| INDUSTRY Go To Top Samar Srivastava mint (Web & Print Edition) (Apr 20)
New Delhi: A pickup in sales of cars, trucks and two-wheelers in the quarter ended 31 March may not be enough to help auto makers post improved earnings for the fiscal year gone by, a Mint poll of analysts shows.
Year-on-year numbers are not going to be good, says Piyush Parag, an analyst at Religare Securities Ltd. At best, market leaders by revenues, Hero Honda Motors Ltd and MarutiSuzuki India Ltd, will buck the trend and post growth, he adds.
Nine brokerage firms polled by MintEmkay Global Financial Services Ltd, Motilal Oswal Securities Ltd, India Infoline Ltd, KR Choksey Shares and Securities Pvt. Ltd, Prabhudas Lilladher Pvt. Ltd, Centrum Broking Pvt. Ltd, IDFC-SSKI Securities Ltd, Angel Broking Ltd and Religare Securities Ltdattribute the weak results to the severe slowdown in sales in the third quarter and high commodity prices that peaked in September last year.
Also See Tough Ride For auto makers, the last fiscal year has been a rollercoaster ride. The first half of the fiscal saw a sharp increase in commodity prices. In some cases, they nearly doubled.
The average price of steel, for instance, touched $1,130 (Rs56,161) per tonne in the second quarter last fiscal, Motilal Oswal points out in a report. In the last quarter, they climbed down to $391 per tonne. Raw materials generally account for 20% of total revenues at an auto maker with steel making up a little over half of that.
Then, the third quarter of the fiscal saw a sharp slowdown in sales. November sales of commercial vehicles were the lowest since 1997. Maruti sold 17,512 less cars in November as compared with the year before.
That trend reversed in the last quarter with sales reviving somewhat. Car makers ended the year with a marginal 0.13% increase in sales. Two-wheeler sales were up 2.6% while truck sales fell 21.69%.
Despite that, Emkay Global expects overall profitability of auto makers to decline by 33% and net sales to fall 7% when compared with the fourth quarter of last fiscal. Analysts say while sales of cars and two-wheelers picked up in the last quarter, the outlook for commercial vehicles remains uncertain as most of the sales in the last quarter were made by fleet operators looking to take advantage of the accelerated depreciation norms.
There are, however, signs that the market believes the worst is over for auto companies. The 14-share BSE Auto Index has shot up by 11.9% this month. In the same period the benchmark index, Sensex, has risen 13.5%.
Still, analysts say it is worthwhile adopting a wait and watch policy. Jatin Chawla of IIFL Capital writes in a report that this buoyancy (in sales) may not sustain beyond the June quarter He points to tightfisted banks and the impact of a revision in salaries of government workers late last year waning after May.
In the past two quarters car makers such as Maruti Suzuki and Hyundai Motor India Pvt. Ltd have targeted government employees who have received salary arrears. Marutis profit is expected to decline by 16%.
Analysts surveyed expect Tata Motors Ltd, the countrys largest auto firm by revenue, to report a 79.6% decline in earnings compared with fiscal 2008.
Tata Motors smaller rival in commercial vehicles Ashok Leyland Ltd is likely to see its profit more than halve to Rs211 crore compared with Rs477 crore.
Unlike for passenger cars where the availability of financing options have improved, for commercial vehicles it is still an issue, said Anup Maheshwari, an auto analyst at KR Choksey.
There is, however, a silver lining. A report by brokerage Prabhudas Lilladher shows that auto makers should record an increase in the average realization per vehicle, or the money earned for each vehicle sold.
For instance, Tata Motors is estimated to have earned an average Rs502,082 per vehicle last fiscal, an increase of Rs12,184, or 2.5%, over the previous year. This, coupled with lower commodity pricescompanies are likely to see the full benefit of the reduction accrue only in the first quarter of this fiscaland an uptick in demand would mean increased profitability from the first quarter of this fiscal.
Among two-wheeler makers, New Delhi-based Hero Honda is expected to clock an 18% increase in sales last fiscal and analysts expect profits to rise 28.7%. The company reports its results on Tuesday.
Bajaj Auto Ltd is expected to report a 5.3% decline in profit. The company aims to regain shares in the market for the more profitable 150cc bikes and has six launches planned this year.
Rural markets will continue to hold the key to growth in the quarters ahead and those auto makers with strong distribution in smaller cities and towns (such as Maruti and Hero Honda) will continue to see earnings expansion, analysts said. In the last fiscal year, for example, rural sales at Maruti rose to 8% of its total sales volume from 3.5% in fiscal 2008. http://www.livemint.com/2009/04/20003714/Auto-firms-may-report-decline.html?h=B
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| INTERVIEWS/FEATURES Go To Top The largesse from the JNNURM is in good flow. Since January this year, the ministry of urban development has sanctioned Rs 4,726 crore for procurement of 14,240 buses in 59 cities. Out of this 4,494 are standard buses 1,170 are mini-buses and the rest are low-floor and other variations of urban buses. The central assistance is Rs 1,630 crore. This slew of sanctions labelled as Part II of NURM is certainly music for the ears of the automobile industry. Unlike Part I of NURM which is contingent upon many organisational and financial reforms as well as significant changes in the processes of decision-making at the city level, Part II is a more honest and quicker way of reaching funds to the cities. However, no money from the government can be free of strings. In this case also the ministry has issued as many as 30 guidelines. Most of them are universally advocated prescriptions like priority for public transport, passenger-friendly buses, better route administration, dedicated metropolitan transport funds, etc. There is also a set of specifications for urban buses. The norms and costs may need scrutiny but it is good the government recognises that benches and a metal roof stuck on a truck chassis is not to be regarded as a passenger bus. For the past several years urban transport has been nobodys baby. Though the so-called rules of business allocation conferred this subject on the urban development ministry in 1990, turf questions continued to be agitated between the railways, transport and urban development ministries. Urban transport was interpreted as principally railbased systems which only the ministry of railways would design and build. Buses were dismissed as a state subject and if PSUs were not doing the needful, privatisation was the obvious response. After launching of the Delhi Metro project, the urban development ministry finally emerged as the guardian of this portfolio. In the past few years, it has also broadened its perception that mobility, more than technology choice, is the key. In India, city space for mobility has become a highly contested issue. However cogent and well reasoned the case for public transport, in real practice it is the private vehicle that has proliferated, thanks as much to the uncalled for subsidies for automobile production and use as well as consistent lobbying practices of the auto industry, perfected over the years in the US and west. In May 2008, the ministry also sponsored a study on transport policies and strategies, by the well known transport consultants Wilber Smith and Associates. The study predicts, in all city categories, a declining share of public transport from 16% in 2007 to 15% in 2011, 11% in 2021 and 9% in 2031. In the mega cities the decline is even worse from 46% in 2007 to 31% in 2021. The study also concludes that the average journey speed would decline from 17 KMPH to nine over the same period. Congestion will be the order of the day. The question thus arises, will there be space in our cities for these 14,000 additional buses? Given the congestion, will the buses be able to move anywhere? While the ministrys guidelines exhort priority for public transport, no overt action has been suggested for restraining private auto growth, apart from some suggestions on parking. Besides, projects sanctioned under NURM for the road sector till now are mainly for expansion of roads, new roads, flyovers, road over bridges, etc. Mercifully some of the projects, such as those