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Hero eyes neighbouring countries to clear stock pile-up


Date: 24-06-2019
Subject: Hero eyes neighbouring countries to clear stock pile-up
Hero MotoCorp is looking at exporting its excess BS-IV stock to neighbouring countries as it plans to launch the BS-VI compliant vehicles in the country at the earliest to ensure smooth transition before the new emission norms come into effect from April 1, 2020, sources said.

The company was the first two-wheeler maker to receive the BS-VI certification by International Centre for Automotive Technology (ICAT) for the Splendor iSmart commuter motorcycle. Other models are in the development stage and will be receiving the BS-VI certification soon.

The move is part of the company’s efforts to liquidate inventory, which is still higher than the normal 30-40 days, owing to poor demand in the domestic market. Besides, the company is also working on growing its exports revenue substantially in the medium term to offset possible volume losses in the domestic market.

“In countries such as Nepal, Bangladesh and Sri Lanka, BS-IV models can be sold without any hindrance, but in India, the unsold stock will become scrap after the stipulated time period,” one of the persons said.

There is a possibility that the vehicles will be exported at a slightly lower price, the person added.

Emails sent to Hero MotoCorp did not elicit a response till the time of going to the press.

As per the Society of Indian Automobile Manufacturers (Siam) data, Hero MotoCorp exported more than double number of units (14,709) units in May compared with April, when it had shipped just 6,434 units. In the coming months, export numbers are likely to be higher as the company plans to increase export volume contribution to 10% over the medium term against 3% currently.

In a meeting with analysts last month, Hero MotoCorp’s management said increase in shipment of volumes will be led by growing in key markets including Colombia, Argentina, Africa, Sri Lanka and Bangladesh and launch of new products in 35-40 markets that it entered over the past 3-5 years. “Aspiration of 10% volumes from exports will take at least 3-5 years,” according to analysts at Jefferies. Two-wheeler demand in the domestic market remained lacklustre for the seventh consecutive month in May, dragged down by steep decline reported by companies, including Hero MotoCorp and Honda Motorcycle. As manufacturers did not adjust production during the initial months, inventory piled up at dealers, going up to as high as 90 days. Consequently, companies had to cut production in the January-March period but due to subdued demand, inventory at dealers continues to remain higher than normal.

Manufacturers increased prices in the range of Rs 500-7,000 as they rolled out products with combined braking system (CBS) and anti-lock braking system (ABS) feature, mandatory for vehicles sold from April 1.

Source: financialexpress.com