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BMW looking to cash in on people spending on luxury cars as virus curbs international holidays

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New Delhi: With the coronavirus pandemic curbing international holidays to exotic locations, German auto major BMW is looking to cash in on people spending on luxury cars in India even as it expects sales this year to be lower than 2019, according to a top company official. Like what has happened elsewhere in the world, the company expects car demand to pick up substantially in India as the country gradually moves towards fully opening up following phased lifting of the COVID-19 induced lockdown.

“The indication from the world, the countries which have gone through the flattening of the curve, is a stronger return of the auto sector, specially of the luxury sector because one of the important things to note is that when we are not travelling so much through international holidays or to exotic locations, we still want to be able to enjoy our freedom,” BMW Group India, Australia and New Zealand, President Vikram Pawah said.

Cars, especially luxury cars, are one of those items which people would love to reward themselves with after the crisis is over, he added.

Stating that India is just reaching the stage of flattening the curve but has not flattened as yet, Pawah said,”I do expect that (pick up in car demand) to happen a little bit stronger once we flattened the curve. Every country would have that.”

He further said,”Human behaviour is pretty similar. One is personal mobility and also what happens is that once you are buying now, you are really thinking that I want to have the latest technology, latest safety, latest emission technology that are available in the world. I think the luxury segment, specially BMW, has been providing world cars to India from day one.”

When asked about the sustainability of the current car demand, Pawah said, one thing clearly shaping up across the world is that people are coming back to individual mobility or personal mobility and avoiding shared mobility and that creates a pent-up demand.

“That has happened across the world. In India also we have seen that pent-up demand now showing up.”

Slowly with the festive period, he said,”We are seeing that people are coming back to some level of engagement there. So we see improvements month-on-month, week-on-week. We expect that to continue.”

On the outlook for 2020, Pawah said there is no doubt that 2020 would be subdued than 2019. “We have to look at it from that perspective that recovering a quarter’s sales loss from the balance six months is not possible.”

While sales have improved quarter-on-quarter, he said,”At the moment we are sitting at 41.2 per cent decline for the year…”

In 2019, BMW India sold 9,641 units, down 13.8 per cent as compared to 11,105 units in the previous year.

Commenting on the impact of COVID-19 on the company’s new launch programme, Pawah said,”When such decline in sales happens it does impact the supply chain a little bit, in terms of introduction of some of the models. Yes, some of our model launches have been delayed to next year like the new 5 Series and the new 6 Series Gran Turismo, these two have been delayed to next year for the time being.”

He, however, added,”We will come back strong, it is only a matter of timing. It is not something that has gone away. It has not changed our strategy or our plan. It is just that we have to adjust the time depending on the supply chain situation that existed in the timeframe.”

Last week, the company had launched its BMW 2 Series Gran Coupe model in India at introductory prices of Rs 39.3 lakh and Rs 41.4 lakh in diesel engine variant, looking to enter new segments of the luxury car market in the country as it prepares to spur demand.


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Ford has nearly 190,000 reservations for upcoming Bronco SUV

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Ford Motor is approaching 190,000 reservations for its long-awaited Bronco SUV, which is expected to arrive in U.S. dealerships next spring.

The automaker added roughly 30,000-40,000 reservations for the vehicle during the third quarter, bringing total reservations to “nearly 190,000” vehicles, according to Ford CFO John Lawler. The company said it had more than 150,000 reservations in July.

“We continue to see strong demand for the Bronco,” he said during a media briefing Wednesday to discuss the company’s third-quarter earnings. “We continue to see interest, strong interest, around the Bronco.”

Those reservations are for two- and four-door Bronco models. They exclude a smaller, more domesticated vehicle called the Bronco Sport that’s built more like a car than a truck.

The 2021 Bronco two- and four-door models are expected to arrive in dealerships spring 2021.

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Ford unveiled the new Bronco and Bronco Sport on July 13 to great fanfare, also opening up reservations. The nameplate developed a strong fan base following the original two-door SUV being discontinued in 1996.

A limited “First Edition” Bronco model — starting at $60,800 — sold out quickly after the vehicle’s unveiling. The company doubled availability of the model to 7,000 units. All have been reserved, Ford said.

Ford is taking $100 refundable deposits as part of the reservation process.

The Bronco Sport is expected to begin arriving in dealerships by the end of this year, followed by the Bronco next spring.

The Bronco Sport will be produced at the automaker’s factory in Hermosillo Sonora, Mexico. The Bronco will be produced at a plant in Michigan.


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Ford (F) earnings Q3 2020

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Incoming Ford CEO Jim Farley (left) and Ford Executive Chairman Bill Ford Jr. pose with a 2021 F-150 during an event Sept. 17, 2020 at the company’s Michigan plant that produces the pickup.

Michael Wayland / CNBC

Ford Motor is expected to eek out a modest profit for the third quarter when it reports its earnings after the markets close Wednesday as the auto industry continues to recover from factory and showroom shutdowns earlier this year.

Here’s what Wall Street is expecting, based on average analysts’ estimates compiled by Refinitive.

  • Adjusted EPS: 19 cents
  • Automotive revenue: $33.51 billion

Former Ford CFO Tim Stone, who left the company earlier this month, told investors in July that the automaker expected earnings on an adjusted pretax basis of between $500 million and $1.5 billion during the third quarter. That would be down from $1.8 billion in the third quarter of 2019.

Stone said the decline reflects the economic impact of the coronavirus pandemic, lower profit from Ford Credit, and weaker global demand for new vehicles, parts and services.

Analysts and investors are watching to see if Ford will be able to outperform its previous projections as it did during the second quarter after consumer demand in the U.S. was stronger than anticipated, especially for trucks such as the Ford F-150.

Wall Street also is watching for any additional business changes by Ford CEO Jim Farley, who succeeded Jim Hackett effective Oct. 1, and any updates on the company paying off its increased debt due to the pandemic.

In July, Ford repaid $7.7 billion of an outstanding $15.4 billion on its revolving credit facilities, and also extended $4.8 billion of its three-year revolving credit lines.

Ford’s shares remain down by 17% so far this year, despite an almost 15% increase in the stock price in October.


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Tata Motors sees better second half even as it prepares for hard Brexit

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BENGALURU – India’s Tata Motors Ltd forecast a stronger second half on Tuesday as sales of its Jaguar Land Rover (JLR) vehicles improved in key markets even as it continued to grapple with the COVID-19 pandemic and uncertainties over a hard Brexit.

The global health crisis has hammered sales for automakers worldwide and compounded problems for the company’s luxury unit, which, like most companies, will have to face a wall of bureaucracy as Britain casts off from the European Union from Jan. 1.

Tata Motors said while it was prepared for any friction at the border, it hoped for clarity on Brexit to avoid supply chain disruptions and better manage its inventory.

“In the situation of a hard Brexit, we expect to see tariffs definitely come through but we also expect depreciation of the pound, and so the net impact needs to be seen,” Chief Financial Officer PB Balaji told reporters after Tata Motors posted a quarterly loss.

While the automaker may need to correct its inventory level to an extent, it does not have any immediate plans to move production, Balaji said.

Tata Motors posted a consolidated net loss of 3.14 billion rupees ($42.47 million) for the second quarter ended Sept. 30, as retail sales at JLR, which accounts for a major portion of its profit, fell 12%.

Total revenue from operations fell 18% to 535.3 billion rupees, the carmaker said in a filing with the exchange.

The company said it had saved 600 million pounds ($782 million) during the quarter at JLR under Project Charge and was on track to achieve the full-year target of 2.5 billion pounds.


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