for Pune, Jaipur, Ahmedabad, etc, include support for BRTS schemes. Somewhere in the ministrys guidelines, there is also the exhortation that the state government and urban local bodies should waive or reimburse all its taxes on urban buses. Distortions in motor vehicle taxation abound in the country. In 10 states taxes on private motor vehicles are a one time levy. Mercifully this is life time of the vehicle rather than the owner. The tax rates themselves are absurdly low. After several years, Delhi recently revised its tax rates to 2% for vehicle costing up to Rs 4 lakh and 4% for those above. This is not even an apology for a demand management measure. In Singapore, which incidentally is the Mecca for urban transport planners, but only for visits and not practice, a licence to purchase a vehicle costs nearly as much as the vehicle itself. It remains to be seen whether the various other guidelines suggested by the ministry of urban development will be adopted by the states. If the implementation of the reform agenda of Part I of the NURM is an indication, the chances are the ministry is fast and generous in making the funds available but short and shy in ensuring compliance with what has been agreed. For an outlay of Rs 4,726 crore for 14,000 buses, the average cost of a bus must be about Rs 32 lakh. Is the candle worth the cost? Perhaps it is. With a few thousand buses on many city roads, the citizens will at least have a visual satisfaction. Stuck as we are in the citys logjam, stuck we shall remain. But we will have a choice of being stuck in our brand new bus on the one hand or on our mobikes, in SUVs, mid-size cars, Marutis or that latest suitor on the block, the Nanos. Very much more will be needed to make our new bus move. Last years dispute about the Delhi BRTS was the first serious contestation in the country for a citys road space between the bus and the car. The present additions to the bus fleet will carry this contest to other cities. Hopefully, the majority of the public, dependent on public transport, will become more assertive and demand that a citys road space cannot be pre-empted by the car-using elite. Hopefully again, this may prompt the ministry to give up gradualism and be more assertive. Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved"
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| CARS, SUVs, MUVs Go To Top Chanchal Pal Chauhan The Economic Times (Web Edition) (Apr 20)
New Delhi: Maruti Suzuki, which makes every second car sold in India, is investing Rs 1,200 crore to replace engines of existing models with a new light-weight fuel-efficient one that will conform to a new national emission standard to come in place next year. Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved" http://economictimes.indiatimes.com/News/News-By-Industry/Auto/Maruti-
HYUNDAI MOTORS MARKETING INITIATIVE The Hindu (Web & Print Edition) (Apr 19) New Delhi: Hyundai Motor India has announced the launch of a special marketing initiative Hyundai Utsav to boost its sales in rural areas and Tier-III cities across Andhra Pradesh and Punjab initially. Beginning April 18, the Hyundai Utsav will be kicked off in over 50 venues in Andhra Pradesh and Punjab markets to create awareness about the Hyundai brand. http://www.hindu.com/2009/04/19/stories/2009041956121400.htm
AUDI REDEFINES SMALL CAR PARADIGM Murali Gopalan The Hindu Business Line (Web & Print Edition) (Apr 19)
Mumbai: Small cars rule the roost in India largely for reasons of affordability but German automaker Audi is entering this segment at a global level for an entirely different reason.
What is getting increasingly relevant for us in the next decade is a small, premium car for big cities such as Tokyo, Shanghai, Mumbai and Los Angeles, Mr Rupert Stadler, Chairman of the Board of Management, Audi AG, told Business Line during a recent visit to India.
We see 40 per cent of the world population going to such big cities which are typically those with over a million people. The traffic situation there will become tougher in the future which will call for a small car, he added.
This explains why Audi has embarked on the A1 car project whose hybrid versions were showcased at the Tokyo and Paris motor shows. The vehicle is small for sure but will not come in cheap because, as Mr Stadler reiterated, it is a premium product with the luxurious interiors of an Audi.
It is a small car by size and length, but definitely not by price. By the end of the day, it is meant for that particular customer who needs to feel a premium brand, he said.
The A1 enters the global market next year. Europe will, in most likelihood, be the launch pad for the car. And even while India is predominantly a small car market, Audi is in no hurry yet to bring it here. The reason is less to do with price and more with customer behaviour.
As Mr Stadler said, when it comes to luxury cars, people in India prefer to be chauffeur-driven instead of opting to be behind the wheel.
When they are willing to drive a luxury car themselves, Audi will be ready with the A1. The key is to reach out to the young because the car is meant for this user segment but then they have to be prepared for it, he said.
Volkswagen, Skoda plans This is a far cry from his own group companies such as Volkswagen and Skoda which are jointly developing a platform for a low-cost small car which will roll out of the recently inaugurated Chakan plant in 2011. It is expected to sport a price tag of around Rs 3 lakh. Fiat is also planning something similar from its Ranjangaon plant by 2012.
The Audi route is obviously different. Mr Stadler maintained that the brand (and not merely product) approach was imperative from his companys point of view. Only a strong brand with clear values will work because this is what customers look for and feel in a car. In the case of Audi, we have invested heavily in the perfect architecture, design and hi-tech innovations, he said.
The Audi Chairman said that the luxury car business would grow with time in India. However, we are not in a hurry. We want to position our brand properly and touch the customer through emotion where he gets to feel it, he added. The company has an assembly operation at the Skoda plant in Aurangabad. Its models in India include the A4, A6, A8 as well as the Q7, TT and R8. http://www.thehindubusinessline.com/2009/04/19/stories/2009041951170200.htm
AUDI BULLISH ON INDIA; SEES METROPOLITAN STRATEGY AS THE WAY FORWARD Murali Gopalan The Hindu Business Line (Web & Print Edition) (Apr 20)
Mumbai: Mr Rupert Stadler, Chairman of the Board of Management of Audi AG, was in India recently for the Volkswagen plant inaugural at Chakan near Pune. The German luxury carmaker is bullish on prospects in this country despite the global slowdown that has had its fallout on the auto industry. Mr Stadler believes that even in such trying times, companies with a clear strategic vision will survive. He took time off to speak to Business Line.
What do you have to say about the effect of the global financial crisis on the auto sector?
There are no two ways about the fact that this crisis, which began in late 2007 and the beginning of 2008, has hurt the automotive industry. If you look at Spain, which lost 50 per cent of the whole market in the last 6-8 months, or the US where the market is down to 9.5 million units (from 16-17 million) annually, it is clear that we are living in absolutely different market conditions where only companies which are best prepared will survive.
The US market has always shown a lot of overcapacities and the Big Three (General Motors, Ford and Chrysler), in my view, possibly did not care too much about that. They did not invest considerably in innovations. As for European brands, mass producers are under pressure and those companies that did their jobs well during the last few years are in good shape.
How has Audi fared in these conditions?
When we look to our business history, 2008 was the thirteenth year of continuous, profitable growth for Audi. We invested heavily in products, new innovations, technology and markets.
For example, we are the clear premium brand leader in China. We decided to come to India 2-3 years ago and this was a new market for us.
From our point of view, the way forward is to invest in a metropolitan strategy which means being in big cities like New York, Los Angeles, Moscow, Frankfurt or Berlin. At Audi, we do the right things at the right time and are well prepared.
Does that mean the slowdown has not quite affected your company?
