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| INDUSTRY Auto industry gears up for a new tax regime Indian auto industry can lead light weighting way: MIT expert Moving cars by rail to become costlier from INTERVIEWS/FEATURES Western firms should come out with low-cost small cars for Indians CARS, SUVs, MUVs Hyundai launches free car care clinic Ford India aims to use EcoBoost to power cars Ford India commissions new facilities at expanded plant near Chennai Tata Motors lines up Rs 160 cr for e-car project Audi to set up five more showrooms COMMERCIAL VEHICLES CONSTRUCTION & AGRI MACHINERY It wont be cheap. But its a Harley-Davidson! A strong local dealer network will be key to success: MD, Harley-Davidson India COMPONENTS Lumax may take JV route for infra foray | ALLIED INDUSTRIES Strikes cost us Rs 1,000 cr, says MRF CMD Mammen Dunlop Sahagunj unit to restart soon FINANCE & INSURANCE INTERNATIONAL NEWS Toyota hybrid vehicle sales crosses two mn mark PSA Peugeot Citroen eyes Mitsubishi tie up: Philippe Varin ECONOMY & FINANCE Sensex surges 290 points; auto, metals move up
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| INDUSTRY Go To Top GLOBAL AUTO FIRMS SEE INDIA AS SMALL-CAR EXPORT FACTORY HUB Janaki Krishnan / Reuters mint (Web & Print Edition)
Mumbai: Global car makers are lining up to make India, home of Tata Motors Ltds Nano, the worlds cheapest car, a base for their export operations as they try to cut costs and move to compact, fuel-efficient vehicles.
South Koreas Hyundai Motor Co., which already exports close to half of its Indian output, wants to make India its global hub for making and exporting small cars.
Toyota Motor Corp., the worlds largest auto maker, is designing a compact car for the Indian market and plans to make the country its small-car hub by 2012. And Ford Motor Co. is investing about $500 million (Rs2,445 crore) to double capacity at its India plant, which will not only produce a compact car but become a strategic global production hub.
Japans Suzuki Motor Corp. has a strong foothold as the majority owner of leading Indian car maker Maruti Suzuki India Ltd, which is spending at least $300 million on building a small-car research and development centre in the country. The firm exported 54,707 cars in the five months from April, the start of the 2010 fiscal year, more than double its shipments for the same period a year earlier.
Apart from the obvious cost advantages, India has a good base of component suppliers who come with the experience of having supplied to global car companies, said Deepesh Rathore, auto analyst with IHS Global Insight.
Indias domestic auto market is relatively small considering a population of at least 1.1 billion, with around 1.5 million passenger vehicles being sold last year. It is, however, a fast growing market, even in an auto downturn. For the first four months of 2009-10, domestic car sales rose nearly 10% from a year earlier. That potential offers an extra attraction to base export operations in India.
Remember, India, along with Brazil, Russia and China, is a fast growing market, said P. Balendran, vice-president, marketing, General Motors India. All big companies have created capacities here. So when they have the capacity, it has to be utilized. Until the domestic demand picks up, these cars will be exported, he added.
General Motors Corp., plans to export 20% of the output from its plant in Maharashtra in western India by 2011, once it reaches its full capacity of 140,000 units. Hyundai is stepping up production of its popular i20 hatchback to export to more countries to meet the growing demand.
John Parker, Fords Executive vice-president of Asia-Pacific and Africa, said its compact car would cater to local and export markets. We see lots of potential for exporting cars from India, he said, adding that India, along with China, Thailand and Africa, was seen as a strategic centre, especially for small cars. http://www.livemint.com/2009/09/04161437/Global-auto-firms-see-India-as.html
AUTO INDUSTRY GEARS UP FOR A NEW TAX REGIME Waman Parkhi The Financial Express (Motobahn)
The auto industry is sensitive to the changes in the economy as well as fiscal policy and is accepted as the barometer of economic well-being of a country. The imminent introduction of the goods & services tax (GST) replacing central excise duty, service tax, state value-added tax (VAT) and central sales tax (CST) may change the way business is done.
The practice in this industry is to sell vehicles to a dealer network that sells as well as services the vehicles. More than 80% of the sales is generally outside the state of manufacture. The distribution of the vehicles may be by way of direct sales to dealers, currently subjected to CST or by stock transfers to depots and stockyards across the country. Both these models entail a tax cost, which gets embedded in the final price to the customers. Though the rate of CST on inter-state sales is a mere 2%, it breaks the credit chain as CST cannot be set off by the dealer against his VAT liability. Similarly, though stock transfers are not eligible to tax, state VAT laws provide for retention or reduction of input tax credits.
