Question

4. What was the composition of the purchase price? Why was this composition selected according to this case study?

5. Where are these companies today in terms of companies and also their stock prices?

6. How is the auto industry doing recently during the Covid-19 crisis? Be specific and Provide an example and your opinion

Answer 1

Questions 4 & 5 cannot be answered due to lack of information as they pertain to a certain case study.

Question 6 Answer:

In my opinion, the Auto Industry's performance has been slow in the recent years. The lockdown aggravated the pains of the Auto Industry due to higher fixed costs, negligble sales and the added stress of inventory disposal arising from the BS-VI Norms that came out recently in 2018-2019. Financing had already been tough for companies in these sectors to obtain and now it is tougher as banks grow more risk averse.

However, as lockdown restrictions as being lifted, we have seen a higher pickup in sales for 2 Wheelers. This is because peole are now turning back to Private Vehicles for Transportation due to fears arising from the Coronavirus Transmission on Public Transport or during shared rides.

Take for Eg, the case of Bajaj Auto which had one of its highest year revenues (finally beating Hero Honda) as sales picked up tremednously this year.

Another example would be news reports from various companies including Hero Motorcorp stating that within a week of reopening their outlets, they had about 10,000 orders for 2-Wheeler Bikes.

Coronavirus has once again raised the demand for private vehicles amongst a generation that was more oriented towards shared transportation means. Although cars may not be afforadble for everyone, most people are turning to 2-Wheelers and making use of the lucrative credit schemes provided by companies for the purchase.