Well, when we at Audi talked about fighting a tough situation in 2009, we knew that the markets were declining which meant lower volumes. However, we wanted to gain market share which is not easy.
Global sales during January-March show that we are right on track and this is equally true for India where 2008 saw 1,050 customers, a jump of 200 per cent. This is thanks to the right investments in the brand to communicate its core values.
Have priorities of global carmakers changed overnight with the economic crisis?
I would like to reiterate that Audi had, years ago, defined a clear strategy for the years 2010 and 2015 with the focus now on 2020 also. We have a clear approach in terms of product, countries and investments.
The global auto industry is stunned with the financial crisis and the levels of damage inflicted. But if you have a good strategy, it can still work in tough times. Those who dont have one are suffering and lamenting that things have changed.
For instance, there is a lot of talk about climate issues and carbon dioxide emissions but these are not subjects that cropped up yesterday. At Audi, we have adopted a long-term approach where we really challenge our engineers to work on areas like cleaner emissions. There are programmes we began 15 years ago and continue to work on even now.
We know what we need to do and where we want to be, which is being the most successful premium brand in the world. This is not about volumes alone but about emotion and perfect cars, profitability and also being an attractive employer. We know people drive business, and want to retain the best talent.
Experts believe that a handful of global platforms are enough to keep costs in check. Would Audi follow a similar model?
As a premium brand, we work with one fundamental structure which is common to the US, Europe or China. When you talk of economies of scale, I would personally prefer an excellent shape and nice design. I would rather not talk about platforms but look at emotional design and technological innovation.
Would the single brand focus be equally true for countries like India where volumes are much smaller for Audi?
I am absolutely convinced that there is only one business paradigm which is one brand and one standard. There could be marginal alterations for different markets. For instance, the Chinese prefer soft seating while Indians go in for gadgets in a big way. From our point of view, we have to understand circumstances in different countries but the brand value is one.
Would Audi go in for multiple branding with group companies, Volkswagen and Skoda, at the retail end in India?
Absolutely not! If you compare Volkswagen to other big automobile groups in the world, you can see how it has given independence to individual brands. Each of us has to do our job and not ask mamas help all the time! This is what finally drives brands in the business.
When will you graduate to full-fledged manufacturing from the present assembly route?
This is a difficult question to answer because you need volumes and the premium market in India is still very small. It will grow but it will take time. Whatever is needed in the future, we are flexible enough to act accordingly. http://www.thehindubusinessline.com/2009/04/20/stories/2009042050810200.htm
The Hindu, Metro Plus
Two years after launching the Q7, Audi gears up to give the BMW X3 a run for its money with the agile Q5. Though the Q5 resembles a scaled-down version of the Q7, the car is built with similar dimensions, and practically the same wheelbase as the A4 saloon. The Q5 is tall, wide and maintains an elevated driving position along with decent road presence just like the Q7.
The Q5s exteriors and interiors exhibit typical Audi design characteristics. Step into the car and the top-notch quality that weve come to expect from Audi is the first thing that catches your eye. The styling of the dash is similar to that of the A4 saloon only its a bit taller in the Q5. Audis MultiMedia Interface (MMI) is relatively easy to operate, with the well-designed dials, air-con and the entertainment controls being logically placed. The steering wheel even comes with audio controls on it. The steering in the automatic versions also gets paddle shifts to change gears.
A cracking characteristic of the Q5 is the hill descent feature in which on-board computers assist you to come down a steep incline. The spacious cabin offers great leg and shoulder-room across the two rows with the rear seats splitting 60/40. A 540-litre boot is made available once the rear seats flip down.
When the Q5 hits showrooms in India by June this year, there will be a choice of a 3.0-litre 240bhp diesel TDi and a 2.0-litre 208bhp turbocharged petrol. Our test car had the seven-speed dual-clutch gearbox and Drive Select system, which allows the steering and gearbox to be altered for responsiveness. You can choose between comfort and dynamic modes at the flick of a button.
Both engine options provide refined levels of comfort. The diesel option is smooth, quiet and doesnt mind being revved with power surging in as soon as you fly past the 2000rpm mark. The seven-speed auto gearbox compliments the engine by distinctly ensuring you are always in the right gear, to optimise performance.
The petrol motor easily manages to deliver power all the way to its redline, however, the best power seems to be in the midrange. The cabin remains placid at all times, and youll only hear wind and tyre noise on approaching faster speeds on the highway.
The permanent all-wheel-drive Quattro system has been biased for a 40/60 front/rear power delivery. With bucket-loads of grip, solid body control and nicely weighted steering, the Q5 displays the talents of an off-roader and surprisingly handles like a conventional car.
The Q5 is set to be launched in June and priced at an estimated Rs. 45 lakh, it wont come cheap. Still, it is a fine-handling car with great engines and good cabin space. The Q5 is exceptionally classy and extremely desirable ideal if you are hunting for a classy SUV that handles well and can seat four adults. http://www.hindu.com/mp/2009/04/15/stories/2009041550420500.htm
The Hindu, Metro Plus (Apr 20)
The car is likely to be built on a modified Fabia or Polo platform Skoda is likely to replace the existing Octavia with an all-new model towards the end of 2010.
The present Octavia has been phased out in Europe but still has a strong following in India. It would need expensive upgradation to meet BS IV emission norms that come into effect from April 1, 2010. The company is reluctant to invest huge sums of money in a 10-year-old product and would rather develop an all-new one.
The car is likely to be built on a modified Fabia or Polo platform with a longer wheelbase. Sharing key components like the suspension, electrics and engines with the Fabia and Polo would allow Skoda to price the next-gen Octavia competitively.
Company sources state that the new model Octavia could cost Rs 8-10 lakh, which will pit it against the Fiat Linea and Honda City. But the future Octavias biggest rival is likely to be the Polo saloon, which VW will produce in India sometime in 2010. http://www.hindu.com/mp/2009/04/15/stories/2009041550430500.htm
VW IS STEPPING ON THE GAS The Financial Express (Web Edition) (Apr 19)
From the looks of it, Volkswagen Group Indias (VGI) days of waiting and watching are over. At the launch of Volkswagen Groups new plant in Indiaat the Chakan industrial park near Punelast month, Jochem Heizmann, member of the board of management of Volkswagen Aktiengesellschaft with responsibility for group production, said, With the start of production at our new plant in Maharashtra, the Volkswagen Group has conclusively arrived on Indias emerging market.
The message was clear. Simply put, VGI wants a bigger share of the Indian automobile market. To be precise, it wants to have a 8%-10% share of the Indian automobile market, where in now has a minuscule 2%. By next year, when the new Polo mid-luxury hatchback goes for production, the company plans touch 50% in terms of localisation, which will be gradually increased to 80% in two years. If all goes well, India will be VGIs regional hub for sourcing components and for exporting its products to the South East Asian countriesto begin with.
The groups newly opened Chakan plant near Punewhich has a capacity of 1,10,000 unitswill play a decisive role in following through the plan. With a total financial commitment in India amounting to 580 million euros, the Pune plant represents the largest investment to date by a German company, in the country.
The Pune plant is among the most modern in the Volkswagen Group. It has a high level of vertical integration and a large share of local suppliers. It is the only production plant operated by a German automaker in India that covers the entire production process, from press shop through body and paint shop to final assembly.
