TVS Motor Company, India’s fourth largest two-wheeler maker, has warned of poor demand for the industry in the second half of FY20.
KN Radhakrishnan, Director and CEO, said, “We expect the H2 to be challenging for the industry, with sales slightly lower than last year. TVS, however, will grow better than the industry. We expect Diwali (sales) to be better than now.”
The Chennai-based company’s net profit for the April-June quarter (Q1) fell six percent to Rs 151 crore on poor retail offtake due to high costs and tightened credit.
TVS’ total sales during Q1 dropped 0.5 percent year-on-year to 9.23 lakh. The industry is struggling to break the negative sales trend which started a couple of quarters back.
Two-wheeler sales have been hit by lack of availability of finance and high insurance costs. Sales in rural areas and demand for scooters in urban pockets have been disappointing.
Manufacturers are now getting ready for transitioning to Bharat Stage VI, the next emission standard which will kick in from April 1, 2020. TVS said that its BS-VI product portfolio will hit the market much before the deadline.
“Our BS-VI products will hit the market in the second half. Q4 FY14 is when we will be fully BS-VI. We will decide and disclose the pricing close to launch,” Radhakrishnan said.
The final quarter (January-March) will be very challenging for automobile manufacturers. Companies would have to ramp up BS-VI production and rampdown BS-IV output. BS-IV units are expected to be in demand during that period, given the consumer’s reluctance to pay more for BS-VI.
Though no two-wheeler manufacturers has divulged details of the expected price rise as result of BS-VI, street expectations put the figure at a minimum hike of Rs 5,000 going up to Rs 15,000 depending on the model.
Besides BS-VI products, TVS is looking at launching electric vehicles this fiscal. The company is looking at both two- and three-wheelers for starting its innings in the electric vehicle space.
“We are looking at this financial year for launching electric vehicles. These products are getting tested now,” Radhakrishnan added.
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