Higher year-end inventory to limit industry growth: TVS

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New Delhi | Published: June 22, 2019 1:25:25 AM

Two-wheeler volumes grew by just 5% in FY19, impacted by high insurance premium and liquidity crunch in the system, which made finance costlier. In FY18, volumes grew by nearly 15%.

Stating that good monsoon aids growth due to a significant share from rural markets, the company said any negative deviation from normal monsoon is a cause of concern.

Higher year-end inventory and increase in costs due to escalated commodity prices and safety norms implemented from April 2019 will limit the automobile industry growth to 6-8% in FY20, according to TVS Motor Company.

Two-wheeler volumes grew by just 5% in FY19, impacted by high insurance premium and liquidity crunch in the system, which made finance costlier. In FY18, volumes grew by nearly 15%.

Migration from BS-IV to BS-VI emission norms from April 1, 2020, will pose challenges as product, supply chain and dealership readiness will be crucial, the company told its shareholders in 2018-19 annual report.

“Uncertainty of demand due to upcoming emission regulation will be high in second half of 2019-20,” the Chennai-based company said. Come April 1, India will switch to Bharat Stage VI emission norms, the cleanest emission standard across the world currently.

Stating that good monsoon aids growth due to a significant share from rural markets, the company said any negative deviation from normal monsoon is a cause of concern.

TVS said international factors such as geopolitical scenarios and rising crude oil prices are being continuously monitored for both risks and opportunities. Crude prices are expected to remain at the increased level of fourth quarter of 2018-19 during 2019-20 and may lead to higher costs for customers and original equipment manufacturers (OEMs), it added.

The company sold 31.36 lakh units in FY19, registering a growth of 9%, unlike its peer Hero MotoCorp, which posted a 3% growth. Another competitor Honda Motorcycle’s volumes tumbled over 4% last fiscal.

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