manufacturing plant with the help of Tata AutoComp, this is something which we have localized.”

“Similarly some of the high value items which have been defined, we are working with the suppliers to get it localized,” added Kumar.

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Layoffs at auto dealerships as dealers forced to cut costs amid bludgeoning demand

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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There is a human side to the slowdown in the auto industry.  As demand for automobiles continues to fall month after month, with monthly sales numbers for July hitting their worst ever levels in two decades, all stakeholders are bearing the costs, but it is dealerships which are hit the hardest.

CNBC-TV18 spoke to some of the most prominent dealerships in the country, with employee headcount ranging from 300 to 5000, and learnt that auto dealers have cut manpower by up to 15 percent on average across levels, especially in the last three months, in the face of demand refusing to pick up.

Auto dealers are now taking a hard look at their costs, and are focusing on maximizing efficiency, becoming more process-oriented and rationalizing headcount, which along with interest payments, is a major cost for them.

While dealers aren’t expecting the festive season to work miracles, they do expect it to lift sentiment among buyers. However, if there’s no turnaround along expected lines, more jobs might be on the line in January, once the busy October – December period ends.

Lay-offs at dealerships are affecting crucial front-end staff the most. Some dealers we spoke to reported a 25-30 percent reduction in sales executives in dealership outlets.

Services technicians come close second. As demand for after-sales services goes down corresponding to the slowdown in new car sales, workshop staff like accessory fitters, PDI (pre-delivery inspection) staff are also being made redundant.

Matters are particularly sensitive for smaller dealership outlets in the rural areas, especially rural Maharashtra and the Southern states which have been hit by a drought, as operating in the face of zero to single-digit sales has now become a matter of survival.

Over the last 18 months, more than 270 dealers shut shop due to a variety of reasons, but poor demand and liquidity constraints have made business unviable for many players who relied on high borrowing.

However, for dealers who have lesser borrowing exposure, there haven’t been layoffs yet– but there’s the consideration to do so if there’s no pickup after the festive season.

Across geographies and sizes, dealers are conducting internal evaluations to rationalise processes and remove non-performers. And as used to be the case earlier, the non-performers aren’t being replaced by new staff.

“On average there’s been a reduction of around 12-15 percent in headcount at dealerships across the country, while this number is significantly higher in some Western and Southern states”, Nikunj Sanghi, president, Automotive Skill Development Council, told CNBC-TV18.

“Sales staff also needs to be trained, we cannot hire novices”, he added. When asked if there is a possibility of the laid-off staff being re-hired, he said that dealers are likely to incentivise their existing staff during the festive season, instead of bringing new people on board.

In July, Nissan India reported cutting over 1700 jobs in India, following poor sales and dwindling demand.

Ancillary parts makers’ bodies, ACMA, too has warned of job losses to the extent of a million if the industry is not provided an immediate stimulus.

The auto sector traditionally employs millions of people, and contributes significantly to the country’s manufacturing GDP. With the prolonged slowdown refusing to turn around, poor sales are now reflecting on peoples’ livelihoods – both at dealerships, where they’re losing jobs and outside, where unemployment and stagnant growth trajectories have been weighing down sentiment.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Tata Motors scouts for partnerships in JLR to address capex issues

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Jaguar Land Rover, Tata Motors’ British luxury car arm, is looking to explore ‘strategic to tactical’ partnerships to address its capex issues, Tata Sons’ chairman N Chandrasekaran told shareholders at the company’s 74^th annual general meeting on Tuesday.

Responding to shareholders’ concerns about reports of discussions of a possible stake sale to French automaker PSA Group, Chandrasekaran clarified that the company is meeting “multiple players” to hold discussions for partnerships with JLR, and that it will explore all options that are in the interest of the company.

Chandrasekaran said that JLR is investing in developing technology to move away from internal combustion engines towards hybrids and electric vehicles, and also in the shared mobility space. JLR cut capex from 4.5 million pounds to 3.8 million in the last 12-18 months, according to Chandrasekaran.

