Eicher Motors to hike price by 2-3% starting October; export market traction rising

Even ahead of the September auto sales numbers, the street was expecting a mixed set, owing to the severe semiconductor shortage plaguing the sector. The worst-hit in this sector have been the passenger vehicle and two-wheeler segments. The country's largest carmaker Maruti Suzuki India on Friday reported a 46.16 percent decline in sales at 86,380 units in September, while for Bajaj Auto, the total sales dropped 9 percent to 4,02,021 vehicles in the month under consideration, as compared to 4,41,306 units in September 2020. Eicher Motors' commercial vehicle segment - VECV reported higher sales - both in domestic and export markets in September. CNBC-TV18 spoke to Vinod Aggarwal, MD, and CEO of Eicher Motors, to discuss this and the impact of the semiconductor chip shortage.

On semiconductor chip shortage, Aggarwal said, “There are a lot of constraints in the supply of micro-processes. But I am sure all the companies are doing their best and they are somehow managing the parts. So, I think that situation will continue for some time. However, we have to manage the constraints in a good manner.”

On price hike, he said, “Price hikes have already happened from October and it is in the range of 2-3 percent.”

On demand in the commercial vehicle (CV) segment, Aggarwal said, “I had been saying for the past few months that we are going to see a month-on-month better sales in the CV industry. If you look at the last three months, in July, the CV industry was at 3.50 times and had sales of around 23,000. In August, sales were 26,000 for the CV industry and in the month of September, it was 32,000, so month-on-month you are seeing better sales and that is a sign of recovery in the CV industry.”

He further added, “CV industry had been depressed for last two years or so and now, it is coming out of that recession. We are seeing same sort of recovery in our sales. We are doing very well in all our segments, in light and medium-duty (LMD) trucks, where last month we had a market share of 34 percent. In heavy-duty (HD) trucks, both Volvo and Eicher put together, we had a market share of close to 7.50-8 percent and in buses also, we had a market share in LMD buses of around 25 percent and in HD buses, of around 10 percent.”

On export market, he said, “Export market has also started doing much better if you look at the exports out of the country, they are much better than the previous year. So, they are in line with the overall growth in the industry. So, we are expecting good traction coming from international markets also, especially from Bangladesh market, it is improving. Nepal has also started improving, Middle East is doing better for the overseas segment. African markets are doing better, Southeast Asian markets are also doing better. So, I think all across there is improvement seen in the international markets.”

On capacity, Aggarwal said, “We never produce to stock, we produce in line with our sales. Last month, we produced 5,000, in fact our sales were more than production in the month of September. In October also, we are planning to produce more than this. The capacity is not a concern. We have very good capacity.”

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