Two wheeler sales may dip 10 percent next year

November 2nd, 2008 - 2:02 pm ICT by IANS  

Chennai, Nov 2 (IANS) The Indian two-wheeler industry is likely to witness a 10 percent reduction in sales volume next year, given the tight market conditions and the slowdown in the economy.”The times ahead will be tough. Economic growth may not be seven percent. It is time for cutting costs,” Venu Srinivasan, chairman and managing director of TVS Motor Company Limited, told IANS from Indonesia.

According to industry lobby Society of Indian Automobile Manufacturers (SIAM), a total of 7,248,589 two-wheelers were sold in India during 2007-08.

While there will not be any fresh employment, Srinivasan ruled out any reduction in the permanent workforce, adding: “There may be some contraction in the temporary workforce”.

According to him, restricted availability of finance to purchase two-wheelers and the general inflationary conditions are impacting the company’s sales.

Speaking about the fall in October sales this year as compared to the corresponding period the previous year, he said: “This year Dussehra and Diwali fell in October. As such sales for September were higher for all the players.”

One should look at the September, October and November sales to mark a trend, he added.

The cumulative sales of September and October 2008 show a growth of four percent when compared to the same period of the previous year.

TVS Motor sold 117,101 units in October 2008 against 129,614 units in the corresponding period of the previous year.

Last month the company exported 17,013 units as against 13,042 units in the corresponding period of the previous year.

Even Bajaj Auto Limited logged a 34 percent reduction in
two-wheeler sales in October as compared to the corresponding period of the previous year.

Bajaj Auto sold 250,175 two wheelers in October 2007 while last month the sales were 165,477 units.

Srinivasan expects three-wheeler sales coupled with the launch of new two-wheeler models and cost cutting to balance the possible slowdown in two-wheeler sales next year.

TVS Motor that drove into the three-wheeler segment with its 200cc two-stroke TVS King will shortly launch a four-stroke model.

“We are now selling around 500 vehicles per month. The response to the vehicle is good. Once we launch the four-stroke model some time in April, the sales will pick up further,” Srinivasan said.

According to him, the company will launch three new products - two motorcycles and one scooter - over the next 12 months.

“A new scooty will be launched in two months’ time and a 180cc Apache motorbike will also be launched later.”

The company closed the first half of fiscal 2008-09 with net sales of Rs.19.26 billion and a net profit of Rs.174 million as against Rs.16.06 billion and Rs.194 million respectively for the corresponding period of the previous year.

The company will also rationalize production based on demand trends in order to cut inventory levels.

TVS Motor has also decided to prune its investment plans this year.

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