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| INDUSTRY Kant to oversee Tata Motors global operations INTERVIEWS/FEATURES CARS, SUVs, MUVs GM India begins trial production of new mini car GM India launches Chevrolet Spark's LPG version Honda targets multiple car owners for Jazz Honda identifies India as launch pad for global small car Honda Siel to ramp up R&D facility Toyota Kirloskar to identify export mkts for EPCG benefits COMMERCIAL VEHICLES | ALLIED INDUSTRIES FINANCE & INSURANCE INTERNATIONAL NEWS At new Chrysler, problems of old Chrysler linger Marchionne has dual task of reviving Chrysler, keeping Fiat fit China's Beijing Auto interested in Volvo ECONOMY & FINANCE Sensex loses moderate ground in volatile trade Inflation rate dips to 0.13%; food still dearer Need growth with fiscal discipline: FM
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| INDUSTRY Go To Top HOEGH AUTOLINERS TO SHIP NISSAN CARS FROM INDIA Manu P. Toms The Hindu Business Line (Web & Print Edition)
Mumbai: Norwegian shipping company Hoegh Autoliners will transport the Nissan Pixo cars from India next month. These will be shipped from the Mundra port in Gujarat.
Maruti Suzuki will manufacture the cars for Nissan in its plant at Manesar, near Delhi. Maruti sells the same model as the A-star in India. Indications are that Nissan will ship out around 5,000 units a month to begin with. Maruti also exports the A-star to Europe, but badges it as the Alto. Maruti too uses the Mundra port for its exports.
Nissan has been shipping the Pixo even before the arrangement with Hoegh Autoliner, which has been the carmakers global partner for many years now.
Chennai plant Mr Per Folkesson, Head of Region, Hoegh Autoliners, said it would also ship Nissans sub-compact car when it rolls out from the Chennai plant next year. The Japanese automaker plans to export around 1,10,000 units in 2011. It has entered into a joint venture with Ashok Leyland for light commercial vehicles and it will be interesting to see if they will be part of a global business plan too.
Hoegh Autoliners, which started its India business barely a year ago, now has services to Africa, Europe, West Asia and the Far East. It has shipped around 1,000 Ashok Leyland buses to West Asia and to Africa.
Long-term plans The company is in talks with Tata Motors, Mahindra & Mahindra, Ford and Renault to ship their vehicles. Hoegh Autoliners expects business from global carmakers in India.
I dont think all these companies are only focused on the Indian market. They do have long-term plans to grow their international business from India which would see big changes a decade from now, said Mr Leif Hoegh, Chairman.
The list includes well established players such as Hyundai, Maruti, General Motors India and newcomers such as Volkswagen and Renault. http://www.thehindubusinessline.com/2009/06/12/stories/2009061251010300.htm
KANT TO OVERSEE TATA MOTORS GLOBAL OPERATIONS Swati Khandelwal Mint (Web & Print Edition)
New delhi: The former managing director of Tata Motors Ltd, Ravi Kant, will continue to oversee the companys international operations even after being named its non-executive vice-chairman (VC).
Kant, who had retired as managing director (MD) on 1 June, is known for his aggressive marketing strategies. People close to the development said Tata Motors couldnt have let him go at a time when its net profit has halved.
Kant continues to be on the board of Tata Motors international businesses including Tata Daewoo Commercial Vehicle Co. Ltd, Jaguar Land Rover, and plants in South Africa and Thailand.
P.M. Telang, who took over from Kant as MD, will focus only on India operations. Ravi Kant will be the non-executive VC, while P.M. Telang will be MD, India operations. Telang will handle all India-related operations for Tata Motors, the company said.
Shweta Bhanot The Financial Express (Web & Print Edition)
Mumbai: Whats common between a game of bridge and running the largest truck-making corporation in India? For starters, both warrant a fair bit of appetite for calculated risks. You cant do without a keen sense of opportunity and timing. Then there are the dealers to deal withfor cards as well as for a fleet of trucks. Above all, the automotive market is just as unforgiving for the casual operator as a lead out of turn.
Survival then, is a function of trusted partnerships across the table and across borders. To excel, you need to be at the helm of affairs with foresight and be loaded with experience.
Prakash M Telang (earlier executive director, commercial vehicles), will certainly need all the panache as he takes over the mantle of Tata Motors managing director from the much-respected Ravi Kant, who will continue as non-executive vice-chairman.
But assuming leadership comes naturally to Telang, 61. The IIM graduate has served Tata Motors in several capacities for over the last 37 years and was tipped to take over the position for quite some time now.
He continues to serve as chairman of HV Transmissions and as a non-executive independent director of Automobile Corporation of Goa, which assembles Hispano Carroceras premium inter-city coaches for Tata Motors. He is also on the boards of Tata Daewoo Commercial Vehicle Company, Tata Motors (Thailand), Telco Construction Equipment Company, and the companys joint venture company with Fiat India Automobiles.
The company watchers say his team was single-handedly responsible for realising the key takeaways from the Daewoo Commercial Vehicles acquisition and applying them to his pet project, the World Truck Platform, which he proudly unveiled late last month.
He is indeed, a reputable truck-man, who knows his role in an organisation that was growing exponentially. At the World Truck unveiling, an otherwise media-shy Telang spoke for the first time since he was anointed MD, India operations of Tata Motors. Small is beautiful but the big boys dont want to stay far behind, he remarked (on the Nano and the World Truck) as he addressed a gathering comprising chairman Ratan N Tata, fellow directors, hordes of employees and a congregation of national and international motoring journalists.