While Tata Motors said that JLR will continue to cut capex, doing so drastically, beyond a point, will adversely impact the company’s future. Assuaging shareholders’ concerns about whether JLR is a “good investment”, Chandrasekaran said the way to handle the company’s capex is through partnerships, and that it’s important to hold on to the company with a long-term view.

The chairman cited the slowdown in China and supply chain uncertainties due to Brexit as the main external factors behind JLR’s misfortunes. He said that the slowdown in the Chinese market, which JLR has exposure to, has led to volumes dropping in the range of 40-50 percent, while the company has seen losses due to the calibration of the supply chain in the UK.

The Brexit deal will be decided in October.

Chandrasekaran also said that Tata Motors at home is actively looking to exit businesses in which it only has a marginal presence unless there’s a possibility of volumes growing. He said the company’s disinvestment program is on, and they are actively exiting loss-making subsidiaries and marginal businesses.

Recognising that market conditions in India are currently tough, Chandrasekaran said that Tata Motors has its operating performance despite the slowdown in demand.

Chandrasekaran said the priority for Tata Motors (standalone) is to pare its debt and bring down interest costs. The company is currently grappling with enormous interest costs due to its large debt of Rs 15,000-Rs 16,000 crore, he said.

In Q1FY20, the company maintained healthy margins despite a slowdown in the CV space, and the PV business too went from an EBITDA-loss to breaking even, despite increasing costs.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Tata Motors admits failure to foresee sharp sales slowdown in analyst call

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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In what is perhaps the first admission by an original equipment manufacturer (OEM) of automakers’ failure to act proactively in the face of a sustained slowdown in sales, leading to inventory piling up to 2-3 times normal levels, Tata Motors in a call with analysts said it had not anticipated such a sharp slowdown in the industry.

“We are not happy with our free cash flows, which was entirely negative. We did not expect the sharpness of the slowdown in the industry. This is because of our inability to accept that the market has come down so drastically,” PB Balaji, Group CFO, Tata Motors, told analysts, adding, “we waited to be 100 percent sure before we took any action.”

Inventories for passenger vehicles (PVs) had crossed over 50 days and 60 days for commercial vehicles (CVs) in the last quarter, prompting OEMs, including Tata Motors, to rejig production schedules to correct stock pile-up in the face of falling demand and lenders refusing to extend funding limits for rising inventory.

However, dealerships feel companies swung into action too late, as the slowdown had started last year itself, and production should have been adjusted sooner, so as to avoid burdening dealerships with the cost of financing mounting stocks.

Emphasising its strategy to push retail sales and prioritise dealer profitability against the current backdrop, Balaji said Tata Motors’ focus will be on market activation, cost reduction and cash flow.

“The time to focus on dealer profitability has never been more ripe,” Balaji said, adding that there is a need to provide customised finance solutions for dealers and customers while ensuring they don’t increase risk in the marketplace.

“Our MHCV volumes dropped 30 percent but we’ve managed to hold on to the EBIT, thanks to Turnaround 2.0,” said Balaji, noting that retail growth has been higher than wholesale growth, which is their focus. The company, he said, now wants to look at marketshare improvement.

“In the heavy commercial vehicles, we saw severe liquidity stress and lost competitiveness in the wholesale space” he told analysts.

“Negative operating leverage coupled with low MHCV volumes have impacted our EBIT,” he said.

Speaking about passenger vehicles (PVs), Balaji said the company’s strategy will focus on winning sustainability and that cost reduction and an improved product mix have helped it.

Going forward, the firm will look to diversify its sources of funding, keep the guidance for JLR margins between 3-4 percent, while the expectation for standalone EBIT will be “slightly lower” this year and the next. The focus, in both PVs and CVs, will remain on the retail side.