The GST regime is expected to overcome this and provide an ninterrupted credit chain. GST, being a consumption tax, is likely to accrue to the state of consumption of goods irrespective of the state of sale. This represents a fundamental shift in the point of taxation from the earlier origin-based taxation system. Though the modalities of collection and transfer to the consumption state are not clear at this stage, it would certainly entail a change in tax costs in the supply chain.
Currently, stock transfers do not attract any tax (other than the loss of input tax credit in the exporting state). It is possible that GST would be applicable on all supplies, including stock transfers. This would have its own challenges. The valuation of such stock transfers have to be tackled as there would be no sale value available to calculate tax. There could be significant cash flow issues as well, if tax is to be paid upfront on all stock transfers. Special transition provisions will be required for the in-movement stock from factory to depot on the date of introduction of GST.
Most of the new investments by auto companies have gone to the states that have offered most competitive tax incentives. Such incentives are largely in the form of subsidies/loan equal to the VAT/CST paid in the state. These arrangements will have to be relooked by the state governments. For instance, under the GST regime, the state of manufacture will not collect any tax (that is, CST) on inter-state supplies. It needs to be seen as to how the existing incentives (in terms of CST exemption/deferral) can continue. Current benefits given under central excise law in states such as Uttarakhand, Himachal Pradesh etc would also need to be relooked at.
One of the reasons for auto component manufacturers to set up units close to OEM plants is to avoid breaking of the VAT credit chain. The removal of CST in the new regime would provide a new opportunity for consolidation of these units into larger units, which would be good for economic efficiency of the sector as a whole.
If the GST rate is fixed anywhere between 16-18%, as being discussed currently, it may be a good news for the industry. The current effective rate works out to be more, particularly for the bigger cars, where the excise duty is higher. That said, GST does offer significant challenges to the industry, as well as opportunities. The industry needs to identify the potential issues and engage into a proactive dialogue with the government to ensure that their concerns are addressed. http://www.financialexpress.com/news/auto-industry-gears-up-for-a-new-tax-regime/512994/2
INDIAN AUTO INDUSTRY CAN LEAD LIGHTWEIGHTING WAY: MIT EXPERT The Economic Times (Delhi Print Edition)
Chennai: One of the ways to look beyond the global recession is for the automotive industry to take a cue from the semi-conductor industry by re-designing itself. Indian auto industry can take the lead in lightweighting as it is still in the early stage of significant growth and hence, not too late to plot a different course, says an expert from the Massachusetts Institute of Technology (MIT). Speaking at the Automotive Component Manufacturers Association of India (ACMA) 49th annual national conference held in New Delhi on Thursday, MIT management prof Charles Fine said technologies for lightweighting of vehicles were difficult and not fully-developed, which presented India an opportunity to gain leadership in this new area of technology, Exhorting Indian auto industry to take the lead and gain a global competitive advantage in lightweighting of vehicles, he said the entire supply chain would have to be involved in this process as other competing countries would find it difficult to copy this model of competitive advantage. Companies like Mercedes, BMW, Porsche, Toyota, Honda and Tata have seen strategies paying off on a number of counts including high performance vehicles, high productivity factories and supply chains, low-cost vehicles and high fuel economy vehicles. Toyota and Honda have an early lead in hybrids but there are many companies investing heavily in power train technology. In light weighting, despite the existence of some aluminium frame vehicle, the field is still wide open. However, the window of opportunity for taking industry leadership will close, Prof Fine said, dwelling on how the semi-conductor industry had redesigned itself to become a benchmark.
