The biennial Auto Expo, to be held at the India Expo Mart in Greater Noida from February 07 — February 12, 2020, will not see participation of several renowned automakers.
The decision to skip the event comes on the back of prolonged slowdown in demand for automobiles and also because the sector is gearing up to meet the deadline for the next big disruption — BS VI-ready vehicles before April 1, 2020.
While the country’s biggest two-wheeler-maker Hero MotoCorp has officially announced to give the event a miss, other big players such as Honda Motorcycle and Scooter India, Honda Cars India, Toyota Kirloskar Motor, BMW and Ashok Leyland are also learnt to have decided to pull out of the expo this time citing the current slowdown.
The auto giants have decided to prioritise resources by spending practically rather than undertaking high costs such as the Auto Expo.
“The domestic two-wheeler industry has been passing through a time of volatility, with market demand still continuing to be sluggish. Notwithstanding these challenges, Hero MotoCorp — and indeed the entire industry — is gearing up for the migration to the new emission norms ahead of the mandatory deadline of April 1, 2020,” Hero MotoCorp said in a regulatory filing.
“At a time such as this, it is prudent for us to prioritise our resources towards meeting business objectives for the benefit of our customers and other stakeholders,” it added.
Two-wheeler sales registered a de-growth of 16.18 per cent in April-September 2019 over the year-ago period.
Hero MotoCorp’s sales were down 20.40 per cent to 6,12,204 units in September 2019 compared to same month last year, when it sold 7,69,138 units. “As the market leader and one of the most vocal torchbearers of the industry, Hero MotoCorp has always been a flagship participant at the Auto Expo in the previous years.
However, participation in the Expo would require months of preparation and allocation of massive resources — both in terms of financial spends and manpower,” the two-wheeler maker said.
The industry is going through one of its worst slowdown ever with sales hitting new lows in the past few months.
Data released by Siam showed that the overall domestic auto sales fell 22.41 per cent to 20,04,932 units in September.
During the month, the passenger vehicle sales declined 23.69 per cent to 2,23,317 units, while the commercial vehicle sales dipped 39.06 per cent to 58,419 units.
There was a decline of 22.09 per cent in the two-wheeler sales to 16,56,774 units. Siam expects sales to improve in the short term, thanks to the festive season but is unsure of a robust growth in future.
Rating agencies and brokerage houses have also projected a poor show by the sector in the second quarter.
Aggregate revenue for listed automobile firms is estimated to have dropped by one-fourth in July-September, stated CRISIL, the Indian arm of S&P rating agency in a recent report.
Prasad Koparkar, senior director, Crisil Research, pointed out that “automobiles, one of the key sectors driven by consumption spending, continues to reel under demand slowdown. Aggregate revenue of listed auto players is estimated to have dropped 25 per cent in the second quarter."
A senior executive at a leading firm said that many manufacturers have either reduced their capital expenditure or deferred it for the current fiscal due to poor sales and future earning expectations.
“OEMs have made big investment in meeting the newer emission and safety norms. Paying hefty fees to participate in the coming auto expo which does not help in boosting sales makes no sense for many players at the moment,” he added.
However, there are many companies who still see value in the event and are ready to showcase their line-up. This includes Maruti Suzuki, Kia Motors, Hyundai, Renault, Tata Motors, Mercedes and more.
Auto Expo regulars haven't backed off yet
Maruti Suzuki, Hyundai, Tata Motors, Mahindra & Mahindra and foreign makers such as Renault, Volkswagen, Mercedes-Benz still see value in the Auto expo and are ready to showcase their line-up with concept cars and electric vehicles. Brands like Kia and MG Motors will also participate.
Tepid sales in September
Passenger vehicle sales fell 23.69% in September 2019, as per data released by SIAM. Commercial vehicle sales were also down 39.06% from a year ago period.