Volkswagen plans to employ some 2,500 people at the Pune plant by the end of 2010. The investment agreement to build the new plant was signed in November 2006just over two years before todays inauguration ceremony. Says Pinaki Mukherjee, lead analyst, Datamonitor India, The brand has been very aggressive worldwide and has the pulse of the Indian market too. Now the biggest challenge before it will be to build customer support and become a volume player in the Indian market.
VGIs line-up currently includes Bentley and Lamborghini (Rs 3 crore-plus) in the super-luxury segment. At the Aurangabad plant, VGI makes part of the luxury car Audi (Rs 28 lakh-Rs 50 lakh), besides the Skoda cars (Rs 5 lakh - Rs 24 lakh) including Fabia, New Superb, Laura and Octavia. It also sells Volkswagen Passenger Cars (range Rs 13 lakh-Rs 22 lakh) including Jetta and Passat. Porsche, that holds more than 50% of VW shares, is also present in India and sells cars in the range of Rs 50 lakh-Rs 1.3 crore.
The Chakan plant will roll out an entire range of compact cars it has lined up for the Indian market: Skoda Fabia, and the upcoming VW Polo and VW Up. The plant will produce cars in the Rs 3 lakh-Rs 6 lakh band. In precisely two years, when all three cars are in production, VW will have an entire spread in the Indian market.
VG Ramakrishnan, director, automotive & transportation, Frost & Sullivan, South Asia & Middle East, said, The role of VW in India will be defined by the kind of products it gets to India and at what price. VW has already given a feel of its product range to the market and its brands like Audi and Skoda have attained visibility.
India fits in snugly with Volkswagens global ambitions. VW is the worlds fourth-largest car maker after Toyota, GM and Ford. In Europe and China it is at the No 1 position. Joerg Mueller, president & managing director, VGI, has said, in so many words, that the company wants to become No 1 player globally. In Europe, the group is looking at a growth rate of 2-3%. In Asia, the growth prospects look better and the group is convinced this growth will come from India.
In times when the demand in the developed economies is saturating, any original equipment manufacturer (OEM) looking for growth will have to be in emerging markets, including India, because vehicle ownership levels are still low, leaving open great opportunities to grow, points out Abdul Majeed, auto analyst & partner, PricewaterhouseCoopers. He adds that greater visibility with well-priced models is the best way to attain growth and market share in the new markets.
In the immediate future, VW groups strategy will be to keep up the excitement with the launch of new products in various segments and by strengthening its dealership and the sales service network. In addition, it will look at bringing down cost and making its products affordable to a larger audiencewhich it hopes to achieve by pushing on greater localisation.
In the final analysis, VGI does not plan to confine itself to passenger cars and has talked about entering the light commercial vehicles segment. At present, our focus is passenger cars; but we are preparing to sell LCVs in the market too. We showed the T5 and the Caddy at the Auto Expo last year. We feel these two models are feasible for the Indian market. However, the volumes in this segment will be limited to start with, says Mueller. http://www.financialexpress.com/news/vw-is-stepping-on-the-gas/448219/3
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| COMMERCIAL VEHICLE DREAMS TURN INTO NIGHTMARES Sindhu Bhattacharya Daily News & Analysis (Web Edition) (Apr 20)
New Delhi: For much of last year, the commercial vehicle segment was the cynosure of all eyes, with a steady stream of global biggies coming in to establish their presence in India. But with industry-wide sales nosediving from the third quarter onwards and remaining in the negative zone ever since, the strain is beginning to tell.
Already, the most high-profile joint venture -- between the Hero Group and the world's largest truck maker Daimler AG -- has come apart because the Indian partner did not want to invest a large sum in a "non-core" activity during the current trying times.
Despite repeated attempts, Ashok Leyland's managing director R Seshasayee did not take calls on the matter. Chief operating officer Vinod Dasari declined to comment. But a senior company official had said some weeks back, "Both Ashok Leyland and Nissan teams are re-evaluating the plans and assumptions on the LCV project and no final decision has been taken yet."
Land acquisition for this project near Chennai is delayed and sources say any alliance "is still only on paper, nothing has been operationalised till now." The Hero-Daimler partnership was to manufacture and sell light and heavy CVs from a greenfield facility in Chennai.
Now that Daimler has decided to carry on with the proposed 700 million investment in this facility, the contours of this project may well change soon.
Another alliance - between Germany's MAN Nutzfahrzeuge AG and Force Motors - has also been recently restructured with the Indian partner divesting equity to convert its 70% majority control into just 50%. The chairman of MAN Force Trucks, Abhay Firodia, told DNA that both partners are "very happy with this reorganisation and the JV has already manufactured and sold about 1,500 vehicles in the domestic and export markets."
The JV's facility at Pithampur has an installed capacity of 2,000 heavy CVs a month but only 500 a month is operational as of now. Firodia said that that though the option of using the 'Force' brand name was available, the JV would be using only the 'MAN' brand on its vehicles.
Even Asia Motor Works, a recent entrant into the heavy CV space, is taking it one step at a time. Anirudh Bhuwalka, managing director, said his company would be launching new models in the medium and heavy commercial vehicle space (M&HCV) space (above 25 tonne) but has not taken any decision on whether to enter the bus and LCV segment. "We had committed a capex of 50,000 units one-and-a-half years back and this would be completed in next three months at Bhuj. But a foray into buses and LCVs remains on the drawing board for now."
The skepticism of most players in the CV market is understandable. An analyst tracking the sector points out that the M&HCV segment is expected to remain flat this fiscal whereas LCVs could grow but only by 6-7%.
No wonder then that Tata Motors, the big daddy in CVs, has decided to increase capacity for its sub one tonne truck ACE even as it has opted for periodic plant shutdowns for M&HCV manufacturing in the recent past. Ashok Leyland has also postponed (by at least 12 months) its new facility coming up at Uttaranchal.
MAN Force Trucks' Firodia avers that now is not the time for anyone in the CV industry to put up new capacity "but capacity that already exists, such as ours, is not unviable. The per capita penetration of CVs in India is still very low; India remains a powerful economy and the market is bound to grow in the long term." http://www.dnaindia.com/report.asp?newsid=1249031
Business Standard (Web Edition) (Apr 20)
Kolkata: Swedish commercial vehicles major, Volvo, is banking on the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), for scaling up its Indian operations, in the public transport segment.
The company, which produced more than 400 buses last year, at its plant in Bangalore, is looking at a 25 per cent growth in production in 2009.
In order to prop up demand in the automobile sector, the government had recently announced an incentive scheme under the JNNURM for generating about Rs 4,000 crore business in the sector in the next few months.
Under the scheme, states are to be provided a one-time assistance of up to June this year, for purchase of buses for the urban transport system, in more than 63 cities. Akash Passey, managing director, Volvo Buses India, said the company was now eyeing northern and eastern India markets for sale of Volvo buses to the state transport corporations.
About 50 per cent of the company's production at its Bangalore unit, comprises Volvo 8400 low floor buses, which the company is pitching as public transport. This apart, it produces two other variants of buses in the plant, mainly for inter-city transport. At present, about 2,000 Volvo buses are plying on the roads, with about 500 in the inter-city segment.