The company reported a doubling of its losses in the quarter ended June at Rs 3,679.66 crore vs a loss of Rs 1,890 crore in the last quarter of FY19.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Ather Energy to achieve 75-77% product localisation by 2020

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Ather Energy, a Bangalore- based manufacturer of smart electric scooters told CNBC-TV18 that it is looking to start localising the production of the electric motor which powers their scooters, achieving a 75-77 percent localised product by the first half of next year.

Currently, Ather scooters are over 50 percent localised, according to Tarun Mehta, co-founder of Ather Energy. At present, manufacturers of electric vehicles import li-ion cells which power their batteries, predominantly from China, including Ather.

The company also imports the electric motor, while the battery pack and the battery management and monitoring system (BMS) is manufactured domestically.

With that, Mehta said in an interview to CNBC-TV18 that batteries Ather uses now cost them close to $150 kWh, while for most manufacturers the cost of the battery is now below $200kWh. Six years ago, when Ather’s journey began, they were priced between $400-$500 kWh, Mehta said.

While globally battery prices have dropped substantially, they are now stabilising at the 7-8 percent level. The fact that the Indian market still purchases batteries in lower volumes, economies of scale don’t help the ecosystem either.

While Ather’s in-plant capacity will reach 25,000 units by 2020, Mehta said the company is looking at a capacity expansion of over ten times the current levels in the future. Ather does not disclose absolute sales numbers.

The six-year-old start-up, Mehta admits, isn’t profitable at either the unit or business level, and it will be another 12-18 months when the company has crossed the 50,000 units sales mark that they hope to turn profitable at the cost-margin level.

In the next two-three years, Mehta says, the cost of batteries could be brought down to $100 kwH. High dependence on imports and low volumes have kept the pressure up on electric vehicle pricing.

The FAME-II compliant Ather 450, for example, is priced at Rs 1.22 lakh and can be bought for Rs 1.11 lakh after one avail of the Rs 10,000 subsidy the government offers under the scheme. The price of an average conventional two-wheeler in the country, on the other hand, ranges from Rs 70-Rs 80,000.

While analysts believe that a higher level of subsidy to close some of the gaps between the cost of a petrol-powered two-wheeler and an electric two-wheeler could go a long way, Mehta feels the government’s subsidies towards electric vehicle adoption are at a “healthy level” before they begin to be tapered down.

Mehta adds that the running-cost advantage that an electric two-wheeler offers more than offsets the upfront difference in prices. A bigger impetus on product financing, Mehta said, could also address that problem, as customer interest in the space is on the rise.

‘Must Shift Focus to Supply Side’

To incentivise established two-wheeler original equipment manufacturers (OEMs) to take the electric vehicle leap and substantively add to capacity, Ather feels the infrastructure and policy push for the electric vehicle industry must now be focused on the supply side to aid localisation.

Demand-based incentives and subsidies currently amount to direct monetary subsidy in the range of Rs 15,000-Rs 30,000, while the reduced GST rate and the recent tax benefit announced on interest paid on loans taken to finance electric vehicles takes off another Rs 5,000-8,000 from the cost of the vehicle.

Analysts believe that the current level of subsidies provided to the electric vehicle buyer, however, is currently not enough, in contrast to countries like China which have millions of electric two-wheelers on the road and have successfully led the transition to electrification in mobility.

Experts have called India’s push towards full electric vehicle adoption as soon as the next 4-6 years premature. Ather agrees that currently there isn’t enough installed capacity in the country to cater to a demand of over 20 million vehicles annually, but that government’s policy push towards electrification can only be a step in the right direction. The challenge will be making major OEMs sign up for it.

That will be possible if demand-side incentives, like tax exemptions on equipment into setting up electric vehicle supply chains, are implemented.

Analysts CNBC-TV18 spoke to pointed out that in crowded metro cities where parking spaces for two-wheelers don’t form part of a user’s dwelling and most users park on the road/footpath, the lack of charging infrastructure is a challenge.