He had announced his arrival, with his usual flair for subtlety. While Telang has carefully nurtured the behind-the-scenes-guy image, a section of the media often speculated about his role in the organisation and the way ahead for him.
He comes in at a time when the mood is sombre at Bombay HouseTata Motors posted a whopping decline of 50% in its net profit last fiscal on the back of severe demand slide and high interest charges on borrowings. The net profit was Rs 1,001.26 crore for the year ended March 31, 2009, against Rs 2,028.92 crore for the year ended March 31, 2008. Debt financing is likely to eat into margins for years and you dont need a degree rocket science to predict the impact. That despite the relentless optimism he demonstrated before journalists during the announcement of FY 2009 results. In fact, every player in the market is feeling the heat as truck sales have deteriorated sharply due to the unwillingness among Indian companies to replace their fleet in the present market conditions. But Telang is accustomed to turnarounds. And while he loves his bridge, itll be a while before gets to unwind with a pack of cards.
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| INTERVIEWS/FEATURES Go To Top Mumbai: Tough market conditions and stiffer competition had eroded sales of the countrys fifth-largest car maker Honda Siel Cars India (HSCI) last year when sales dipped 16.5 per cent to at 52,000. But Masahiro Takedagawa, president and CEO of HSCI, feels that his company can record double-digit growth this year, owing to an improving economy and continuous government effort to boost spending. In an interview with Swaraj Baggonkar, Takedagawa highlights HSCIs strategy. Excerpts:
For the first time in 12 years, HSCI has launched a hatchback in India (Jazz) but that, too, in the premium category. Your small car will only debut by 2011. Wouldnt you have felt a lot more comfortable had you launched a compact car two years back? Introducing a model is a big, big task as it calls for so many joint efforts. We have to have reliability, adhere to delivery timing and, the most important of all, we should be able to extract a certain return from the product. We do not feel that we are falling behind the competition, but are very much on track.
How do you gauge Honda groups success in India? While we saw a huge slump in the sale of Honda products in the US (from 7 million to 1 million), our two-wheeler business in India comprising Hero Honda and Honda Motorcycle & Scooter India (HMSI) continued to post a remarkable growth. Our motorcycle business appears quite stable in Asia because of India.
There has been a flurry of launches since January and some of them are directly aimed at the markets you operate in. Do you see your sales under pressure this year? There has always been competition for us but we are not scared of it. We hope to record a double-digit growth this year, primarily on account of sales added by the Jazz (starting at Rs 7.43 lakh, ex-showroom Mumbai). We will be happy if the Jazz achieves half the sales of the Honda City (the company sells 3,000-3,300 units of the City every month). Besides, we are also studying the possibility of assembling the CR-V here.]
Although HSCI makes four models in India (City, Civic, Accord and Jazz) it does not have an engine plant here yet. Will the additional volumes of the new small car force you to consider it? We feel it is necessary to have a yearly production of at least 250,000 units before we put up an engine and transmission facility. We are hoping that such a volume will come up. There will be an increased need for a plant when our small car gets ready for launch.
What is the typical size of the investment required to put up an engine plant? About $100 million (around Rs 475 crore, according to todays exchange rate) for the engine plant and another $50 million (about 237 crore) for the transmission plant. This is what is usually spent by Honda. We do make crankshaft and connecting rods in India at the moment.
How much localisation is there in your products currently? We have about 70 per cent localisation for our products with the content being higher for the Jazz, which is about 77 per cent. A local engine and transmission plant will push it further by 5 per cent. Because we import 30 per cent of components, we are impacted by the rupee depreciation immensely. http://www.business-standard.com/india/news//we-hope-to-post-double-digit-growth-this-year-thanks-to-jazz//360851/
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| CARS, SUVs, MUVs Go To Top MARUTI TO DRIVE A-STAR INTO AFRICA, LATAM Chanchal Pal Chauhan The Economic Times (Web & Print Edition)
New Delhi: Maruti Suzuki India (MSI), the largest passenger car maker in the country, plans to take its latest A-Star hatchback to new markets, such as Africa and the Latin America, a top company executive said. Maruti is looking to tap new markets for exports, as the demand is shifting towards compact cars globally. This would help the automaker meet its target of exporting 1.5 lakh cars, across all models, in the current fiscal, two times that of the year ended March 2009. Maruti exports doubled to 15,978 units in the April-May period led by A-Star. Copyright 2008, Bennett, Coleman & Co. Ltd. All Rights Reserved"
Yogima Seth The Financial Express (Web & Print Edition)
New Delhi: The exorbitant high prices of Honda CR-V and Maruti's Grand Vitara have resulted in customers moving away from these sport utility vehicles (SUVs) to more reasonably-priced SUVs. So much so is the fall in demand that both Honda Siel Cars India and Maruti Suzuki India (MSI) did not sell a single unit of each of these vehicles in April and May. Maruti Suzuki, infact, has been selling very low volumes of Grand Vitara over the last few months. It sold just one unit in February, only to completely exit the segment from March onwards.
"There has been over 35% increase in prices of Honda CR-V over the last few years from Rs 17 lakh then to almost Rs 23 lakh now, resulting in lower demand for the vehicle. Consequently, we have decided to no longer maintain inventory with our dealers for Honda CR-V and instead import the vehicle as per the order," Masahiro Takedagawa, president & CEO, Honda Siel Cars India (HSCI).
"Grand Vitara is set to appear in its new avatar in Japan and we will bring it to India in a month's time. As a result, the company has stopped selling the vehicle in the domestic market since March," says a Maruti official.
