This week in Auto: November car sales decline 3.4%; Are price hikes for real?

New launches have taken a back seat for the time being. Manufacturers would rather wait for the new year before launching anything new especially not in a forgettable and challenging year as it has been. Besides new launches the year 2019 will see price hikes across product lines. But surprisingly the announcement that usually comes a day or two before the actual hike has been announced by companies weeks in advance this time. Here is a complete list of all the major developments in the auto space happened this week

Hero Electric gets Rs 160 crore investment

Hero Electric, the country’s largest two-wheeler manufacturer, has raised Rs 160 crore in its first ever fund raising exercise, through equity sale, to chart its future growth.

The Delhi-based company has off-loaded a ‘significant minority stake’ in the company to Mumbai-based investment management firm: Alpha Capital Advisors. The privately held Hero Electric declined to specify the size of stake sold.

Mahindra to supply 1000 electric three-wheelers

Mahindra Electric and SmartE have signed a memorandum of understanding (MoU) to deliver 1,000 electric three wheelers in Delhi-NCR by March 2019 to provide last mile connectivity.

According to the MoU, the two companies will deploy Mahindra Treo and Treo Yaari electric three-wheelers in the National Capital, during the first phase and, later, across the county during the second phase

New car sales decline 3.4% in Nov

Domestic passenger vehicle sales declined 3.43 percent to 2,66,000 units in November from 2,75,440 units in November 2017.

Domestic car sales were down marginally to 1,79,783 units as against 1,81,435 units in November 2017, according to data released by the Society of Indian Automobile Manufacturers (SIAM). Motorcycle sales last month, however, rose 9.36 percent to 10,49,659 units as against 9,59,860 units a year earlier

Ashok Leyland signs MoU with Israel's ELBIT

Hinduja Group firm Ashok Leyland has signed a memorandum of understanding (MoU) with Israel's Elbit Systems for high mobility vehicles. Ashok Leyland will provide high mobility vehicles (HMV) for mounting Elbit Systems' artillery guns and systems. The integrated systems are targeted for worldwide export markets

Are price hikes for real in the discounting age?

Sales of passenger vehicles such as cars and SUVs in November have been disappointing. The industry recorded a fall of 3.4 percent compared to the same month last year. And November was not a flash in the pan. Earlier months have been equally painful to the industry. Yet companies have threatened a price hike next month which might seem inexplicable.

The hike will most likely be accompanied by heavy discounts, which has been a norm since the past several months. The discounts in fact will take care of the proposed hikes which in many cases is several times higher than the actual hike.

For instance Toyota Kirloskar which launch the Honda City fighter called Yaris only six months ago the company is offering consumer benefits to the tune of Rs 1 lakh on the sedan. At the same time Toyota has announced a planned hike of a 4 percent across range.

Manufacturers have signaled hikes upwards of Rs 5,000. Usually price hikes range between 1 to 1.5 percent. But this time companies were quick to release statements stating that the hikes will be up to 4 percent to be brought into effect from January.

Likewise Tata Motors, Honda, Skoda, Renault, Ford and Nissan have announced proposed price hikes. Maruti Suzuki jumped the band wagon too a few days ago to announce a hike from January preceded by Mahindra & Mahindra and Volkswagen.

With the exception of the Tata Motors and Honda none of the manufacturers have recorded good growth during the last several months. Dealers are forced to shell out discounts from their own pockets to convert enquiries into confirmed booking orders.

The price hike threat may work its magic of helping clear inventory with dealers that had been piling up even before Diwali but only to a certain extent. Buyers do not opt to buy new cars in December because they lose the opportunity to have registration date of the new year only by a few days. This dramatically impacts the resale value of the vehicle.