Ather dismisses concerns that the lack of public charging infrastructure is a concern. Mehta says for two-wheelers, most users plug in their vehicles at home, and the key challenge is accessing. Policy changes which mandate charging points in parking complexes of apartments, for example, could substantially aid access.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Volkswagen says electric vehicles unviable for Indian market at the moment

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Despite the government’s monetary and policy incentives for buyers and makers of electric vehicles (EVs), the world’s largest automaker Volkswagen feels that the business case between a conventional internal combustion (IC) engine and an electric engine is still not positive.

In an exclusive interview to CNBC-TV18, Steffen Knapp, director, passenger cars, said the company finds it unviable to bring out electric vehicles in the Indian market at the moment.

Currently, there are only a few thousand electric cars on Indian roads, while globally, electric vehicles contribute to about three percent of the total automotive market.

Knapp feels Volkswagen is the best-prepared original equipment manufacturer (OEM)  to transition into the electric vehicle space.

“We will have to see the waves. We will have to see the normal customer we are selling to, and we’re predominantly selling to the private customer. They will not opt for electric vehicles so fast because the business case between the internal combustion engine and the electric engine is still not positive. It is also unviable for us to provide an electric vehicle as all the equipment that a customer wants today at a cost point which is equivalent to a petrol-powered engine. We’re monitoring the situation very closely, and learning from our activities around the world, especially in China and Europe on how to do this,” he told CNBC-TV18.

“We have the product available, but we will only get into the segment when time permits and when it is a business case for us,” Knapp reiterated.

Hyundai, India’s number-two passenger car maker by sales volumes, brought out India’s first long-range electric passenger car, the Kona, at a price tag of Rs 25.3 lakh.

“I don’t see a customer ready to pay Rs 2.5 million for an electric car when they can get a classical combustion engine of a bigger size in that price…Indian people are very focused on value for money. Therefore, it needs to fit both sides. The customer should get value and the OEM needs to survive too”  Knapp said.

The government’s proposal to phase out all non-electric vehicles by as soon as the next four to six-year caught automakers in a tizzy, especially as the discussions are timed around an unprecedented slowdown in auto sales in the country.

Instead of providing a fillip to the industry in the form of a reduction in tax rate or the announcement of a scrappage policy, the union budget introduced earlier in the month imposed an additional cess on petrol and diesel, thereby raising the cost of ownership for petrol or diesel-powered automobile. The auto industry is currently also facing headwinds in the form of low demand, tight liquidity and an impending transition to safer emission norms next year.

All this has fed into the uncertainty of the buyer, according to Knapp, “The government’s way to tackle the future of mobility is a curvy road. It’s not completely clear, it’s changing, a lot of visions are afloat, but this is not possible to implement in the short frame of time. Instead, this also plays into the uncertainty of customers. Certainly, people see fuel prices going up and people living in cities are seeing rising congestion levels. Political instability, no clear policy vision, implementation challenges are causing people to defer their investments and rethinking.”

On the production front, Knapp said Volkswagen read the signs early and started cutting production from May last year, “We’ve been pretty clever. We started lowering domestic production early to ensure our stocks weren’t oversized. We drive our business at pretty low levels which is vital for the network and for us. And we will not take any more production cuts, we are pretty clean right now.”

“We split domestic production from international production as a  higher portion is exports. You could see signs of a slowdown in terms of technology spending of all manufacturers and you could see something is going in that direction. Everyone was drunk on the growth as it was pre-GST, then there was a stop, following which volumes recovered and everyone started talking about 40 percent growth. In our case, already there is a tougher market situation. We saw a jump in the technology spending in the marketplace so we lowered our production for the domestic market to adjust to the demand. We would like to produce more but it is our obligation to ensure our partners are having good business case results,” he added.

However, Knapp said Volkswagen is a company which places a huge premium on the residual value its cars fetch and they wouldn’t compromise that with tactical strategies like discounts or lower pricing to grab a bigger pie of the market share.