Industry analysts, however, have a different view on complete absence of these players from the segment. "The sport utility vehicle category in India has products across huge price range, starting from low-priced SUVs like Mahindra Scorpio to mid-priced cars like Ford Endeavour and top-end SUVs like Honda CR-V and Grand Vitara. Since rupee has been depreciating vis--vis yen over the last few months, these vehicles are becoming uncompetitive for OEMs, which are already working on wafer-thin margins with their bottomlines squeezed because of low domestic sales, to import them as completely build units (CBUs)," says Abdul Majeed, auto analyst and partner of Price Waterhouse. Indian rupee has depreciated by 9.8% since January 1 at 53.74 then to 48.42 now.
According to another analyst, the unavailability of more products at lower price range from HSCI and MSI in SUVs has taken a toll on sales. "At a time when economic slowdown has spread across every sector, car manufacturers need to have products across different price range to keep customers hooked to a brand, he said. http://www.financialexpress.com/news/maruti-honda-suvs-hit-bump/475075/
GM INDIA BEGINS TRIAL PRODUCTION OF NEW MINI CAR The Hindu Business Line (Web & Print Edition)
Hyderabad: Unfazed by Chapter 11 filing and financial turmoil of the automotive giant and parent General Motors in the US, GM India has begun trial production of its new mini car to be launched later this year.
This mini car, being developed around the Beat hatchback, will be rolled in multiple fuel options in the second half of 2009, Mr Karl Slym, President and Managing Director of GM India, said. In fact, there is pressure from employees to roll this out early, he said.
The $1-billion investment we have made in India already has put us in a comfortable position. We now have a manufacturing capacity of 2.25 lakh cars in two plants at Halol and Talegaon. The latter has the capability to be ramped up to 3 lakh units per annum, from 1.4 lakh capacity now, he explained. Work on the press shop has been completed, and the building for the transmission unit is ready and the equipment is being installed. We will be able to commence production in the transmission plant by next year. This will offer us great flexibility.
Announcing the introduction of Spark LPG here, he said they expect to roll out two new models in the country this year. This includes a mid-sized Chevrolet sedan Cruze priced at about Rs 12 lakh and a mini car built on Beat concept. The latter would be sold in the Rs 4 lakh range.
The new transmission plant would allow the company to offer cars in different fuel options, including diesel engines. It is also considering roll out of cars with diesel engines imported from other manufacturing bases, he explained. http://www.thehindubusinessline.com/2009/06/12/stories/2009061250930200.htm
GM INDIA LAUNCHES CHEVROLET SPARK'S LPG VERSION PTI See this story in: The Economic Times (Web Edition), Hindustan Times (Web Edition)
Hyderabad: General Motors India launched the LPG version of its Chevrolet Spark here. The environment friendly LPG model features premium beige interiors with a certified Factory Fitted Next Generation Sequential Injection-type LPG kit, latest in terms of technology which is far superior to the venture-type LPG kit currently available in the market. http://economictimes.indiatimes.com/News/News-By-Industry/Auto/ http://www.hindustantimes.com/StoryPage/StoryPage.aspx?sectionName=
HONDA TARGETS MULTIPLE CAR OWNERS FOR JAZZ The Hindu Business Line (Web & Print Edition)
Mumbai: Honda Siel Cars India is targeting multiple car owners for its newly launched high-end hatchback Jazz.
We have a customer base of 3.5 lakh people. We mainly target these existing Honda car owners. About 70 per cent of them are multiple car users who would love to add Jazz to their fleet of cars, said Mr Jnaneshwar Sen, Vice-President, Marketing, Honda Siel Cars India, on the sidelines of the launch of the Jazz here. Jazz will appeal to the multiple car users as a lifestyle car, he added.
According to Mr Sen, advanced technology and magic seat configuration to achieve multiple seating and cargo-carrying facility offer Jazz the utility value of a multipurpose vehicle. Currently, the Toyota Innova and Mahindra Xylo are the key models in this segment.
New segment The Jazz will cost Rs 7.43 lakh to Rs 7.78 lakh (ex-showroom Mumbai). Earlier, Mr Masahiro Takedagawa, President and CEO, Honda Siel Cars India, said We are creating a new segment. We are not ambitious about high volumes for the Jazz. This year, we will look at half the numbers of the Honda City.
Manufactured in HSCIs Greater Noida plant, Jazz has 77 per cent local content. Globally, Honda has sold close to 2.8 million units of Jazz. http://www.thehindubusinessline.com/2009/06/12/stories/2009061251050300.htm
HONDA IDENTIFIES INDIA AS LAUNCH PAD FOR GLOBAL SMALL CAR Murali Gopalan The Hindu Business Line (Web & Print Edition)
Mumbai: Honda has identified India as the launch pad for its global small car which will debut during the next two to three years.
The vehicle is being developed for India specifically as the lead country. It will then enter other markets across the world, Mr Masahiro Takedagawa, President and CEO, Honda Siel Cars India, said here on Thursday.
This is part of the Japanese automakers strategy to create models for lead countries and then have them modified appropriately for other global markets. For instance, the Civic, Accord and CR-V were targeted at the US (as the lead country) while in the case of the City, it was the Asian market comprising India, Thailand, Indonesia and the Philippines.
The recently launched Jazz was developed with the lead market being Japan. Once we complete development of lead markets, we can have the cars modified for other global markets, he said. The global small car that will debut in India will be positioned below the Jazz which means that its size will not necessarily translate into an inexpensive offering. Price should be justified by value which, in turn, is determined by the customer, Mr Takedagawa said.
