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This week in Auto: Sales sputter in FY19, companies reappoint directors well past their retirement age

The automotive industry bid adieu to the most challenging second half (H2) period it has seen in a while. Though the first half (H1) saw almost all companies post double digit growth, the second half saw buyers staying away from showrooms.

Such challenging conditions has perhaps forced companies to rely on experience than anything else to steer themselves out of this. More on this later. Here’s a complete of the main developments in the automotive space during the week.

BMW clocks 19 percent growth in Q4, Volvo grows 25 percent in FY19

German luxury car maker BMW reported its highest-ever first quarter sales of 2,982 units in India for the three months to March 2019. Sales of the BMW brand cars grew by 19 percent to 2,822 units during the January-March period, as compared with same period of last year. The MINI brand sold 160 units during the period, up 18 percent from the year ago period.

Volvo Car India on April 4 reported a 25 percent increase in retail sales in 2018-19 at 2,687 units as against 2,157 units in the previous fiscal. This growth was largely driven by new product launches, including SUV XC40, the company said in a statement. The growth was further fuelled by opening five new showrooms across India in Calicut, Raipur, Kolkata, Indore and South Mumbai.

Maruti cuts production by 21 percent in March

The country’s largest car maker Maruti Suzuki India (MSI) cut vehicle production by around 21 per cent across its factories in March due to a subdued demand.

The auto major produced a total of 1,36,201 units in March, including Super Carry LCV, down 20.9 percent from 1,72,195 units in the year-ago period, it said in a regulatory filing.

Peugeot to make India return in 2020

PSA Peugeot Citroen, France’s largest carmaker, will make its India debut in late 2020 with the launch of the Citroen C5 Aircross SUV that will compete against current generation models.

The group, which is the last of the big international automotive names to come to India, has promised to launch one new model every year after its first year. These models will be made and launched in India before being introduced in other parts of the world

Volkswagen to merge group entities in India

German auto major Volkswagen on April 3 said it intends to merge all passenger car entities in India, which will now be led by group firm Skoda Auto as part of its new strategy for the country.

The boards of the three Indian subsidiaries — Volkswagen India (VWIPL), Volkswagen Group Sales India and Skoda Auto India (SAIPL) — have approved the proposal for their merger, the Volkswagen (VW) Group said in a statement.

Car sales remain muted in March

Subdued demand conditions of the last several months continued in March for the auto industry, with most manufacturers reporting flat to negative sales during the month despite dealers offering mouth-watering discounts.

The reluctance of banks to lend, rising fuel prices, an increase in product prices by manufacturers and negative buyer sentiments were some reasons why the demand refused to pick up

Star directors continue on boards well past their retirement age

On April 1 Hero Motocorp, the country’s largest two-wheeler maker, said two of its director had to quit the company due to a SEBI Regulation, 2015.

The regulation states that a director (executive or non-executive) could not continue on any company’s board after reaching the age of 75 years. This rule came into effect from April 1.

As a result, Retired General V P Malik and Pritam Singh have ceased to be independent directors of the company.

Directors of other companies were however lucky. Maruti Suzuki (MSIL), the country’s largest carmaker, sought approval through a special resolution from the shareholders at the annual general meeting last year for reappointing chairman R C Bhargava and Osamu Suzuki.

While Bhargava joined Maruti Suzuki’s board in 2003, Suzuki is the oldest director on MSIL’s board having joined it in 1983. Both senior executives are credited with steering Maruti Suzuki to the top spot and retaining it despite a strong onslaught from foreign car companies.

MSIL has managed to push its market share to 50 percent and beyond in the domestic passenger vehicle market while also entering segments where the company was traditionally not strong such as sedan, SUV and premium hatchback segment.

MSIL’s board certainly needs the guidance of both Bhargava and Suzuki especially at a time when the car market has severely underperformed with six consecutive months of poor performance.

Another reappointment of an industry veteran was of Rahul Bajaj, the chairman of Bajaj Auto. His appointment also came in last year, though it was for the first time ever that the senior Bajaj was not present at the annual general meeting.

Bajaj (80) resigned as chairman of Bajaj Finserve in March, the most valued Bajaj Group company listed on the Bombay Stock Exchange. He will however, continue to serve as chairman emeritus.

Under Rahul Bajaj, Bajaj Auto scaled to new peaks recently in market share and sales despite the broader demand conditions remaining subdued. Brands such as Pulsar, CT 100, Platina have pushed the company’s volumes to a multi-year high.




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