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EconomicSlow Down Hits Bike Producers Too

After the Carmaker now Bike companies are facing a stubborn time. Now the reports are developing that Suzuki Motorcycle to hold back investment due to a slump in sales, BS-VI norms.

Suzuki Motorcycle India Pvt Ltd has decided to hold back its planned investments on capacity enhancement due to the ongoing slowdown in two-wheeler sales and expectation of a hit in the market by the transition to stricter BS-VI emission norm from BS-IV in April 2020, according to a senior company official.

• The organisation, which is the only two-wheeler producer to post repeated digit growth so far this financial, also stated question created over electrification of two-wheelers had also worked a role in parent Suzuki Motor Corporation to choose a wait and watch policy before deciding on setting up a new production plant in India.
• “The potential improvement is on the cards but it is not immediate. We would need a new facility but it would all depend on how the market responds to the BS-IV to BS-VI migration. That is very significant and we are seeing out for that,” Suzuki Motorcycle India Pvt Ltd (SMIPL) vice-president (sales, marketing and aftersales) Devashish Handa told PTI.
• SMIPL currently has a production plant in Gurugram with an annual potential of 10 lakh units. The organisation demands to sell around 8 lakh units in the national market and shipping one lakh units this fiscal, he added.
• “The development would be there. It would have been more advanced had the downturn not happened,” Handa said adding, it would also depend on how the whole electrification of two-wheelers pan out despite the new government definition over co-existence of internal combustion engine and electric vehicles (EVs).
• “However, things like timelines and infrastructure (for EVs) are still to be published or spelt out. We would like to understand that (happen). A lot would depend on these two factors (BS-VI migration and electrification),” Handa said.
• When asked if the organisation has at most limited identified a location and investment for the new plant, he said, “It is early to comment because it would not necessarily be to do with just the domestic market but also to do with parent Suzuki Motor Corporation’s (SMC) plans on their global operations, which may have a bearing on what capacity and what nature of capacity. Along with EVs, you have multiple factors which make it difficult to comment right now.” Commenting on the challenges of BS-VI transition, he said it may “have an impact similar to what the insurance regulation had in September last year”.

• “That was the tipping point actually, that’s where the slide began,” Handa said. While new safety regulations making features combination brakes and anti-braking systems added to the cost of two-wheelers, these were not as steep.
• “The steepest was the five-year guarantee that took up the recovery cost for the buyer to as high as 14-15 per cent overnight. Consumers have still to come to terms with the extended price point for a two-wheeler,” he said.
• Just as things were about to start settling down, Handa added, “We are likely to have a very similar range impact because of the BS-IV to BS-VI migration.”
• He said two-wheelers, especially in the entry-level segment which uses carburettor instead of fuel injection technology, will be the worst hit when the emission norm transition happens.
• In the more premium two-wheelers the percentage (of the price increase) will be lesser because some value addition such as catalyser and fuel injection system that is required in BS-VI is already there, he said.
• “However, in the case of cheaper end you move from carburettor needle to direct fuel injection, that is one jump and then the catalyser, after processing of the exhaust. Depending upon this, the percentage increase would be around 12-16 per cent,” Handa said.
• He, however, believed that at least for SMIPL sales are supposed to grow next years despite reduction related to this economic due to its strategy to enter new businesses in India.
• In the April-August period, this fiscal SMIPL has sold 346,018 units as against 298,989 units in the year-ago period, a growth of 15.72 per cent.

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