The cost of each of the Volvo 8400 is close to Rs 80 lakh. Passey said, the response of plying Volvo 8400 buses in cities like Bangalore, Chennai and Pune had been positive. In Bangalore, about 300 Volvo 8400 buses are on the roads, covering an average of 250 km per day, About 25,000 personal vehicles were off the roads in Bangalore every month, as people preferred Volvo buses, said Passey.
The company is in talks with the West Bengal Surface Transport Corporation (WBSTC), for public usage of Volvo buses on Kolkata roads. The company has already done trial run on select routes in Kolkata. http://www.business-standard.com/india/news/volvo-pins-hopesjnnurm/355594/
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| CONSTRUCTION & AGRI MACHINERY Go To Top (Apr 20)
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| 2/3 WHEELERS Go To Top The Hindu Business Line (Apr 19)
Pune: Two-wheeler manufacturer Honda Motorcycle and Scooter India Pvt Ltd (HMSI) is targeting sales of 12.5 lakh units during the current fiscal translating to a growth of 18 per cent over the 2008-09 numbers.
The company expects to sell 5.2 lakh motorcycles and 7.31 lakh scooters during the year, including 5.5 lakh units of its latest product, the standard version of the new Honda Activa, which is currently being rolled out in 24 key cities in the country. It will be available through 650 outlets across the country by April 22. The deluxe variant of the same will hit the market by the end of August, Mr N.K. Rattan, Operations Head, Sales and Marketing, HMSI, said.
We are currently manufacturing 35,000 units of the new Activa and stopped production of the earlier one in the middle of March, Mr Rattan said adding that production of the new scooter will be ramped up to 45,000 units by next month.
The new Activa has been fitted with a 110 cc engine and promises 15 per cent improved fuel efficiency. According to the internal Honda estimation, the scooter will give a mileage of 55 km to the litre against 46 km/l of the older version. The additional features of the deluxe variant are a combi-brake and a key shutter that can only be opened with a magnetic key for greater safety. http://www.thehindubusinessline.com/2009/04/19/stories/2009041951110200.htm
HONDA TARGETS 45% IN GEARLESS SCOOTER Business Standard See this story in: The Financial Express (Apr 20)
Kolkata/ Bhubaneswar: Honda Motorcycle and Scooter India Private Ltd (HMSI), the fully owned two wheeler subsidiary of the Honda Motor Company (HMC), plans to take its market share in the gearless scooter segment in Orissa to 45 per cent by the end of 2009-10.
At present, HMSI has a market share of 34 per cent in the state in the gearless scooter segment.The company, which claims to have a market share of 9 per cent in the overall two-wheeler market in the state, is also aiming to raise its market share to 12 per cent by the end of this fiscal. We intend to increase our market share in the gearless scooter segment to 45 per cent in Orissa from 34 percent at present. The launching of the New Activa will help us achieving the target, Makoto Yurino, advisor (sales and marketing), HMSI said.
Yurino, who was here to launch the companys latest gearless scooter New Activa told the media that the company was able to achieve 18 per cent increase in its pan-India sales at compared to 5 per cent growth in sales in the two wheeler industry in the country. The sales of two wheelers by the company is likely to increase by about 16 per cent to reach 12.5 lakh during the current fiscal, compared to 10.7 lakh in 2008-09, he added. HMSI sells about 40,000 units of Activa per month, including 700 scooters in Orissa. With the sales stagnating at that level, the company has introduced the New Activa which is based on the consumer preferences.
The new model focuses on economy, reliability and convenience. It has headlights fitted with halogen lamp, elegant aluminium grabrail, metal body and more under seat storage capacity. The New Activa will be available in two versions namely standard and deluxe.
The standard variant of the New Activa is priced at Rs 41,997 (ex-showroom, Bhubaneswar). Vivek Taluja, zonal head (east), sales said, the company has 10 dealers in the state in places like Bhubaneswar, Cuttack, Balasore, Keonjhar, Angul, Sambalpur, Berhampur and Jeypore. http://www.business-standard.com/india/news/honda-targets-45-in-gearless-scooter/355574/ http://www.financialexpress.com/news/electric-vehicles-likely-to-clock-45-growth/448845/
ULTRA MOTOR LAUNCHES LOW SPEED SCOOTER The Hindu Chennai: Ultra Motor Company, a global electric vehicle company based in the U.K., which is now present in both high speed (Velociti) and high range (Marathon) category of electric two-wheelers in India, has unveiled its low speed scooter Marathon Lite (Rs 25,850) with a range of 70 km per charge. The company plans to introduce more new products in 2010, says a release.
DEBT-RIDDEN VIDARBHA SPLURGES ON BIKES Chittaranjan Tembhekar The Times of India (Apr 20)
Mumbai: In the 2008-09 fiscal year, Namdeo Thakre, a Vidarbha farmer, gave up his land for the governments cargo hub project and began working as an attendant in a hardware shop. When his Rs 1 crore compensation came through, he gave up the job to live off the money and began purchasing expensive items like vehicles. He spent over Rs 90 lakh over the past year and is now again working as a labourer in the same hardware shop, said social activist Baba Daware. Thakres story is not an isolated one. A thousand kilometres away from the states economic capital, residents of several villages in Bhandara district, the heart of the crisis-ridden farm region of Vidarbha, have bought the highest number of two-wheelers (mainly motorbikes) as compared to any district including urban areas in the state this year. Bhandara, whose main village is Gosikhurd, is the first rural area to achieve this distinction, according to a review by the state transport department. The review shockingly reveals that the farmers, living in one of the worst debtridden areas in the country, have bought the vehicles with money they recently got as compensation against the acquisition of their farms and properties for different projects, mainly irrigation ones, like at Gosikhurd dam. A survey of the last fiscal, according to state transport commissioner Deepak Kapoor, says farmers and labourers in Bhandara bought 88,000 two-wheelers in 2008-09, over 7,000 to 8,000 more than in 2007-2008. Nashik was next, with 78,000 bikes bought in a region saturated with grape cultivators. State transport sources revealed that around Rs 21 to 23 crore were collected over the past year in vehicle taxes from Bhandara district, with only 1 to 2% of the sales being cars. At this rate, Rs 300 to 340 crore may have been spent on bikes, sources said. Farmer community leaders say this is a bad trend that has been on for the last couple of years. Owning a bike has become everyones ambition in these villages where farmers dont even have enough food to eat. These are killer vehicles as the poor farmers use them to travel to nearby talukas to play matka and drink. After losing money, they sell the household utensils of their bayko (wife) but not the bike, said Kishor Tiwari of Vidarbha Janandolan Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved"
FIPB TO TAKE UP YAMAHA PROPOSAL PTI See this story in: Business Standard (Apr 20)
After deferring it earlier, the Foreign Investment Promotion Board (FIPB) will again take up Japanese two-wheeler major Yamahas proposal to transfer its Indian sales business to a new entity-India Yamaha Motor Pvt Ltd-on Monday. The FIPB will also consider Nokia Corporations proposal to enter into a joint venture with HCL Infocomm to set up exclusive retail outlets for selling handsets and services to Indian consumers.