The Jazz itself qualifies as a small car (in India) by virtue of its length and engine capacity but it is priced at Rs 7-lakh plus which is dearer than some mid-size sedans. In Thailand, it is actually higher positioned than the City.
Thanks to the 12 per cent excise duty incentive, we are able to position the Jazz lower (than the City) in India, he said. There were indications that the global small car scheduled to roll out in the next three years would be part of a bigger Honda business plan which included Brazil and Thailand. However, Mr Takedagawa said that there was no reason why it would not be considered for Europe either, which is increasingly turning to fuel-efficient models, and Japan.
Key regions Honda has drawn up six key regions for its global markets which are the US, Japan, Europe, Asia, China and South America. It is up to the head of each region to consider a particular model from another. I do believe that the small car being planned will have the potential to get requests from many regions, he said.
The choice of India also reflects the growing importance Honda is paying to this part of the world for its auto business. In two-wheelers, for instance, both Hero Honda and Honda Motorcycle & Scooter India have a combined market share of over 70 per cent. The growth in our motorcycle and scooter business from these two companies has been remarkable both in terms of revenue and profitability. Asia and India, in particular, are important growth drivers for our two-wheelers, Mr Takedagawa said.
India scores Though the growth rate in cars has been less spectacular in comparison, Honda is comfortable with the fact that the Indian market is stable than most parts of the world, especially during the current slowdown. From our point of view, this indicates that the fundamentals are in shape across the country, including rural areas, he added.
Thailand, often touted as the Detroit of the East, has always been a favourite destination for Honda in cars, thanks largely to decades of familiarity. Despite this, Mr Takedagawa said that India scored in terms of a larger market and easier access to key raw materials like steel and plastics, which Thailand imports.
Honda Siel is, in talks with Tata Steel for a particular grade (of steel). All this is part of the localisation agenda for India which could come in handy once the small car debuts. Already, critical parts for the Jazz and City are supplied from the Rajasthan plant (which has a press/stamping shop as well as engine components) to Greater Noida. Rajasthan was the original home for the Jazz and it remains to be seen if it will be home to the global small car project. http://www.thehindubusinessline.com/2009/06/12/stories/2009061250980300.htm
HONDA SIEL TO RAMP UP R&D FACILITY Neha Rishi Daily News & Analysis (Web Edition)
Mumbai: Honda Siel Cars India (HSCI) is ramping up its research and development (R&D) facility to increase level of localisation on its existing models. The R&D facility, which started operations recently, will help Honda increase domestic sourcing, helping it to rely less on imports.
Masahiro Takedagawa, president and chief operating officer, HSCI, said, "We were doing good business and then suddenly last year we were impacted by rupee depreciation. Two years ago, you could buy one dollar for Rs 38, you've to pay Rs 50 for a dollar. This 30% depreciation directly impacted our 30% proportion of imports."
The R&D facility, for which HSCI invested around Rs 10 crore, will help not only reduce costs of its products, but also insulate it from yen and dollar fluctuations.
HSCI is also considering setting up its own powertrain facility at its Rajasthan plant or at a separate location. Takedagawa said, "We need minimum volumes in order to have engine and transmission plants. Depreciation is the key; we need minimum volumes to see depreciation of these investments. We would need an investment of $100 million for an engine plant and $50 million for a transmission plant."
Currently, the company's engines are assembled at the Rajasthan plant, where other components such as connecting rod and the crank shaft are also manufactured and sent to HSCI's plant in Greater Noida. Anti-braking system, airbags, engine and transmission parts and high-tensile steel are sourced from Thailand, Philippines, Indonesia and Japan. Jnaneswar Sen, vice-president (marketing), HSCI, said,
"Manufacturing all engine parts requires a certain amount of consumption, otherwise it will be much more expensive." He said that if the engine plant comes up, the company will save an additional 5% on costs.
"Rajasthan plant's phase-I started operations in September last year. We have started stamping plant operations, engine components assembly. All body panels are produced and provided from this plant to the Greater Noida plant for both Honda City and Jazz,"Takedagawa said. Until last year, all body panels were imported from Japan and Thailand via Mumbai to Greater Noida, he said.
HSCI has over 110 suppliers and is expanding the number, especially the ones that supply materials - di-casting, forgings and foundries -- which are not available in Thailand. Sen said, "Exchange rate is another factor that comes into play when we talk about localisation. You can never foresee this. But in the long term, we should be able to save and reduce cost. "
Honda R&D Asia Pacific India currently has three engineers from Japan. More engineers are being hired from India. http://www.dnaindia.com/report.asp?newsid=1264142
TOYOTA KIRLOSKAR TO IDENTIFY EXPORT MKTS FOR EPCG BENEFITS Jaishankar Jayaramiah The Financial Express (Web & Print Edition)
Bangalore: Toyota Kirloskar Motors (TKM), the Indian subsidiary of Japanese auto giant Toyota, is in the process of identifying export markets for its small cars to be manufactured in India as the company has planned to avail themselves benefits under Export Promotion Capital Goods (EPCG) scheme.
According to Export Import Policy of India 2004-2009, the EPCG scheme allows import of capital goods for pre-production, production and post-production at 5% customs duty, subject to an export obligation equivalent to eight times of duty saved on capital goods imported under EPCG scheme to be fulfilled over a period of eight years reckoned from the date of issuance of licence. However in respect of EPCG licences with a duty saved of Rs 100 crore or more, the same export obligation shall be required to be fulfilled over a period of 12 years.
