Tyre Prices Shooting Up In India
There has been an increase in the prices of the car tyes. And the 7 per cent increase for the tyre price is because of the high demand and low supply. The car owners actually need not spend an extra 5 to 7 per cent. But it is the carmaker who needs to shell out an additional cost of Rs.800 for a new tyre for every new car they sell.
A deficiency of tyres in the market has become the reason for decrease of inventories at tyre makers to just 5-7 days from 20-25 days. And this is seriously affecting car manufacturers such as Maruti Suzuki, Hyundai Motor India, Tata Motors, General Motors India and Ford India. There isn't any clear information on how much are the carmakers affected by this situation.
"There is a demand-supply mismatch. While production has increased in the past few weeks, the supply of tyres has not kept pace, resulting into shortages. We have asked tyre companies to augment supplies but that has not happened yet," a senior executive at Tata Motors said.
Auto makers assume that tyre companies are charging arbitrary prices. But the tyre makers are of the opinion that they are trying to meet the demand despite production constraints.
"Tyres are a capital-intensive industry and there has been no major capacity addition in a year due to slowdown in the market and economic recession. While sales have jumped in recent months, production has not increased to that level, leading to shortages," said a senior executive of a tyre company on condition of anonymity. It is expected that the price will be dropped once the festival season is over and the demand for cars come down.
Is Hero Honda recession proof?
Hero Honda's strategy to maintain its position in the ongoing economic slowdown seems to be paying off. The world's largest two-wheeler manufacturer has registered an increase in sales by 12% or 33 lakh units in the first 11 months of this fiscal year. It is the company's best sales performance in its 25 years manufacturing history. Hero Honda's profit margins for the December 2008 quarter were the highest ever in the past three years with its net profit rising by 9.24% and total turnover increasing by 5%.
According to Pawan Munjal, MD, Hero Honda, the company always manufactures products that the customer wants and that are driving sales. He also commented that it's the manufacturer's single-minded focus to drive volumes which automatically leads to higher profits. Other two-wheeler manufacturers like Bajaj Auto and TVS Motor Co have not been fortunate enough and have registered negative growth.
Hero Honda has been the world's largest two-wheeler manufacturer for the past eight consecutive years. The company's focus on maintaining its market lead in the entry-level segment, which is the country's largest two-wheeler market segment, has ensured it remains unaffected in the ongoing economic slowdown.
[Via: BIKE]
Bike sales grows, but at snail’s pace
Motorcycle sales have managed a modest growth between April-08 to Feb-09 despite the entry-level segment registering a decline. The on-going global economic slowdown played a key role in the slowing down of two-wheeler sales.
Adding fuel to the fire were the existing vehicle repossession norms and the lack of easy finance. The entry-level bike segment which accounts for around 70% of the two-wheeler market registered a decline in sales by almost 2%. A sales decline in this major segment should have caused a slump in the overall sales of the bike segment.
However, as per the latest figures from the Society of Indian Automobile Manufacturers (SIAM) the overall bike sales managed to grow by 51,687 units to a total of 53,13,145 units compared to 52,61,458 units in the last financial year. The overall two-wheeler sales were up marginally to 67,83,653 units from 66,18,302 units in the last financial year.
The entry-level market leader, Hero Honda was the sole manufacturer to register a gain by around 3 lakh units in the segment. Bajaj Auto sold around 2.75 lakh units less compared to the last fiscal year. TVS Motor Co sold 84,299 units less while India Yamaha Motor sold 23,353 units less compared to the same period last year.
Even in the executive segment Hero Honda registered a marginal gain while Bajaj Auto still sold lesser number of units compared to the last fiscal year. Overall sales in the executive segment increased to 15,29,362 units compared to14,09,380 units in the same period last year. The scooter segment grew overall to 10,59,054 units compared to 9,67,087 units in the same period last year. The sales of bigger scooters fell to 41,331 units compared to 58,880 units in the same period last year.
[Via: BIKE]
You need to log in to vote
The blog owner requires users to be logged in to be able to vote for this post.
Alternatively, if you do not have an account yet you can create one here.
Powered by Vote It Up