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| COMPONENTS Go To Top Chanchal Pal Chauhan The Economic Times
Although top auto firms have seen stock prices moving up with Maruti Suzuki and Hero Honda trading at their one year high level and other firms also seeing a significant movement, component firms have done much better. For instance, Tata Motors scrip is up 34%, Mahindra & Mahindra has risen 24%, while both Ashok Leyland and TVS Motor scrips have moved up 16%. Maruti and Hero Honda scrips have also risen 10-15%. In the same period top component makers such as Bharat Forge, Amtek Auto, Minda Industries, Exide, Cummins besides Apollo Tyres have seen share price shooting up 40-50%. Auto sector analysts say this is because most of the component firms are in the mid cap category which usually sees volatile movement. When markets go down they crash and when market goes up these stocks tend to move up sharply. There has been a significant movement in auto stock as demand picked up as a result of the governments stimulus package and softening interest rates, said Kishor Ostwal managing director of CNI Research Ltd, a Mumbai-based auto research firm. Car sales jumped 14% and two wheeler sales increased 5% in the January-March quarter this year over last year. There has been a huge correction in the market. With rural demand holding up on the back of governments loan waiver of Rs 70,000 crore we are seeing major benefits coming to the auto sector. The stocks may see further positive moves in the April-June quarter, said an analyst with HSBC Securities and Capital Markets. Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved"
THYSSENKRUPP DRIVES OUT OF INDIAN METAL BUSINESS Chanchal Pal Chauhan The Economic Times See similar story in: The Hindu Business Line (Apr 19)
New Delhi: German auto-part maker ThyssenKrupp is exiting the sheet metal business in India by selling its 74% stake in joint venture company ThyssenKrupp JBM (P) to Indian partner JBM Auto for an undisclosed amount. http://economictimes.indiatimes.com/News/News-By-Industry/Indl-Goods--Svs/ http://www.thehindubusinessline.com/2009/04/19/stories/2009041951090200.htm
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| ALLIED INDUSTRY Go To Top |
| FINANCE & INSURANCE Go To Top Reuters See this story in: The Economic Times (Apr 19)
New Delhi: The country's largest lender, State Bank of India (SBI), on Saturday said it has extended the period of its concessional financing to the farmers against warehouse receipts by another five months to September 30. http://economictimes.indiatimes.com/News/News-By-Industry/Banking-Finance-/
N.S. Vageesh, M.V.S. Santosh Kumar The Hindu Business Line (Apr 19)
R. Sridhar, Managing Director of Shriram Transport Finance Company (STFC), briefs us on the quarter-century journey of his company. A chartered accountant by training, Sridhar is also associated with some of the famous institutions connected with music the Shanmukhananda Fine Arts & Sangeetha Sabha in Mumbai as Treasurer and with the Sri Krishna Gana Sabha, Chennai as Joint Secretary. That his heart lies in this is clear when he voices his desire to start an entertainment company sometime in future. Outlining how STFC has tapped a new market (small truck operators who wanted to buy second-hand trucks) that was hitherto denied access to formal channels of credit, Sridhar points out that they had to face considerable scepticism over the years. Sridhar explains how the company has met these challenges and provides a road map of how the company hopes to move to the next level.
Excerpts from the interview:
What was the turning point for STFC? When did its business model begin to gain greater acceptance?
We faced a lot of problems like other NBFCs in 1999. Raising finances was curtailed when new guidelines were introduced. From 2002, we worked with Citibank for five years. We worked as their franchisees and they also put in equity because they lent a lot of money through us. At that time there were capital adequacy problems; so we asked them to give us capital. That was the real turning point for our company. Getting money from the Citibank of those days was viewed as a big landmark achievement for STFC. STFCs business model had been accepted by the worlds largest bank. That helped us change the mindset of Indian institutions. They looked at STFC from a different perspective from that time.
More private equity (PE) players came during the last five years with euphoria of economic growth, and we could march forward to this level. From a book size of Rs 2,500 crore in 2002 we have scaled 10 times in seven years to Rs 22,000 crore. This has been possible because the resources came in from banks and institutions. It is not possible to build this size only with retail deposits.
By bringing more money into the system we brought down interest rates from 30 per cent to 21 per cent in case of second-hand trucks. We are still working hard to bring it to 18 per cent in another 2-3 years. Our objective is to bring more institutional credit and make the truck owner access cheaper credit so that he finds it better to replace the older trucks quickly, leading to a younger fleet.
We still account only for 25 per cent of the segment when it comes to second-hand trucks. The balance 75 per cent is being funded by unorganised players. We need to pull out small truck owners from unorganised sector. We want to move from a book size of Rs 25,000 crore to Rs 1,00,000 crore. That is the future plan of STFC and for that we are preparing the company.
How will you reach this target? What is your road map?
We have put three strategies in place to build this organisation to manage Rs 1,00,000 crore. One is partnership with private financiers. The second is an internal restructuring of the company. And the third is a new initiative called truck bazaar.
Private financiers (part of the unorganised sector having 75 per cent market share) are struggling for capital, like STFC struggled 25 years ago. They dont have any rating. They are not able to leverage.
We are looking at whether we can grow this business. We have 13,000 people with 500 offices. We are there in nearly every geographical location so there is a limit to organic growth.
We think that private financing is the way to go. Like we were given oxygen by Citibank, we are taking that role. These partners private financiers will place all their assets in STFC books with some equity. We will create different Special Purpose Vehicles. In our estimate there are around 15,000 private financiers in the country. At present we have a relationship with 500 financiers who have been working for us for the last two years.
What is the internal restructuring that you have done?
The first thing we have done is to convert our truck financing company into a commercial vehicles company. We have moved from trucks to tractors to small commercial vehicles to multi-utility vehicles.
We are looking at a bigger picture and have created a vertical structure. We brought in specialists from the market place who have product experience and put them in touch with the branch manager who had territory and customer knowledge.
A branch can now handle more volumes. Earlier we had a multi-tier structure branch office, divisional office, state office, regional office and then head office like a pyramid. Now we have strategic business units (SBUs) about 50 of them. Each SBU is a miniature STFC. An SBU controls 10 branches. We are looking at doubling the number of SBUs from 50 to 100 and the amount they handle from Rs 500 crore to Rs 1,000 crore. When we double them both, we reach our business target of Rs 1,00,000 crore.
What is the third part of your strategy to increase business?
We finance about 25,000 second-hand vehicles a month which roughly works out to 1,000 vehicles a day. The transaction is done independently while I come at the end to fund the transaction. But we want to do the transaction itself. So we have now started something called truck bazaar.
Like new vehicles are sold through showrooms, we are creating a market for pre-owned truck through mandis in various places. These truck bazaars will be held preferably once every month.
We are facilitating a medium for buyer and seller to meet. In every truck (irrespective of the age), which is bought or sold, we would like to be the catalyst, depending on the acceptability of the credit.
How do you collect money from this un-bankable customer of yours?
We bring them into our system and give them organised credit. They upgrade and then move to a bank. The un-bankable truckers become bankable through us. So we are giving customers to these large NBFCs and banks. These un-bankable people dont give post-dated cheques. We have eight to nine lakh vehicles that we have financed. Every month we go and collect payments of Rs 800 crore to Rs 900 crore from them. About 70 per cent of this comes in the form of cash. We are probably the only company in the world who is giving a loan without post-dated cheques. We have a relationship-based model.