As there is shortage for quality car plant machineries in India, TKM, in which Toyota owns 89% stake while Kirloskar Group holds the remaining stake, is expected to import machineries and equipment under EPCG scheme for its Rs 3,200-crore second plant, which is under construction at the companys existing 420-acre factory complex in Bidadi village near Bangalore. The upcoming plant will manufacture small car, starting from 2010-11.
If the company import machineries for reduced duties under EPCG scheme, it will be committed to export cars manufactured using the imported machineries.
Talking to FE, a top official attached to TKM, requesting anonymity, said, We will look at export markets as it is required for us to avail some tax concessions under the EPCG scheme. If we have to import machineries for our second plant, we can get reduced duties if we make an export commitment. He said, To make that export commitment, we are currently studying the export market (for small cars).
Further he said that the company is weighing options to export small cars to Brazil, Russia and China and some other Asian countries in the initial stages. http://www.financialexpress.com/news/toyota-kirloskar-to-identify-export-mkts-for-epcg-benefits/475086/
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| COMPONENTS Go To Top AMBATTUR AUTO UNITS SEEK HELP FROM ITALY VIA CII-UNIDO The Hindu Business Line
Chennai: Auto component manufacturers in the Ambattur Industrial Estate have sought the Italian Governments support for investments and technology through a United Nations Industrial Development Organisation (UNIDO) programme.
The Confederation of Indian Industry Southern Region (CII-SR) handed to Italian Government officials on Thursday 42 investment proposals and 20 technology proposals from auto component manufacturers in the Ambattur Industrial Estate . These are to support the companies with technology and funds from their counterparts in Italy through UNIDO.
Mr J. N. Amrolia, Chairman, International Business Promotion & Networking Task Force, CII-SR, handed over the proposals to Dr Santa Mole, Director of Italian Cooperation and Donor Representative in India.
A couple of years ago, CII signed a co-operation agreement to profile auto component companies for the consolidated project for the development of small and medium enterprises in India.
It has profiled 210 companies in Pune and 200 companies in the National Capital Region. The Tamil Nadu Technology Development & Promotion Center profiled about 100 medium sector companies in Chennai. http://www.thehindubusinessline.com/2009/06/12/stories/2009061251711700.htm
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| ALLIED INDUSTRY Go To Top TYRE MAKERS SEEK CUSTOMS WAIVER Sohani Das Business Standard
Kolkata: The Automotive Tyre Manufacturers Association (ATMA) has sought a waiver in customs duty on raw material, which is in short supply to meet the domestic demand besides demanding a reduction in duty on natural rubber.
Onkar S Kanwar, chairman and managing director, Apollo Tyres Limited met finance ministry officials last week on behalf of ATMA. As part of its pre-budget memorandum, the industry association has asked for a cut in the customs duty on natural rubber to 10 per cent from the current levels of 20 per cent. Alternatively, the duty on the import of tyres could be raised to 20 per cent to protect the industry from cheaper Chinese imports. Imports from China and Korea that comprise nearly 80 per cent of all imports, draw an 8.6 per cent duty under the Asia Pacific Trade Agreement.
Moreover, the ATMA has also sought a waiver of customs duty on raw materials which are not manufactured domestically. These include butyl rubber, polyester tyre cord, styrene butadiene rubber (tyre grade) and chlorobutyl or bromo butyl rubber. While SBR currently draws a 10 per cent duty, the other categories of raw material attract a five per cent duty.
Analysts pointed out that the tyre industry was a raw-material intensive industry,accounting for nearly 62 per cent of the production cost. The shortfall between production and domestic demand for key raw materials ranges from 17 per cent to 60 per cent. The increase in raw-material prices in the second half of last fiscal has led to a net profitability getting adversely affected.
The net profit as a percentage of net sales of the top five tyre companies has fallen to 0.96 per cent in 2008-09 as against 4.84 per cent in 2007-08, Kanwar said. Natural rubber prices during the last three months has risen about 40 per cent from Rs 70 per kg during early March to Rs 100 per kg presently.
The price of domestic natural rubber is comparatively higher by Rs 15-20 per kg compared to the corresponding international price. An increase of Re 1 per kg results in an additional annual financial burden of Rs 50 crore for the tyre sector, claimed the ATMA. Taking a hit by the slump in demand for commercial vehicles, truck and bus tyres have recorded a 2 per cent decline in sales in 2008-09. The passenger vehicles segment has been able to register a flat 1 per cent growth in volumes. Truck and bus tyres account for over 60 per cent of the entire industry turnover.
On the export front, the truck and bus segment was down 20 per cent last fiscal. Even passenger car tyre exports registered a 10 per cent dip. Rajiv Budhraja, director general of ATMA informed. On top of that, Indian exporters would now have to directly compete for the smaller size of the market with its Chinese counterparts. China now has excess capacity. Its exports to the US are down around 50-60 per cent, and they are now ready to quote cheaper prices, Budhraja explained. http://www.business-standard.com/india/news/tyre-makers-seek-customs-waiver/360834/
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| LUBRICANTS & ALTERNATIVE FUELS Go To Top OIL NEARS USD 72 PER BARREL See this story in: The Indian Express Singapore: Oil prices rose in Asian trade, getting a lift from a bigger-than-expected drop in US crude reserves, analysts said.
New York's main contract, light sweet crude for July delivery, gained 57 cents to USD 71.90, its highest in eight months. Brent North Sea crude for July was 45 cents higher at USD 71.25. The US government has said that national crude reserves fell 4.4 million barrels in the week ending June 5, far more than the 700,000 barrels that the market was expecting.
Oil prices have also been boosted by the sagging US dollar as investors, encouraged by hopes of an economic rebound globally, dump the greenback in favor of other key currencies that offer better yields. Dollar-priced crude is cheaper for buyers holding stronger currencies. That tends to stimulate demand and push the market higher. Analysts from National Australia Bank said the weaker US dollar was "giving foreign investors greater purchasing power and increasing demand for real assets, such as oil, to hedge against inflation."
"All things considered, it appears that the oil price is currently trading at a price consistent with market fundamentals, owing more to the activity of investors with the depreciation of the US dollar and anticipation of a relatively quick rebound in global economic growth," they said. http://www.indianexpress.com/news/oil-nears-usd-72-per-barrel/474781/
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| INTERNATIONAL NEWS Go To Top HONDA READY WITH BIG AND SMALL, HOPES TO WIN IN US Agencies See this story in: The Economic Times
Tokyo: Honda is ready to offer bigger vehicles in North America should demand return for such models, as well as the small cars viewed as the Japanese automaker's forte, a senior executive said on Thursday.
AT NEW CHRYSLER, PROBLEMS OF OLD CHRYSLER LINGER Tom Krisher/AP See this story in: Hindustan Times Detroit: Chrysler has been reborn under a new Italian parent, but it can't shake the shadows of its past: It's not selling enough cars, its fleet is tilted to trucks and sport utility vehicles, and help is more than a year away.
A 42-day stay in bankruptcy court cleansed the company of much of its debt and labor costs, but many analysts say Chrysler's immediate future is bleak. It lost $8 billion in 2008, and sales are down by almost half for the first five months of this year. Cars designed by its new owner, Italy's Fiat Group SpA, won't make it to the US until late 2010. And even then there are no guarantees American drivers will want the tiny cars Fiat specializes in.
In the meantime, Chrysler is left with few new vehicles headed to its drastically reduced network of dealers. Its aging model lineup is still heavy with bigger vehicles. And its offerings in the growing small and midsize markets haven't caught on.
"The showroom is not going to look terribly different over the next 18 months," said Aaron Bragman, an analyst for the consulting firm IHS Global Insight. "They're going to try and maintain market share in a down market with products, many of which haven't been redesigned in several years."
Bragman said Chrysler faces tremendous competition, especially from new cars in the works at General Motors Corp. and Ford Motor Co.
Even if the new Chrysler Group LLC can survive, the super-small Fiat cars that were popular in Europe, like the 500 and Grand Punto, could be out of step with Americans who like bigger cars and are used to lower gas prices.
During Fiat's last run at the U.S. market, in the 1970s and '80s, reliability problems led people to suggest the name stood for "fix it again, Tony."
"Fiat is really not a known commodity in the US market," said David Koehler, a clinical marketing professor at the University of Illinois at Chicago. "It doesn't resonate with the target market."
The new Chrysler began operations Wednesday morning after the U.S. Supreme Court refused to hear an appeal of lower court decisions that allowed the transfer of most of the old Chrysler's assets to Fiat.
Fiat CEO Sergio Marchionne was named chief executive of the new company, and Chrysler CEO Bob Nardelli said farewell to employees and ended his tumultuous 20-month reign.
Jim Press, who was Toyota Motor Corp.'s top US executive until he joined Chrysler in 2007, was named deputy CEO and will probably run the company when Marchionne is in Italy.
In an e-mail to Chrysler's 54,000 workers, Marchionne acknowledged the company's problems and said he was determined to repair them. Five years ago, he wrote, he stepped into a similar situation at Fiat, perceived at the time as a failing bureaucracy that made poor cars.
"Through hard work and tough choices, we have remade Fiat into a profitable company that produces some of the most popular, reliable and environmentally friendly cars in the world," he wrote. "We can and will accomplish the same results here."
Marchionne's more immediate problem is weak offerings in the market for small and midsize cars. Its smallest vehicles, the Dodge Caliber and Jeep Compass and Patriot, sell far less than the Toyota Corolla, the nation's top-selling small car.
Work is already under way to convert Chrysler factories to produce small Italian-
"The need is now, but unfortunately, it'll be at least a two- to three-year process," said Michael Robinet, vice president of CSM Worldwide, a Detroit-area auto industry consulting firm.
Chrysler plans to roll out new versions of its popular Jeep Grand Cherokee SUV and Chrysler 300 large sedan by the end of next year, along with a rechargeable electric vehicle. But Bragman said those were probably delayed in the bankruptcy process, making the next 18 months look iffy.
The good news for Chrysler is that it has cut its expenses enough that it can break even with lower sales, said Gary Dilts, senior vice president of global automotive operations for J.D. Power and Associates.
He said much of the drop in sales this year for Chrysler came from cuts in its sales to rental car companies. Chrysler actually made small gains in market share in sales to individuals in the first five months of 2009.
The struggling company has offered the heftiest rebates and other incentives to buyers recently. But it remains to be seen whether Chrysler can produce amazing cars, not just amazing deals.
Aside from the electric vehicle, Chrysler's upcoming new models are not particularly fuel-efficient, and they could suffer if gas prices keep climbing. Those same gas prices could help Chrysler benefit from Fiat's small-car technology.
Marchionne has said Fiat could start selling a successful, North America-made remake of the 500 minicar as soon as next year. Fiat also plans to relaunch the sporty Alfa Romeo brand in North America.
The new Alfa 149 midsize five-door hatchback, to be unveiled next year, would be built in North America as a successor to the larger Alfa 159, Marchionne has said.
But Toyota and Honda remain the champs of midsize cars, and Fiat still has to prove itself to American drivers.
"A lot of us have residual memories of Fiat that are less than stellar," Dilts said. "But I think the product looks good. They've got some great small engine capabilities. With a little bit of pressure on gasoline, I think they're going to give Fiat a look." http://www.hindustantimes.com/StoryPage/StoryPage.aspx?sectionName=
MARCHIONNE HAS DUAL TASK OF REVIVING CHRYSLER, KEEPING FIAT FIT Bloomberg See this story in: Business Standard
Milan: Fiat SpA Chief Executive Officer Sergio Marchionne, who won his six-month battle to gain control of Chrysler LLC, has yet to prove he can rebuild the US carmaker without losing sight of his original challenge: bolstering Fiats finances.
The 56-year-old Fiat CEO is assuming the same role at Chrysler after the Turin, Italy-based carmaker and its partners on Wednesday bought most of Chryslers assets, creating the worlds sixth-largest auto producer. His first move was to reshuffle the US companys leadership around its Chrysler, Jeep and Dodge brands, emulating a similar move he carried out at Fiat when he arrived in 2004.
Chrysler is losing as much as $100 million a day, global car demand is withering amid the biggest recession since World War II, and Marchionne needs to refinance about 4.5 billion ($6.3 billion) of Fiat debt coming due this year. Sergio Marchionne is at the top dealing with it all and theres a lot to do, said John Buckland, automotive analyst at MF Global Securities in London who has a sell rating on Fiat shares. Fiat has to deliver platforms and technology and organize things so it can sell Chrysler cars and Fiat cars. Marchionne, seeking to trim Fiats 6.6 billion of net debt, has insisted the Italian automaker wont inject cash into the newly formed Chrysler Group LLC. Fiat is providing technology such as engines and vehicle designs and will own an initial 20 per cent of Chrysler Group. Fiat, which is controlled by Italys Agnelli family, will have management control as well as three of nine board seats.
Jim Press, who had been one of two presidents of Chrysler LLC, was named deputy CEO. He will also be a special adviser to Marchionne. The carmaker confirmed its goal for earnings before interest, taxes and some items of more than 1 billion this year. Sales slumped 25 per cent to 11.27 billion in the first three months of this year. Sales in Fiats home market, its biggest, fell for a second month in May, posting an 8.6 per cent decrease and bringing the decline this year to 15 per cent. However, Fiat gained market share against rivals including Renault SAand Bayerische Motoren Werke AG, helped by government incentives to trade in older cars and as consumers pinched by the economic crisis traded down to smaller, less-expensive models such as the Panda and the Punto. Moodys Investors Service estimates that global auto sales will fall 13 per cent this year, with the US leading with a 24 per cent drop. Vehicle registrations in Western Europe will drop 11 per cent, according to the ratings firms forecasts.
CHINA'S BEIJING AUTO INTERESTED IN VOLVO See this story in: Business Standard
Shanghai/Stockholm: Beijing Automotive Industry Holding Corp (BAIC) is interested in buying Ford Motor Co's (F.N) Volvo car unit, the Wall Street Journal reported, adding a new name to a list of potential Chinese bidders for the Swedish luxury car brand.
A team of BAIC executives is likely to visit Volvo's Gothenburg, Sweden headquarters as early as Thursday to meet with its executives and tour its research-and-development and manufacturing facilities, the paper said, citing three people familiar with the situation.
A spokesman for state-run BAIC, China's fifth-largest automaker, said he was not briefed on the company's interest in any foreign auto brands. BAIC expressed an initial interest in General Motors' (GMGMQ.PK) European brand, Opel, earlier this month but did not follow through.
Other potential Chinese buyers for Volvo that have cropped up in news reports include Geely Automobile Holdings (0175.HK), Ford's China partner Chongqing Changan Automobile Co (000625.SZ), and Chery Automobile.
Stefan Elfstrom, spokesman for Volvo Cars, declined to comment.
"Ford has said it is a process ongoing, but they haven't disclosed any names," Elfstrom said. Ford Europe could not be reached immediately.The worst industry downturn in decades has hammered major global automakers in the past year, forcing Ford's U.S. rivals, GM and Chrysler, into bankruptcy and leading to sales of a number of auto brands and assets.
ONCE Burned But analysts said Chinese firms, burned by past acquisitions that backfired, lack skill and stomach to take over the entire operations of their foreign counterparts, and are more likely bargain hunters for technologies and assets being sold in secondary sales.
"Don't take the reports seriously. Lots of so called Chinese interest are leaked by investment bankers and lawyers trying to drum up deals," said Zhang Xin, an analyst with Guotai Junan Securities.
An industry source told Reuters BAIC was interested in technology and designs which could then be used in its first self-developed car which it hopes to roll out in 2010.
BAIC currently only makes Mercedes-Benz and Accent cars at joint ventures with Daimler AG (DAIGn.DE) and South Korea's Hyundai Motor (005360.KS).
"BAIC doesn't even have a in-house design car brand so far. How can anyone realistically expect it to take over and turn around Opel or Volvo?" asked the source, who was not authorized to speak publicly on the matter.
One of the people told Wall Street Journal that BAIC's interest was "preliminary" and "nascent."
Geely Automobile, which has also been talked about as a potential bidder for Volvo and GM's Swedish unit Saab, said last month that it has no intention of making a takeover offer for either Volvo or Saab.
Earlier this month, little known Chinese machinery maker Tengzhong Heavy Industrial Machinery agreed a tentative deal with GM on its Hummer unit, but faces challenges completing the purchase.
Chinese state media has run lengthy commentaries predicting the deal could be vetoed by the Chinese government as it runs against Beijing's policies to promote small and clean cars.
MAZDA MULLS ALLIANCE WITH FORD Bloomberg See this story in: The Hindu Business Line
Mazda Motor Corp., Japan's second- largest auto exporter, is considering forming an alliance with Ford Motor Co. and other carmakers to develop electric devices that boost fuel efficiency. "There is a possibility to form an alliance with Ford and others," Seita Kanai, senior managing executive officer in charge of development, said at a press conference in Tokyo. Mazda, 13.8 percent owned by Ford, will continue its partnership with the U.S. automaker and share vehicle platforms, the Japanese carmaker's President Takashi Yamanouchi said. Mazda will keep up spending on research and development on new models and engine technology, notwithstanding the global recession that has cut demand for new vehicles, The Hiroshima-based carmaker said in April.
The company aims to boost the fuel efficiency of its models 30 percent by 2015, and develop "electrical device solutions" and a new Mazda hybrid, said Yamanouchi, said in April.
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| ECONOMY & FINANCE Go To Top RUPEE FALLS 10 P AGAINST DOLLAR The Hindu Business Line
Mumbai: The rupee fell by about 10 paise against the dollar tracking the overseas currency markets and the domestic equity market. The dollar appreciated against most overseas currencies such as euro, said a forex dealer with a private bank. The weak trend in the domestic equity market and oil prices touching $71 for a barrel also put pressure on the rupee, he said. The rupee opened higher at 47.35/37 and closed at 47.58/60, lower from the earlier close of 47.48. Some amount of do llar selling by exporters helped to arrest the rupees slide, the dealer added. In the forward premia market the one-year closed at 2.41 per cent (2.4 per cent). http://www.thehindubusinessline.com/2009/06/12/stories/2009061251600600.htm
PTI See this story in: The Hindu Business Line
Mumbai: After a fluctuation of 323 points during the day, the Bombay Stock Exchange benchmark Sensex ended nearly 55 points lower on investors booking profits at higher levels. The Sensex, which touched the day's high of 15,563.74 and a low of 15,240.73 points, closed with a loss of 55.34 points at 15,411.47 on heavyweight stocks of Reliance Industries and Infosys falling sharply. The two stocks carry nearly 27 per cent weight on the Sensex.
The 50-share National Stock Exchange index Nifty fell by 17.55 points at 4,637.70. It moved between 4,679.55 and 4,586.15 points during the day. Selling pressure picked up as market participants booked profits at higher levels.
An undercurrent of the market remained bullish as the 30 Sensex shares traded at 18 times the estimated earnings this year, the highest in Asia after Japan, China and Taiwan. However, a rise in metal stocks following a steep increase in base metal prices in the global markets on easing concerns of recession saved the market from any major fall. - http://www.thehindubusinessline.com/blnus/05111901.htm
INFLATION RATE DIPS TO 0.13%; FOOD STILL DEARER The Hindu Business Line
New Delhi: The annual wholesale price index (WPI)-based inflation rate has further slipped from 0.48 to 0.13 per cent for the week ended May 30.
That makes it the thirteenth consecutive week where year-on-year inflation has ruled below the 1 per cent level. The all-commodities WPI (base 1993-94=100) was provisionally placed at 232.6 for the latest recorded week, as against 232.3 a year ago. The coming week (i.e. ended June 6) could well see the headline inflation rate turning negative the first time in over two decades. The reason for this is that the WPI last year, between May 31 and June 7, shot up from 232.3 to 236.5. The base effect of this 1.8 per cent rise in a single week is likely to produce a negative inflation rate, when the June 6-ended WPI data is released.
The sub-one per cent overall inflation numbers, however, hide the much higher price increases registered in foodstuffs. Thus, while the all-commodities annual inflation for the latest recorded week was 0.13 per cent, the corresponding rate for the primary articles group stood at 5.7 per cent. And within primary articles, the year-on-year price rise was 8.6 per cent for food articles which included foodgrains, fruits & vegetables and milk.
The significant reduction in headline inflation over recent weeks has been mainly brought about by the fuel, power, light and lubricants and manufactured products groups, which have respective weights of 14.23 per cent and 63.75 per cent in the all-commodities WPI, compared to 22.02 per cent for primary articles.
For the week ended May 30, the WPI for the fuel group actually fell 6.68 per cent year-on-year, while inching up by 0.39 per cent for manufactured products. But within manufactured products again, the inflation in food products was 12.36 per cent. The latter included a disconcerting 31.27 per cent for sugar. http://www.thehindubusinessline.com/2009/06/12/stories/2009061250130700.htm
NEED GROWTH WITH FISCAL DISCIPLINE: FM See this story in: The Indian Express New Delhi: Finance Minister said on Thursday there was a need to find ways to bring the economy back to higher growth path without increasing the fiscal deficit. Pranab Mukherjee said the government would focus on infrastructure, agriculture and employment generating sectors to protect growth and jobs.
"The stimulus measures by the central (federal) government had a cost in terms of deterioration of centre's fiscal deficit which went up to 6.2 per cent of GDP in 2008/09," he told a gathering of state ministers.
"High levels of fiscal deficit are not sustainable in the medium to long term," a government statement quoted the minister as saying.
"We have to deliberate on ways and means to bring back the economy to higher growth trajectory without fiscal profligacy," he said. "We have to resume the process of fiscal consolidation at the earliest." http://www.indianexpress.com/news/need-growth-with-fiscal-discipline-fm/474847/
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