Compared to the period of relative inactivity in February, March has been flush with important developments for the automobile sector. Most important amongst these could very well be the reclassification exercise kicked off by the AIAM for differentiation between different vehicular categories. If seen through to the end, the exercise could throw up some startling revelations, as the current data put out by the AIAM is riddled with various anomalies. For example, sales of the Tata Sumo have been clubbed into Telco's LCV sales since its inception, which undoubtedly bloats the sales figures for Telco. The same applies to Tempo Trax and the Trekker which are also categorised as LCV's. Thus both these erroneous classifications cloud the accuracy of the data.Interestingly, though AIAM has chosen to classify the Mahindra Armada, Commander and the Maruti Gypsy as multi-utility vehicles. Thus the reclassification would also put an end to the long drawn debate about whether the Mahindras outsell the Tata Sumo orvice-versa. Unfortunately this is not where the anomalies end. Bajaj Auto's M-80 and the Hero Honda Street are both classified as motorcycles rather than mopeds. This, analysts state, begs for reclassification. Thus a reclassification on the basis of engine capacities could definitely help analyse how a multi-product company like Bajaj Auto with models in all the categories of mopeds, scooterettes, scooters and motrocycles performs in each segment. Industry sources suggest that a similar tactic be utilised for car sales. The new found enthusiasm for Indo-Japanese motor-cycles in the two wheeler segment has also helped TVS Suzuki cross the Rs 1,000 crore turnover mark. The company has in fact managed to post an 11.5 per cent growth in volume terms on a year-on-year basis, compared to an industry growth of mere 3 per cent.
However sceptics point out that with TVS Suzuki now aggressively entering the big league scooter market, future profitabilities could depend on the company's ability to take on the big-wigsin the scooter segment namely - Bajaj and LML. Thus a lot could depend on TVS's ability to aggressively price its models to counter the competitive threat. Herein volumes and the ability to achieve economies of scale could play a very integral role in driving earnings. Interestingly just as the Mahindra-Ford combine announced the introduction of a new 1.6 litre Zetec engine for the Ford, there was the decision by Mahindra & Mahindra to freeze investments in the 50:50 JV. This analysts state is undoubtedly a sign of the changing times in the Indian automotive market. M&M now joins a long list of Indian auto-manufacturers like Telco in Mercedes Benz, DCM in Daewoo Motors, Pal in Peugeot and Hindustan Motors in General Motors, to have chosen the passenger seat for the ride ahead.
The move also signifies the coming of a full circle by M&M, which incidentally was the only company in the automotive segment without any expertise in the passenger car segment. M&M has interestingly chosen to concentrate all itsresources on the IDAM project codenamed "Scorpio" which is a multi-utility vehicle. This according to analysts is definitely a move to strengthen the company's position in the UV segment niche, especially given the host of players waiting in the wings.
Probably the last and most important news has been the stoppage of production of the Safari by Telco, which analysts state could prove crucial for Telco's profitabilities. That Telco was banking heavily on the success of the Safari, to alleviate some of the strain on its finances is well known. Besides the sorry state of the commercial vehicle segment in India where offtakes have been on a continuous southward journey, could well turn things sour for Telco. Interestingly if the reason for the production stoppage is indeed a component shortage, Telco would do well to rectify the problem and start production immediately. However if the problem really lies in the gear-box alignment, then the recall option could prove to be catastrophic. Primarily the move wouldpour water over the four year R&D and the more than Rs 300 crore pumped into the Safari project. More importantly the beating that Telco's image would take as a car maker in the European export markets and India, would now need a desperate clean up job. What with the launch of the much publicised small car slated for later this year, Telco can ill-afford any more slip ups. Lastly to round things off, bookings finally opened for the Honda City, which with its aggressive pricing could make things hot for other players in the passenger car segment.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
