Here is a brief on all the important developments in the auto space this week.
The next time you walk into a
two-wheeler showroom, don’t be perplexed if you find it difficult to get a
vehicle loan from the banks. Rising non-performing asset (NPA) levels have
forced banks to become extra cautious in lending to the two-wheeler sector
which, besides the commercial vehicles segment, has become more vulnerable to
repayment defaults. More on this later but before that here is a complete
brief on all the important developments in the auto space this week.
Tesla in
talks with Karnataka
Karnataka has offered Bengaluru as the destination for Tesla’s Indian Gigafactory, and the company has already held preliminary discussions for a research and innovation unit in the city.
Bengaluru is likely a shoo-in for
Tesla as its Indian unit – acquired from Toyota in July, is based in the city.
Besides, other EV makers such as Ather Energy, Bosch, Daimler, Mahindra
Electric and Ola Mobility are also based in the area.
Hyundai India produces
more cars than China
India marched past China to turn
out the highest number of Hyundai cars outside South Korea in 2019,
producing one in every four of the company’s cars worldwide.
This is despite China having
Hyundai’s largest production capacity in the world outside South Korea and
twice its capacity in India.
Electric
two-wheeler demand rise
High-speed electric two-wheeler
sales have grown 18 percent year-on-year (YoY) since June 1, highlighting
a growing consumer interest in electric mobility post the lockdown.
According to data shared by the
Society of Manufacturers of Electric Vehicles (SMEV), 6,976 high-speed electric
two-wheelers have been sold between June and September, compared to 5,897 units
sold in the same period last year.
MG
launches Gloster at Rs 28.98 lakh
MG has just announced prices for
its new flagship SUV set to rival the likes of the Ford Endeavour,
Mahindra Alturas G4 and the Toyota Fortuner.
The new full-size SUV was first
showcased at the 2020 Auto Expo. While all the details of the SUV had already
been shared, prices were kept under wraps.
Car sales
gather steam
For the first time in 2020 retail
sales of cars and SUVs in a month surpassed sales of the same month last
year, signalling a pickup in consumer demand.
As per data shared by the
Federation of Automobile Dealers Association (FADA), retail sales of passenger
vehicles (PV) during September grew nearly 10 percent to 195,665 units as
against 178,189 units clocked in the same month last year.
Mercedes-Benz rolls
out EQC at Rs 99.3 lakh
German luxury carmaker
Mercedes-Benz on Ocober 8 kicked off its electric vehicles journey in
India with the launch of EQC model at an introductory price of Rs 99.30
lakh.
The all-electric SUV, which is
the first product under Mercedes-Benz EQ brand, is powered by an 80 kWh
lithium-ion battery with a range of 445-471 km on a single charge.
Banks go
cautious about lending to two-wheelers buyers
While the Reserve Bank of India
(RBI) announced reductions in lending rates over the past few months, banks
have been reluctant to get the two-wheeler buyer to benefit from the lowered
rates. This has led to a decrease in vehicle financing for the two-wheeler
sector which is now estimated to be at 40 percent from more than 50 percent
about two years ago.
“In the run-up to the festive
period, banks usually come out with attractive finance schemes. But this year,
in light of rising NPAs, banks have not at all been proactive in lending to the
sector. Consumers are either forced to go for NBFC loans or opt for an all-cash
deal,” said a senior executive of a two-wheeler making company.
Two-wheelers are not considered
to be a prime lending segment for the financial institutions given that a large
part of the two-wheeler market (more than 50 percent) is made up of the
low-cost, entry-level motorcycles. These are mainly bought by buyers belonging
to the low-income group thereby making them vulnerable in extreme situations
like a lockdown.
The RBI, in a report, said public
sector banks’ gross bad loans ratio of 11.3 percent at the end of March may
increase to 15.2 percent by March 2021 under the baseline scenario. Private
banks may see an increase from 4.2 percent to 7.3 percent.
Yadvinder Singh Guleria, Director
Sales and Marketing, Honda Motorcycle and Scooter India, said, "Banking is
one of the most important enablers for us. With a couple of measures taken by
the RBI and the central government, it is imperative that they
(banks) would be extending loans to two-wheeler buyers, which was not visible
till August”.
Not only are buyers finding it
tough to secure loans to buy two-wheelers, even dealers are not finding it easy
to get banks to finance their inventory. Of all the automotive segments only
the passenger vehicle and tractor segments have bounced back recording a growth
in retail volumes during September.
“The uncertainty around
demand is forcing banks to believe that dealers will find it tough to repay the
working capital requirements we seek from them. This situation won’t get back
to normal at least before February next year,” said a Mumbai-based two-wheeler
dealer.
Source- Moneycontrol.com
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