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Tractor sales expected to post 9% growth this fiscal on demand pick-up: Report

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Mumbai: After initial setbacks due to the pandemic, tractor demand has rebounded with a robust growth in sales volumes in the past few months and the industry may post a 7-9 per cent growth in 2020-21 as against the earlier estimates of 2-4 per cent, according to a report by ratings agency ICRA. The earlier 2-4 per cent growth projections were based on the uncertainty regarding the impact of the pandemic on the farming community, it said.

Farm sentiments are expected to remain healthy, aided by healthy farm cash flows across regions and stable crop prices, supported by enhancement government focus on procurement, the agency said. It added that based on the prevailing circumstances, the credit outlook on the sector remains ‘Stable’.

“ICRA has upwardly revised its industry growth forecast to 7-9 per cent in 2020-21 from an earlier estimate of 2-4 per cent growth which was due to the uncertainty regarding the impact of the pandemic on the farming community,” the report said.

According to the rating agency, while uncertainty still continues to exist in relation to the pandemic, the rural agri scenario that matters more for robust tractor demand is supportive of growth.

Domestic tractor demand has rebounded in a strong manner after initial setbacks due to the COVID-19 pandemic and the subsequent lockdown measures, it said.

“We have revised growth estimates based on the favourable rural market conditions. However, one cannot rule out the downside risk emanating from spells of unfavourable rainfall and floods leading to crop damage and supply chain disruption if any,” ICRA stated in the report.

Tractor volumes plummeted significantly in March and April but have seen a strong recovery since relaxation of lockdowns in May, it added.

The agency said there has been a robust growth in wholesale and retail sales over the past few months. It added that the industry is estimated to have recorded an impressive around 72 per cent growth in wholesale volumes and around 27 per cent jump in retail volumes on a y-o-y basis in August.

Overall, the tractor Industry has remained resilient to enforced lockdowns vis-a-vis other automotive segments, it said.

ICRA Vice-President Shamsher Dewan said, “The strong revival in tractor volumes in August 2020 was aided by healthy rabi cash flows across regions and progress of monsoon (in line with forecasts).”

He added that original equipment manufacturers (OEMs) have also been ramping up production levels to stock inventory ahead of the festive season and are gearing up for healthy sales for the rest of the year.

As per the report, healthy monsoon precipitation across regions till date, favourable kharif crop outlook, supported by early sowing and seasonally high reservoir levels, among others, support tractor demand.

Besides adequate financing availability has also been supportive, it said.

ICRA Assistant Vice-President Rohan Kanwar Gupta said, “We have revised growth estimates based on the favourable rural market conditions. However, one cannot rule out the downside risk emanating from spells of unfavorable rainfall and floods leading to crop damage and supply chain disruption.”

He added that based on the prevailing circumstances, the credit outlook on the sector remains ‘Stable’.

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Car makers deliver over two lakh cars during festive season, post 20-30% jump in retail sales

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MUMBAI: Motown’s wheels have begun to rev up this festive season – and cars are clearly winning this drag race with bikes.

With safe personal mobility goals dwarfing other consumer priorities in the Covid backdrop, sales of sedans, hatchbacks and SUVs climbed a fifth this Navratri and Dussehra as more than 200,000 buyers reached out for their cheque books.

Bike-makers, by contrast, weren’t as lucky: Sales of two-wheelers, particularly at the price-sensitive end of the market, have been marginally lower to flat. The impact of flat bike sales was visible on the stocks: Bajaj Auto and HeroMoto both lost about 6% Monday, and were among the biggest losers on the index.

But first, the good news.

Market leader Maruti Suzuki delivered its best performance in about five years by delivering 95,000 cars. Hyundai Motor India, Kia Motors, and Tata Motors, too, registered record numbers, cashing in upon the pent-up demand in the festive season. Toyota Kirloskar delivered a 13% rise in retail sales during the nine-day period.