What makes the loans you give safe?
One, for this customer it is a question of his livelihood, unlike for fleet operators for whom there is no emotion involved. Second, if your loan-to-value is perfect, then he has 30 per cent stake, and 70 per cent stake is borrowed. If in the first 12 months the money is paid promptly, we are 50-50 partners. The value of the vehicle doesnt depreciate so much than the loan run-off. So your asset cover improves after one year.
Third, even in a tough situation like this in our economy our customers are running their trucks for short distances, carrying essential commodities and passengers. They are able to manage. Truckers who are carrying industrial produce for export-import, etc., have been hit. But our customers, the small truck owners and second-hand truck owners, are mostly dependent on the local economy or the rural economy. Fourth, in this business of theirs, there is no credit; it is only cash and carry. Our fellow unloads the goods and gets money. So, livelihood, equity, local economy and cash-and-carry those are the four reasons why our loans are safe. In spite of all this, if he cannot pay, we can still take the truck as it is a movable property and realize some money.
Every lender in the world wants the borrower to change according to his rules and regulations. We are the only company that has changed its processes for the sake of customers. We have never asked our customer to open a bank account and give a post-dated cheque. We are a different company with a bottoms-up approach. Every other company is top-down only the MD decides everything. But here, our branch manager is the king. http://www.thehindubusinessline.com/iw/2009/04/19/stories/2009041950441300.htm
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| LUBRICANTS & ALTERNATIVE FUELS Go To Top Bindu D. Menon The Hindu Business Line (Apr 20)
New Delhi: Oil and gas company Exxon Mobil Corporation has obtained an ex-parte interim injunction restraining a Mumbai-based cyber-squatter from operating a Web site that featured the companys name as part of its domain name.
Exxon Mobil Corporation maintains its corporate Web site as www.exxonmobil.com and offers credit card services for its products through Citibank via the Web site www.exxonmobilcard.com. Interestingly, the defendant, through its Web site www.exxonmobilecard.com, was not only providing access to services of the plaintiffs competitors but also to portals of Exxon Mobil itself, Ms Anuradha Salhotra, Partner, Lall Lahiri & Salhotra, a law firm which represented the oil company said.
No logical explanation The Delhi High Court on Friday said there was no logical explanation as to why the defendant chose to use the mark Exxon Mobil in its domain name when it is not and never has been associated with Exxon Mobil Corporation.
The court passed the injunction, restraining the use of the said domain name or any other name that is deceptively similar to the marks Exxon, Mobil and ExxonMobil against the cyber-squatter. The court further went on to direct the registrar of the domain names to not renew the registration of the said Web site.
Exxon Mobil Corporation had, prior to the initiation of the legal proceedings, also approached the National Arbitration Forum (NAF), an expert body entrusted with resolution of such disputes. However, despite an order by NAF to stop the operation of the Web site and to transfer the name of the company, the cyber-squatters continued their actions. http://www.thehindubusinessline.com/2009/04/20/stories/2009042050910200.htm
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| INTERNATIONAL NEWS Go To Top Reuters See this story in: The Economic Times (Apr 19)
New York: The Obama administration has directed General Motors Corp to prepare a new restructuring plan that would pay off bondholders and the automakers major union in stock in exchange for $48 billion in debt, people briefed on the plan said on Friday. The US Treasury, which has provided $13.4 billion in emergency funding to keep GM operating since the start of the year, has indicated that it could also convert those taxpayer-backed loans into GM stock, the sources told Reuters.
GM READIES ALL-EQUITY OFFER FOR DEBT: SOURCES Reuters See this story in: The Economic Times (Apr 19)
Detroit/New York: The Obama administration has directed General Motors to prepare a new restructuring plan that would pay off bondholders and the automaker's major union in stock in exchange for $48 billion in debt, people briefed on the plan said on Friday.
DAIMLER, PORSCHE CEOS HEAD TO SHANGHAI AS CHINA SALES NEAR US Bloomberg See this story in: Business Standard (Apr 20)
Tokyo: Daimler AG will skip this years Tokyo Motor Show, Nissan Motor Co passed on Frankfurt, Europes largest car extravaganza and Porsche SE will bypass Detroit. All will be in Shanghai.
Porsche SE Chief Executive Officer Wendelin Wiedeking will unveil the new Panamera sports sedan in Shanghai. Daimlers Dieter Zetsche, Volkswagen AGs Martin Winterkorn and Toyota Motor Corps Katsuaki Watanabe will also be there.
The hope for every automaker in the world is riding on China, said Ricon Xia, an analyst at Daiwa Institute of Research (HK) Ltd in Shanghai. No matter how many difficulties they are facing, they have to be here and the Shanghai Auto Show will be the show for the year.
A record number of automakers will attend the Shanghai Motor Show, which starts on Monday, as China threatens to usurp the US as the worlds biggest auto market. General Motor Corps China sales surged to a record last month, at the same time its US sales plunged 45 per cent.
More than 1,500 companies will attend the show, the most since it started in 1985, said Wang Xia, an official with the organiser. More than 600,000 people are expected to attend the nine-day event at the Shanghai New International EXPO Centre, he said. We dont have enough space and there are people still asking for more, said Lawrence Lu, executive vice president of Shanghai International Exhibition Co. A lot of foreign exhibitors can see the potential here.
Chinas vehicle sales have surged an average 20 per cent a year in the past decade, making it the biggest market for GM and Volkswagen after their home countries. Still, vehicle ownership per person is one-third the world average and about the level of the US in 1925 and Japan in 1965.
Passenger car sales jumped 10 per cent in March to a record 772,400 after the government cut retail taxes and gave subsidies to help rural residents buy vehicles. The growth compares with a 37 per cent plunge in the US and a 32 per cent decline in Japan. Total auto sales in China may rise to more than 10 million this year, according to the governments plan to help stimulate vehicle demand. In contrast, CSM Worldwide Inc. slashed its US auto sales forecast for this year to 9.7 million, compared with 13.2 million in 2008 and its initial 2009 forecast of 10.7 million vehicles.
GM, whose US sales plunged 49 per cent in the first quarter, doubled its 2009 forecast for Chinas market growth as tax cuts and subsidies revived demand. The carmaker will show 37 production and concept models at Shanghai. The companys CEO, Fritz Henderson, canceled plans to attend the show, due to business requirements, GM said in an email.
General Motors has made a long-term commitment to China, the automakers China president Kevin Wale said April 2. Despite the challenges that GM and our industry now face, we believe our best years are ahead of us. With China set to overtake the US as the worlds largest auto market, Chinese carmakers are looking abroad. Geely Holding Group Co has been in talks to buy Ford Motor Cos Volvo unit for more than a year, according to people familiar with the matter. Ford sold its luxury Jaguar and Land Rover brands to Indias Tata Motors Ltd.
In anticipation of rising sales, foreign automakers are expanding in China even as they close factories and fire workers elsewhere.
Volkswagen, which has invested a total of 6.8 billion euros ($9 billion) in China, aims to add at least four new models a year and double its number of dealers by 2018 to double sales to 2 million vehicles. The carmaker curbed German production in the first quarter and cut 16,500 temporary jobs worldwide.
