Search the Internet          Tips  Sites: Finance, Investment

Two-wheeler firms sense Chinese threat in imports

V Phani Kumar

The Indian two-wheeler manufacturers, especially scooter and scooterette manufacturing companies like Bajaj Auto, TVS Suzuki and Kinetic Engineering, are likely to face some rough weather ahead because of the recently announced Exim Policy.

However, motor cycle manufacturer Hero Honda Motors is seen to be better positioned to withstand the onslaught of cheap two-wheeler imports expected from across the Chinese border. The Exim Policy has permitted the imports of scooters in the 50-500cc engine capacity range, and imports of scooterettes in the 50-250 cc range.

Currently, all the scooters and scooterettes manufactured in the country fall in this range. Bajaj Auto, Kinetic and TVS Suzuki, which together command a lion's share in the scooter and scooterette segments, may have to contend with substantially cheaper Chinese products, notwithstanding the various duties and taxes.

Arun Firodia, chairman of Kinetic Engineering told Business Standard, "With so many duties and taxes in place, the Chinese products will not be as cheap here. Also, it will not be easy for Chinese manufacturers to provide as good a sales and service network as the domestic companies. In case they try to undersell their products, we expect the government to react and put anti-dumping duties in place."

R L Ravichandran, vice-president (business development & marketing) of Bajaj Auto said, "India is a highly evolved two-wheeler market, unlike the Philippines' and Malaysian markets which were run over by cheap two-wheelers from China. We have to wait and see what products are brought in and how they are priced. Indians will prefer to buy highly branded products rather than just cheap products."

However, in the motorcycles segment, only vehicles in the 250cc-800cc engine capacity range will be allowed. Since most of the bikes in India fall in the 100-175cc bracket, analysts do not expect motorcycle sales of domestic companies to be affected.

Hero Honda, the largest motorcycle maker in the country, is expected to be least affected. But auto analysts have said that Chinese motorcycles greater than 250 cc engine capacity will be priced similarly with top-end 100cc bikes manufactured locally, and will offer tough competition to Indian products.

Powered by

ALSO READ:
The Capital Markets Crisis

The Rediff-Business Standard Special
The Budget 2001-2002 Special
Money
Business News

Tell us what you think of this report