Hero MotoCorp’s upcoming products along with Research & Development will continue to get investment, however, other non-important areas have been put on hold…
Even without the impact of COVID – the pandemic which has rocked the whole country and kept it under lockdown, Indian auto industry was reeling under tremendous pressure because of continuous dull buying sentiments. The economy as a whole was going down and now with the whole country stalled, with no production in factories for almost two months, things have further aggravated.
Honda’s top boss has already shared that he believes that 2-wheeler sales will go down by high double digits this year (more details). Hero Motocorp’s CEO, Pawan Munjal, is also certain that sales for this year will be lower than even the lowly figures of last year. It must be known that, barring Suzuki, no other major 2-wheeler manufacturer showed growth in last year’s numbers. You can check out figures here.
Prior to the COVID outbreak, Hero had announced a big capex of Rs 10,000 crores which was to be spent in the next five to seven years towards new product development, manufacturing facilities and network expansion.
However, with the falling economy, expected low sales, Mr Munjal says that the company will defer a part of this capex. He, however, clarified that investments in new products, Research & Development and other important areas will continue.
Here is what he said,
We will defer out capacity expansion and other investment plans in this area. Since the sales will lower than the last year, there is no point in investing which will not give any returns.
Pawan also believes that electrification will be pushed back globally because of the issues caused by the pandemic. The world will want to get back to normalcy till it thinks of a major turnaround in industries.
Hero was to launch the all-new Xtreme 160R in April, however, it now appears that it is waiting for the lockdown to get over. Xtreme 160R is one of the many expected new products from the company.
Source – ET Auto