“The key is to survive. We want to earn money and at the same time also cater to your ecosystem which includes all parties with our brands – dealers and customers. We have an obligation to stick to a base volume so their survival is guaranteed.  For us, a residual value is a very high value. If we go aggressive on the market, that automatically impacts residual value which we don’t value. If a customer comes back to sell the vehicle after 3-4 years and gets good resale value, it feeds back into the ecosystem and helps our brand portfolio” Knapp explained.

While Knapp admitted that Volkswagen’s current product portfolio in India is old (the last time it launched a new car in India was in 2017) and doesn’t help pique consumer interest in a market that’s driven by new launches, he said, “The company is building the fundamentals for their next line of launches for India, called India 2.0.”

Knapp said Volkswagen isn’t clocking any growth in India given its current line-up but hopes interest in the brand will revive with the new launches.

The company is working on new dealership formats, taking investors out and taking the dealership experience online to build a profitable dealership network, “Real estate in cities like Mumbai, Delhi, Bengaluru is too expensive and creating a business case with classical dealerships is simply not viable in a lot of cases. So we’re creating new formats. Like pop-up stores which cost only 1.5 million and are already profitable.”

Despite the slowdown in the industry, Knapp said Volkswagen is upbeat on the India story, “India will be a self-feeding growing market, its biggest advantage is its consumption. We are seeing a dip right now but we’re positive in the long-term.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

CV makers halt or cut production sharply amid slowing sales

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Weak rural spending, a delayed and weak monsoon and the impact of increased axle load rules have caused a painful downturn on the makers of commercial vehicles, with all major companies imposing a halt on production in June, or cutting sharply production to manage a pile-up of inventory.

Sales of commercial vehicles dropped by 12.27 percent in June, and 9.53 percent in the April-June quarter of 2019-20 from a year earlier, according to industry group SIAM.

To manage the inventory pile-up at the retail level, these original equipment manufacturers have continued to cut production. The result: production reduced by 23.39 percent in June and 14.47 percent in the quarter ended June from a year earlier.

Commercial vehicles part, sales of passenger vehicles have also been declining in recent months as worried consumers put off purchases amid slowing economic growth. The government recently increased local taxes on ales petrol and diesel by two rupees each. Commercial vehicles in India largely run on diesel.

On Monday, a survey by market research firm IHS Markit said business sentiment in June was the lowest level since 2016.

The latest CV maker to halt production totally is Ashok Leyland. The manufacturer’s Pantanagar facility in Uttarakhand was shut on July 16, and will remain so until July 24.

Ashok Leyland will now suspend production for 4-5 days across all plants. The company’s CV sales fell by 14 percent last month.

Ashok Leyland joins a long list of companies that have put the brakes on production. The country’s biggest CV maker Tata Motors is also keeping its Pantnagar plant shut for 2 days this month — on July 13 and July 22.

Tata Motors has said, however, that there will be no closures at any other of the company’s six plants this month. “The overall CV industry demand has softened. Production plan at our manufacturing locations are as per our plan and aligned to the market demand,” a Tata Motors spokesperson told CNBC-TV18, adding that a “few days of the month are also being utilised for planned maintenance activities”.

Tata Motors is also cutting production in a staggered manner in the passenger vehicle space to manage retail inventory, people familiar with the matter said. They asked not to be identified.

Tata Motors’ passenger vehicle sales were down 27 percent while CV sales were down 7 percent in the domestic market in June from a year ago.

Volvo Eicher Commercial Vehicles, a medium and light commercial vehicle player, too has cut production. Sources told CNBC-TV18 that while the company is not stopping production this month, it is adjusting its weekly production schedules to market demand and undertaking production cuts.

Mahindra & Mahindra, India’s second largest CV maker by market share,  had earlier indicated in an interview to CNCB-TV18 that it won’t expect closures to the extent of 5-6 days as they saw in June, but if in case they do happen, they won’t last as long.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow