Auto Industry update

MARUTI SUZUKI SALES JUMP 22% IN MARCH; UP 4% IN FY09
 
  The Times of India (Web Edition), The Hindu Business Line (Web & Print Edition), Mint (Web Edition), The Tribune (Web Edition), The Indian Express (Web Edition), The Pioneer (Web & Print Edition), Hindustan Times (Delhi Print Edition), The Statesman (Web Edition), The Financial Express (Web & Print Edition)
 
New Delhi: The countrys largest carmaker Maruti Suzuki India reported a 21.87% jump in its total sales during March at 85,669 units as compared to 70,296 units in the same month last year.
 
The company also recorded its highest-ever annual sales in 2008-09 at 7,92,167 units as against 7,64,842 units in the previous fiscal, a rise of 3.57%. The previous highest annual sales were in 2007-08.
 
2008-09 marked Maruti Suzukis Silver Jubilee year in India. Over these 25 years, the company sold over 70 lakh cars in the domestic market. Additionally, over five lakh cars have been exported world-over, Maruti Suzuki India (MSI) said in a statement.
For March, the domestic sales of MSI stood at 73,855 units compared with 64,421 units in the same month a year ago, up by 14.64%, it said.
 
MSI registered an over two-fold increase in its exports last month at 11,814 units as against 5,875 units in the corresponding month last year.
 
After September last year, MSIs sales in October, November and December had declined drastically by 7.1%, 27.4% and 10%, respectively. In January and February, the companys sales, however, rose by 5.39% and 24.08%, respectively.
 
 
AFTER FEB SPURT, CAR SALES SLOW DOWN IN MARCH
 
 
  Domestic sales of passenger cars grew 4.1 per cent in March, ending the hope that the industry has gone back on the fast track after the heady sales growth of February.
 
In February, sales of passenger cars grew by over 21 per cent. Car sales of the leading automakers, which include Maruti Suzuki, Hyundai, Mahindra & Mahindra, Honda-Siel, Tata Motors and Fiat, went up to 152,409 units in March this year from 146,338 units in March 2008.
 
Maruti Suzuki, which officially declared its numbers, saw its domestic sales grow 15 per cent. It saw robust demand for its A2 models like Swift and A-Star and the midsize sedan, Dzire, selling 73,855 units in March. This is a continuation of the double-digit growth managed by the company in January this year.
 
Mahindra & Mahindra (M&M) was the second company to post strong sales for March this year, based on the roaring success of its newly launched utility vehicle, Xylo, which has a waiting period of around six to eight weeks. The firm sold a record 19,973 units of utility vehicles in March, 30 per cent more than the previous year.
 
Fiat India, on the back of the launch of new models, saw its sales go up nearly three-fold, from 450 in March 2008 to 1,817 in March this year.
 
Industry executives say March sales for this year should not be compared with the sales for the same month last year. Since the budget was announced in February 2008, customers postponed buying cars in anticipation of excise duty cuts. Thus, the bunched demand in February was carried out in March last year, which constitutes a high base. A year-on-year comparison isnt possible, said Vaishali Jajoo, analyst, Angel Broking.
While Hyundais sales dipped by 15 per cent to 24,754 units in March, its exports rose by 22 per cent, to 21,406 units. The same trend of falling sales was witnessed by Tata Motors. Despite good sales for Indica Vista and the improved Indigo and Sumo Grande, its March sales dipped by 4 per cent to 23,680 units.
 
Meanwhile, Bajaj Auto reported 14.40 per cent fall in its motorcycle sales in March at 1,32,210 units against 1,54,443 units in the same month last year.
 
 
 
AUTO INDUSTRY STILL DRIVING AHEAD DESPITE ROAD BUMP OF UNCERTAINTY
 
 
New Delhi: Given the state of the global and domestic economies, and the fate that has befallen many of their international counterparts, automobile manufacturers in India are grateful to see fiscal 2008-09 come to an end. However, they are much more concerned about the future.
 
However, Maruti, the undisputed leader of the passenger car segment, has reason to be pleased as it is the only major car manufacturer to have recorded a positive growth in sales in March 2009. Data shows that only Maruti and Hyundai managed to notch up positive cumulative sales growth in FY 2008-09.
 
Maruti Suzuki India Ltd (MSIL) chairman R C Bhargava said, The coming fiscal is a year of uncertainty. I will need a crystal ball to be able to make any predictions about the industry this year. As this is an election year, a lot will depend on the kind of Government that comes into power.
 
MSIL sold 72,461 units in March 2009, which is triple the number of cars sold by its nearest competitor, Hyundai, and a 13.58 per cent increase over the same month last year when 63,799 units were sold. Despite a dismal third quarter when company sales were deep in the red, MSIL managed to rebounded sufficiently in the fourth quarter to break even.
 
Tata Motors, Honda Siel Cars India, Mahindra and Mahindra and General Motors India (GMI) cannot share so joyful a view as all four companies recorded double digit negative sales growth for March 2009 as well as for fiscal 2008-09.
 
While GMI was celebrating its highest ever sales growth of 6,836 units in March last year, the car manufacturer sold only 5,001 units in the same month this year a 26.84 per cent decline as it continues to suffer from the effects arising from the uncertainly surrounding its parent company.
 
The two-wheeler segment, on the other hand, despite trying credit availability and loan rates, appears to have an idea as to when the market may begin to recover. TVS Motors chief managing director Venu Srinivasan said, Recovery for the industry will be slow at least six to nine months especially if car loans remain ridiculously high. We are only expecting single digit growth of maybe 5-6 per cent from the two-wheeler segment in 2009.
 
While Hero Honda appears to have run away with this segment with a market share of 57 per cent, TVS Motors continues to steadily gain ground on Bajaj Auto, which has seen both sales and market share plummet steadily.
 
 
 
MARUTI: DESIRABLE BUT EXPENSIVE
 
 
Mumbai: March has been a good month for Maruti but it would be surprising if Indias biggest car maker is able to sustain the last quarters momentum, of around 70,000 cars a month, this year.
 
For one, a fair part of the spurt in volumes in the March 2009 quarter is the result of pent up demand in the previous quarter there were those who wanted to wait for the news flow to get more encouraging before they took the plunge. No doubt, the news is better to the extent that the environment may not be showing signs of further deterioration and demand appears to have picked up in some sectors.
 
However, the macro economic environment isnt showing signs of any major improvement either the State Bank of India chairman himself has admitted that the pick up in credit growth hasnt been up to expectations so it seems unlikely that prospective buyers will take the plunge very soon.
 
In other words, even though fuel prices may be lower and interest rates come down further customers arent really expected to rush to buy big ticket items because theyre only slightly more comfortable with the economic outlook than they were three or four months back.
 
Its true that Maruti has come up with a couple of winners in the Swift and the Dzire and their diesel versions will sell in bigger volumes this year since the engines will be more easily available. Also the Star should be able to clock reasonably good volumes in overseas markets. Despite this, however, it doesnt seem like Maruti will be able to grow volumes by more than 10-11 per cent this year. The Maruti stock has rallied by about 45 per cent since January and the stock is a no doubt a great play on the rising incomes and aspirations of middle-class Indians. At the current price of Rs 795 though, it trades at around 14 times estimated 2009-10 earnings. Thats not too expensive except that there isnt enough of a cushion in case demand doesnt come through.
 
 
 
MARUTI 800: STORY OF A LITTLE GIANT
 
 
"The Maruti 800 made India a country that is now on wheels," R C Bhargava, former managing director, Maruti.
 
The iconic Maruti 800, which stood as the symbol of pride in the garages of millions of Indian homes for years together, is set to bid goodbye. For over 25 years, this small car made giant strides, virtually monopolising the roads in India.
 
It was in 1983, that this small car stole the hearts of millions, and its launch was a turning point in the history of Indian automobile sector. The small car soon became an inherent part of many Indian households.
 
The Indian car industry was then represented by two companies, Hindustan Motors and Premier Automobiles, with a volume of 40,000 cars annually. The Maruti-800 changed the dynamics of the trade. It lived up to the aspirations of the Indian middle-class.
The Maruti 800 was Sachin Tendulkar's first car. It was also the first car for many others who could not afford a car for years. . . Priced at Rs 52,500 in 1983, it was a treasure on wheels!
 
 
TOYOTA TAKING FRESH LOOK AT INVESTMENT IN SMALL CAR UNIT
 
 
Bangalore: The economic slowdown has forced Toyota Kirloskar Motor Pvt. Ltd, the Indian venture of Toyota Motor Corp., the worlds biggest car manufacturer by volumesto review its plan to invest in a new factory near Bangalore, to roll out a small car for the Indian market.
 
The company also expects to post losses for the first time in six years, on lower demand
for its vehicles and an increase in the cost of imported inputs.
 
In November, Toyota Kirloskar had said it would invest Rs3,200 crore in a second plant to make a small car near its existing factory in Bidadi, on the outskirts of Bangalore. The new plant, set to be operational in 2010, had a planned capacity to make 100,000 cars a year.
 
...the production capacity at the second plant has been reviewed and we are carefully reviewing the investment figure in the light of (the) severe economic downturn, said Shekar Viswanathan, deputy managing director (commercial) at Toyota Kirloskar, in an email. However, this will not in any way affect the second plants operations.
 
The factory will initially produce 70,000 units of the so-called compact vehicle by end-2010. Details of the small car have not been disclosed.
 
Viswanathan did not elaborate on how much the investment figure would change or when it would be finalized.
 
In December, parent Toyota Motor had forecast an operating loss for fiscal 2009, the first in 71 years. In February, it declared losses of 164.7 billion yen, or about $1.68 billion (about Rs8,500 crore) at the rates prevailing then, for the December quarter.
The Japanese currency has appreciated 33% against the rupee between 1 August and now, making imports from that country much more expensive in India and thus increasing costs of production here.
 
Toyota Kirloskar also imports parts from Thailand, paid for in the US currency, which has appreciated 21.6% since August. For instance, the company imports 30% of parts by value for its Innova utility vehicle and 55% for the Corolla Altis car, according to a company spokesperson. It imports completely built units of the sport utility vehicle Prado and Camry, its upper-end sedan.
 
The increase in costs and a slowdown in automobile demand is affecting profitability at the firm here in India, Viswanathan had said in an interview. This year (fiscal year ending March 2010) we are not going to be profitable in India, he told Mint on 31 March.
 
Toyota Kirloskars senior management is set to take a 10-15% pay cut effective April, following pay cuts in Japan, the UK and the US.
 
Toyota Motor, which entered the Indian market through a joint venture with the Kirloskar Group in 2000, has been profitable since 2004. With buyers delaying vehicle purchases, Toyota Kirloskar, which produced a daily average of 200 vehicles, including the Innova and the Corolla, cut it to less than one-third, or 60 vehicles, in December.
 
In March, the plant made 150-160 vehicles a day, but it was difficult to forecast sales for the weeks ahead. In terms of demand, I do think April- May will be muted, said Viswanathan. Its very difficult to isolate and say you know this month is going to be good, this month is going to be bad.
 
Sales of passenger vehicles, which includes cars, utility vehicles and multi-utility vehicles, are expected to have grown up to 3.5% year-on-year (y-o-y), to 1.59 million units for 2008-09, said V.G. Ramakrishnan, senior director (automotive and transportation) at consulting firm Frost and Sullivan India Pvt. Ltd. Y-o-y growth was 13-14% over the last couple of years.
 
For 2008-09, Ramakrishnan projects a growth of 7.5-8% on the back of brisk sales of Tata Motors Ltds recently launched ultra low-cost car, the Nano.
He expects profitability of all car makers to slide on subdued demand, more so for multinationals with large imports. Toyotas compact car next year could help it buffer this impact, but if the firm slows investments on the small car plant, it will probably not be in a market that is a growth market, said Ramakrishnan. The small car is a market that is still continuing to grow.
 
 
 
M&M SALES AT RECORD HIGH
 
 
Chandigarh: Mahindra & Mahindra on Thursday announced domestic sales of 25,748 units in March 2009, its highest ever. The figures also denote the highest-ever monthly sales this year. Domestic utility vehicles have grown by steady 30 per cent, riding on the back of the highest-ever sales of Scorpio, Bolero and the Pik-Up. The recently launched Xylo, too, clocked a sale of 3,171 units. 
 
GM TO LAUNCH TWO NEW CARS
 
 
Chandigarh: Riding high on the success of its small cars, Spark and U-VA, General Motors (GM) will launch another premium hatchback by the end of this year. The company will also be launching its compact sedan, Chevrolet Cruz this year.
This was stated by the president and managing director of General Motors India, Karl Slym, in an interview with The Tribune here. He was in town to inaugurate a new dealership at Panchkula.
 
The premium hatchback a mini car will be priced around Rs 4 lakh and will have a 50 per cent indigenisation component. We will also launch an LPG variant of Spark this year, and introduce a CNG variant of our mid range cars like Aveo, he said.
 
Slym said this year, the company had managed to grow by 10 per cent over last year, even as growth in automobile sector had shrunk by two per cent.
 
In spite of the gloomy forecasts for this year, we are sure of achieving a similar growth this year. In India, GM plans to grow through introduction of new products at regular intervals. We have already announced plans to introduce Chevrolet Cruz, which will be priced between Rs 12-14 lakh. We are also looking to rationalise versions under a certain product category, he said.
 
Though he refused to comment on the fiscal health of the company in the US, he said that the company was growing rapidly in India, China and Brazil.
 
In India, we are investing heavily. A new plant has just been commissioned at Talegaon, near Pune, which is being constructed at an estimated cost of $300 million. This facility, with a capacity of 1.40 lakh units, is currently being used to manufacture Spark, and this can be scaled up as the demand rises. Another power training (engine manufacturing) plant is under construction there, which will cost $200 million, he said.
 
GM India has not yet kept a sales target for calendar 2009. The first two months of 2009 have shown a recovery in automobile sales. If the economy continues to fare well, sales will grow. Lowering of interest rates on auto loans will also give sales a further boost. We are eyeing to capture 10 per cent of the countrys passenger car vehicles by 2010, he said, adding that they were planning to increase their dealerships from the present 184 to 400 by 2012.
 
 
NANO TO BRING DOWN PRICE OF USED CARS: DEALERS
 
See this story in: The Hindu Business Line (Web Edition), Daily News & Analysis (Web Edition), The Indian Express (Web Edition), Yahoo India (Web Edition)
 
Chennai: With the much awaited world's cheapest car 'Tata Nano' car launched, dealers of used cars forecast around 30-40 per cent dip in the sales of used small car in the country.
 
Due to its low' price tag, many customers opting to buy a used car may plump for a new Nano, though it comes comparatively with lesser cubic capacity, Mr R Srivatsan President of MyTVS, part of the TVS Group engaged in selling used cars said.
It is because of this factor, we are expecting around 30-40 per cent drop in the market of A and B segment vehicles'', he said.
 
However, once the car (Nano) hits the road, we will know the exact figure on that, he said. Stating that the Nano design was very good and attracts more buyers, he said once the booking starts for Nano, there would be less number of people going for us ed small cars.
 
For the exact results, we have to wait and see on how the market responds, he said. Initially, there may be a slump in the sales of used cars especially Maruti 800, Alto and Hyundai Santro range of vehicles, he said.
 
 
BAJAJ CLAIMS VICTORY OVER TVS
 
  Bajaj Auto on Thursday claimed that it has won a patent case against rival TVS Motor Company over the ExhausTEC technology. TVS officials, however, said that they were not aware of any such verdict.
 
In a statement issued here, Bajaj said the Indian patent office has granted Bajaj Auto a patent for its ExhausTEC technology and the verdict has been published in the gazette.
The Indian Patent Office granted Bajaj Auto a patent for its ExhausTEC invention vide patent no. 231498 dated March 5, 2009. This grant was published in the patent gazette dated March 27, 2009, the Bajaj statement said. A senior official of TVS Motor Company, when contacted, declined to comment. The unique invention, named
ExhausTEC, significantly improves low range/ mid range torque in a single cylinder four stroke engine, employing a chamber of predetermined volume attached to the exhaust pipe. Bajaj has employed this innovation on its motorcycles since August 2004 in various models. Bajajs patented DTSi twin spark technology and ExhausTEC together deliver unbeatable fuel efficiency, the statement claimed.
 
According to the statement, Bajaj filed the ExhausTEC patent application on August 6, 2004, and the application was published in the Indian patent gazette on June 22, 2007.
Thereafter, Bajaj observed a chamber attachment looking similar to its ExhausTEC on a product displayed by TVS on August 30, 2007. On December 12, 2007, Bajaj served a notice on TVS Motor regarding the potential infringement.
 
After another series exchanges, on March 5, 2009, the Indian Patent Office dismissed TVS pre-grant opposition and granted patent to Bajaj Auto for a period of 20 years from August 6, 2004, claims the Bajaj statement. The grant of the patent arms Bajaj Auto with rights to seek legal remedy against infringements, if any, the statement added.