GM, which plans to shutter 15 factories in the US by 2013, expects to double its sales in China to more than 2 million vehicles a year during the next five years by adding more than 30 new and upgraded models.
Toyota, which slashed global production by 50 per cent in February, still plans to open a factory in the northeastern city of Changchun with partner China FAW Group Corp, said Masahiro Kato, president of Toyota Motor (China) Investment Co.
The plant will increase the Toyota City, Japan-based automakers production capacity in China by 11 per cent to 1 million vehicles a year.
The company also plans to boost the number of dealerships selling luxury Lexus vehicles in China by a third this year to about 60, said Godfrey Tsang, vice-president of Toyota China.
Toyota, together with its partners, will have its biggest ever display at any Chinese auto show with 50 models, the company said in a statement. http://www.business-standard.com/india/news/daimler-porsche-ceos-head-to-
AUTO INDUSTRY MAY DON A NEW LOOK Agencies See this story in: The Economic Times (Apr 20)
Frankfurt: The global auto industry will be remodelled once economic crisis debris is cleared, but analysts are hazy over how many giants will be humming, which ones will be hauled away and where cars will be made.
SHANGHAI AUTO EXPO: SHOWDOWN FOR GLOBAL AUTOMAKERS
See this story in:
Shanghai: World automakers were launching 13 new models Monday as they converged on China's commercial capital for the Shanghai Auto show, a key showcase for the only major growing car market.
From upstart BYD Auto to sports and luxury car makers like Porsche, automakers everywhere are zeroing in on China's growth as they struggle through hard times elsewhere. "The number of new launches, especially from global manufacturers, will set it apart," said Paul Gao, CFO of Chery Quantum Auto Co., a new unit of Chery Automobile Co. that is developing upscale models for the domestic automaker.
"Many automakers now see the Chinese market as at the forefront," he said. Porsche kicked off the show on Sunday night by unveiling the Panamera, the German automaker's first foray into the luxury sedan segment. Porsche said its decision to reveal the vehicle in China signals the rising importance of the country's auto market. Porsche sales in Asia more than doubled in its 2007-2008 fiscal year to 7,600 vehicles, the company said.
"This is a clear signal that we count on these markets and have full confidence in their future economic potential," Porsche Chief Executive Wendelin Wiedeking said in a statement. Like the company's Cayenne SUV, the new four-door Panamera will be built at Porsche's plant in Leipzig, Germany. It will be entering the market in Europe, South America and parts of Asia in September 2009, in North America and Australia in October, and in China in early 2010.
China, the world's second-biggest car market, has revived sales after a late-2008 slump with tax cuts and rebates that are pulling small vehicles out of showrooms nearly as fast as companies can make them.
Sales hit monthly record of 1.11 million vehicles in March, exceeding U.S. sales for the third month in a row and up 5 percent from a year earlier. While the surge to the forefront mainly is a result of deteriorating conditions in the U.S. and elsewhere, the gravitational center of the world auto market clearly has shifted to China and other emerging markets. The uptick in sales this year caught many automakers off guard, since they had cut production in expectations that the slowdown in sales seen last year would persist in China, Gao says.
"There are supply shortages and in some cases, automakers couldn't meet demand. Joint ventures rely on imported components, and many of the tier-one global suppliers were already on the verge of bankruptcy," he said. But these are the kind of headaches automakers pray for at a time when sales in the U.S. market have been plunging by close to 40 percent in annual terms.
China is a lifeline for ailing General Motors Corp., which sold 137,004 vehicles in China in March, up 24.6 percent from a year earlier. Tax cuts and other government policies focused on encouraging sales of small, fuel-efficient cares pushed sales at its minivehicle joint venture, SAIC-GM-Wuling, up 38 percent to 90,784 vehicles.
Kevin Wale, president and managing director of the GM China Group, says GM intends to double its sales in China, to more than 2 million a year, by 2014. Among its strategies: launching or upgrading more than 30 models over those five years.
It's a far cry from decades past, when vehicles like the VW Santana, a 1980s model made by Volkswagen AG's joint venture with Shanghai Automotive Industry Corp. that remains the staple of Shanghai's taxi fleets, were among the few choices on the market. To compete now, both Chinese and foreign automakers need a full portfolio covering the whole spectrum, from the inexpensive compacts favored by first-time car buyers to the high-margin luxury models needed to compete with foreign-brand sedans.
And vehicles need to be tailored to the preferences of increasingly particular Chinese customers, says Thomas Schiller, managing director of Arthur D. Little China, who specializes in the auto industry.
"It doesn't work to take some car and just localize it. Chinese customers are now more educated and U.S. designs are shifting to a more Japanese and European model," he said. Chinese automakers, still unable to successfully challenge their foreign rivals in affluent Western and Japanese markets, are striving to bring quality up to snuff, while also going after the small-car market where their home player status gives them cost and distribution advantages.
Among those who have made headway: privately owned Geely Automobile Holdings. Based near Shanghai, it has worked hard to upgrade its sedans after floundering in European markets, several analysts said.
Meanwhile, global automakers are struggling to get their products right and to set up strong dealer networks - a major challenge given China's vast territory and disparate regional markets. "There is huge potential for first-time car buyers. They will buy a car because they need a car," Schiller said.
BRITAIN PROMISE TO REV UP ELECTRIC CARS The Financial Express (Apr 20)
The incentive could knock as much as 5, 000 ($7,500) off the sticker price of electric vehicles when it is introduced in 2011, the government said. UK prices for the cars range from about 8,000-80,000.
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| ECONOMY & FINANCE Go To Top Reuters See this story in: The Economic Times (Apr 20)
Amingaon: The economy will return to growth rates of 8-9 per cent as the global economy begins to recover from September, Prime Minister Manmohan Singh said on Sunday. http://economictimes.indiatimes.com/Economy/PM-sees-return-to-8-9-pc-growth/articleshow/4420809.cms
INDIA TO SEE DISPARATE LEVEL OF GROWTH THIS FISCAL: ICRA PTI See this story in: The Hindu Business Line (Apr 20)
New Delhi: India's economic growth in the current fiscal may vary distinctly, with the first half witnessing a modest 6.5 per cent fiscal expansion and the second over 7 per cent, says rating agency ICRA.
''... financial year is likely to have fairly disparate levels of activity in the first and second halves. In the first half ending September 2009, growth is likely to be modest at about 6.5 per cent,'' ICRA said in its March bulletin on money and financ e. The first-half will witness industrial growth of about 4 per cent and the services sector expansion at little under 9 per cent, pushed up by continuing government expenditures, the rating agency said.
In the third and fourth quarter of 2009-10, growth should pick up, by our reckoning to well over 7 per cent and likely close to 7.5 per cent,'' it said. Further, it pointed out that growth will be assisted by the fact that the comparable periods of the previous years had weak growth, especially in the manufacturing sector and also in general commercial activity.
Industrial growth in the second half could be over 9 per cent, even as service sector growth drops off on account of the high base effect in public expenditures, the agency noted. The rating agency believes the private corporate investment will continue to be cramped for want of equity funds and for many entities even access to loan funds. It will be well worth the effort for the fiscal and monetary authorities to selectively tr y and ease funding constraints using instruments that are best suited for the sector,'' ICRA added. -
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Sunday, April 19, 2009
Auto Industry News
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