Bookings through the season were in lockstep with the number of cars delivered, meaning Diwali and Dhanteras would be as sparkling as the Navratras.

Hyundai Motor retailed 26,068 units, a growth of 28% over last year, whereas deliveries were higher at 30,000 units for the same period, climbing a fifth from last Navratri.

Tarun Garg, Director for Sales and Marketing at Hyundai Motor India, said the positive momentum in sales of the last few months continued during Navratri and Dussehra.

“On all parameters, the numbers are very positive. Not only have the deliveries and retails grown by over 25-30% over the same period last year, but the bookings and enquiries also have been very strong, indicating that the rest of the season will be healthy,” added Garg.

The deluxe drive
At the highest end of the spectrum, Mercedes Benz India also broke into the green during Navratri and Dussehtra, delivering as many cars as it did last year. That contrasts with a 40% decline so far in 2020 for the luxury segment.

Rural demand continues to underpin car sales.

Veejay Ram Nakra, CEO for the automotive business at Mahindra & Mahindra, said deliveries were higher than last year for the nine-day festival period. Deliveries could not match demand as supplies are getting streamlined.

“We had a very healthy booking momentum pre-Navratri and Dussehra and we continue to have a very strong pipeline of bookings. Our bookings are up over 40% in SUV’s and at an overall level…, are up about 20% during the nine days of festivals,” said Nakra. “Rural continues to drive strong numbers.”

This year’s Navratri and Dussehra included one day less than the customary 10, and the festivities were preceded by Adhik Maas (or an additional month in Hindu calendar) during which some purchase decisions and deliveries were made.

In 2019, the 10-day festival period was preceded by 15 days of shradh or inauspicious period. People usually defer bookings or don’t take deliveries during the shradh.

Bikes play catch-up
Meanwhile, two-wheeler sales remained tepid in the metros and tier one cities with commuter trains and metros remaining largely out of bounds for the public, thus reducing the need for short-haul commutes from home to the nearest suburban railhead.

Rakesh Sharma, ED, Bajaj Auto, told ET that festive sales now are flat compared to the same period last year. But considering the shutdowns, he said the flat sales growth was not surprising.

“The emphasis on 30 days of festivities is overblown and its extrapolation can be misleading. The real test will be over the next few months when the heat and dust of the season has settled. That period is difficult to predict and unfortunately, we have no other option but to wait, observe and then respond,” added Sharma.

The weekly run-rate of the two-wheelers registration for the week ended October 17, 2020, was 220,029 units, data from the Vahaan platform showed. This implies that daily sales for the week before the Navratri was around 31,432 for two-wheelers.

“Navratri retail volumes may not strictly be comparable with last year’s Navratri as this year, the festival has only a nine-day window compared with ten days in the previous year, and one day in the festival period could add 50,000-52,000 of incremental sales,” said an executive at a leading two-wheeler maker.

A Hero dealer in western UP said that the Navratri sales have been a few units lower than last year’s. Steep price increases in the entry-level segment due to new emission norms and crop payment delays have put a lid on sales in the more price elastic end of the market.

A Honda dealer in Telangana said that bike sales have been surpassing last year’s Navratri volumes, and supply constraints could affect bike volumes ahead of Diwali. Scooter sales remain muted.

The month-long period between the start of Navratri and Diwali typically accounts for about double the monthly average of the year for two- and four-wheeler sales. A large part of this demand is in the North and East, which together account for 50-55% of total sales of two-wheeler and passenger cars. At its peak, though, the festive season would report 3.5-4 times the usual monthly run-rate.


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Cummins India completes BS-IV emission standard certification tests for wheel equipment

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MUMBAI: Engines and power equipment manufacturer Cummins India said on Monday it has successfully completed BS-IV emission standard certification tests for its wheel equipment at the International Centre for Automotive Technology (ICAT). The new BS-IV (construction equipment vehicle) norms for wheeled equipment such as wheel loader, backhoe loaders, compactor, harvester and paver are to be implemented from April 1, 2021, and Cummins India has accomplished the task much ahead of the deadline, the company said in the the release.

