Chennai: India’s third largest motorcycle maker, TVS Motor Co. Ltd, said net profit fell 52% in the quarter ended September as sales fell by more than two-fifths on the back of rising interest rates, which made auto loans more expensive and kept customers away.
The company reported a net profit of Rs11.9 crore on sales of Rs823 crore in the quarter, compared with a profit of Rs25 crore on sales of Rs1,078 crore in the year-ago quarter.
“The decline in motorcycle sales was mainly due to stringent norms followed by retail financiers (in issuing loans) and high rates of interest,” the company said in a statement.
Almost 60% of all two-wheelers in India are purchased using loans.
For TVS Motor, sales of motorcycles fell by more than 110,000 units to 144,682 units in the three months to September. But scooter sales went up slightly, from 73,364 units from the year-ago quarter to 75,685 units in the current quarter.
The company said it plans to overcome the slowdown by launching vehicles in segments less dependent on retail financing. At present, its best-selling model is the StaR City, in the price-sensitive entry-level segment.
TVS plans to launch its Flame model, which uses controlled combustion variable timing intelligent technology, in the second half of this fiscal. This has drawn it into a spat with India’s second largest two-wheeler maker, Bajaj Auto Ltd, which claims the technology as its own.