The latest engine can easily be scaled up to BS-V emission norms and beyond, it said.

“As India looks to boost its economy through infrastructure growth, we are all set to evolve from mechanical to new generation, fully electronic engine systems,” said Cummins India Managing Director Ashwath Ram.

He added that these new engine systems will be powered by Cummins’ best-in-class technology and will ensure higher uptime, better total cost of ownership, easy installation and cleaner emissions and, hence, will deliver superior value to end-users.

Cummins India Vice-President (Engine and Component Business) Anjali Pandey said this new four-cylinder, 4.5-litre CEV BS IV-compliant engine system will further help Cummins enhance its presence in the construction segment while meeting stringent emissions standards and providing value to the customers.

Globally, more than one million Euro-VI/BS-VI equivalent and higher emission vehicles are running with Cummins’ engine and after-treatment system, the company said.


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gst: Govt support in GST cut to aid entire PV industry: Tata Motors

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NEW DELHI: Any kind of support from the government in terms of GST reduction would help the passenger vehicle segment immensely as it would negate some of the price increase in vehicle prices due to the shift to stricter BS-VI emission norms, according to a top Tata Motors executive.

In an interview with PTI, Tata Motors President, Passenger Vehicles Business Unit, Shailesh Chandra said the reduction in vehicle prices would even help end customers who have been facing various pressures owing to the current state of the economy.

“Due to this transition from BS IV to BS VI, there has been a significant escalation in cost. In these trying times customers are not very confident about the outlook how the future is going to be including their salaries and jobs.

“On top of that there has been an increase in vehicle prices. It definitely impacts the industry immensely and any support by the government to reduce GST to offset some of the price increase will definitely boost the whole PV industry,” Chandra noted.

He was replying to a query whether lowering of GST would help revive the industry.

The Indian automobile industry leapfrogged to BS VI emission standards from BSIV from April 1 this year.

While auto companies put in around Rs 40,000 crore to upgrade their facilities and products, the auto components industry chipped in with an investment of Rs 30,000 crore for the same.

Chandra said there has been a significant escalation in cost due to the transition from BS IV to BS VI emission regime.

“It (reduced GST) will help consumers who are going through low buying sentiments because of uncertain and precarious outlook for the economy and their source of income. So definitely it will be helpful to boost the volumes for the passenger vehicle industry,” he said. Currently, automobiles attract GST of 28 per cent with additional cess ranging from 1 per cent to 22 per cent.

When asked about the electric vehicle segment, Chandra said the government has done its part and it was now up to the ecosystem players to participate in the process.

“As far as the government is concerned, the trust they have been bringing to electrification is something which very few governments across the world have done. Significant capital has been diverted towards the FAME scheme and others including charging infrastructure and R&D,” Chandra said.

It is now up to the manufacturers now to scale up their operations, he added.

“Government has done a lot and the only thing that the government can consider is giving FAME scheme benefits to the personal car segment as well. Incentives currently are being directed towards shared mobility and it is not gaining traction as during the pandemic the fleet segment has got impacted a lot,” Chandra said.

Personal car segment is 90 per cent of the industry and even a lower penetration of this 90 per cent segment would bring more visibility to the electric segment in the country, he added.

“Demand can be triggered through personal segment. Keeping that in mind if FAME incentives are also provided to personal segment electric cars which meet the criteria of price, localisation, range it will just accelerate the process of electrification in the country,” Chandra noted.

Tata Motors currently sells Nexon EV and two trims of Tigor with different range outputs. During the July-September quarter, the company has sold over 900 electric vehicle units. Since January, over 1,500 units of the Nexon EV have been sold.

“We believe in the future of electric mobility. We already have two versions of Tigor, we have Nexon EV, and we have announced Altroz EV, something which we are working on. There will be additional versions and products which will come in the coming years,” Chandra said.


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