CII president Venu Srinivasan, in his keynote address, said Nano and Xylo in the small car and SUV categories respectively are products that showcased Indias engineering competence in low-cost yet quality products. Highlighting the two-fold challenges - free trade agreements (FTAs) and climate change - for the auto sector, he said one must not forget the global context. Though climate change posed a threat, it also offered a huge opportunity. But, 15-20% internal transaction costs, logistics disadvantage and lack of technical education infrastructure were denting Indias edge compared to China, which has been overtaking its neighbour on all fronts. Earlier, ACMA president J S Chopra said the three key challenges for the industry were globalisation, technology trends, and manufacturing capacity. According to the Automotive Mission Plan, although the auto component industry proposed incremental investments of $1.5 billion annually till 2016, actual investments over the last five years had touched only $1 billion per year. Vehicle manufacturers had been forced to change their product strategies. I believe that the future of the automobile is going to be in small cars worldwide with greater emphasis on higher quality and more features. If we look at the world, 60% of cars globally will be relatively smaller, about 25% medium and 15% large cars, he said. Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved"
MOVING CARS BY RAIL TO BECOME COSTLIER Mamuni Das, Meera Mohanty The Hindu Business Line (Web & Print Edition)
New Delhi: Moving automobiles by Indian Railways wagons is set to become more expensive with effect from Saturday.
For a distance of 1,200 km (distance between Maruti Suzukis Gurgaon plant and Mundra port), the end-to-end rail transportation cost will become Rs 7,900 per car. The corresponding road transportation rate is Rs 6,900 per car, said industry sources.
The domestic car transportation market is primarily served by road with companies moving 95-96 per cent of their cars by road. The road transporters are able to provide end-to-end service unlike the railways.
The Railway Ministry has decided to withdraw the 25 per cent discount it had offered for specially designed wagons of Indian Railways (called BCACM wagons) to carry automobiles.
BCACM wagons are actually modified container flat wagons with two tiers developed for carrying automobile traffic.
In August 2008, Indian Railways had started a pilot project for moving automobiles by modifying container flat wagons.
Railways had then decided to offer a 25 per cent discount on the tariffs so that they could match the lower tariffs offered by road transporters.
For instance, the Railway freight rate per Maruti Alto between the two rail heads (1,200 km) in a BCACM wagon is Rs 7,243. But the car manufacturer has to undertake an added cost of Rs 700 a car (last mile connectivity charge of Rs 500 and loading/unloading charge of Rs 200).
Adani Logistics But, Adani Logistics, the Adani Groups container train operating arm, which transports cars in container trains between Patli (in Haryana) and Mundra port, claims that it is transporting cars at tariffs of Rs 6,900 a car.
Adani Logistics uses special containers of South African firm Kar-trainer and fits in five small (Maruti Suzuki 800 model) cars in each 40-feet unit equivalent container.
Each rake can carry 45 containers, thus, allowing 225 cars to be transported in a rake. The cars are then exported from Mundra port to various European countries in NYKs vessels. http://www.thehindubusinessline.com/2009/09/05/stories/2009090551211500.htm
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| INTERVIEWS/FEATURES Go To Top In just over two years since setting up its assembly plant in Chennai, BMW India has achieved what was once thought as something extremely difficult if not impossible emerge as the No 1 in luxury car segment in the country. Hindustan Times caught up with BMW India President Peter Kronschnabl at his office in Gurgaon for a short tete-a-tete. Excerpts
Is 2009 the dream year you were looking forward to?
We have our targets for each year and our own goals to achieve. When we set up our plant in Chennai one thing we were eyeing was obviously the top spot but other than that we also know that the luxury car space in India is too small and needed to expand. We have done well this year so far, growing by 14 per cent till July having sold 2008 cars in the year. The segment as a whole has grown by only in single digits so we are happy to have led the growth. We want to maintain the momentum and only in December, if we are No. 1 will the champagne be uncorked.
Your competitors in the segment Mercedes and Audi are also expanding dealerships and getting aggressive. How prepared or confident are you with the challenge?
We are also expanding our presence and increasing our footprint in Tier 2 cities. In the next couple of months, there will be dealerships opening up in Jaipur, Indore and Bhubaneshwar and there will be new products on offer like the Z4 roadster in October. So we are not sitting idle but confident of turning the tables on competition.
With the way you are growing, would you need to expand your capacity anytime soon?
We have a 3,000 unit assembly capacity in Chennai but we have a lot of space available inside the factory to expand production should the need arise. I dont see any major investment requirement to expand capacities in the near term as we can easily produce much more cars from the existing facility.
The luxury segment in India is still very miniscule in comparison. What growth do you expect going forward?
Luxury car segment right now is approximately at 9,000 cars per annum. I believe this segment will double itself by 2015, while 2010 will be the first year when the market would hit five digits. We are proud to have played a major role in expanding the segment and helping it achieve its true potential.
Are you surprised that global recession had such a marginal role to play in the Indian automobile industry?
No, we arent because we are always confident about the economys resilience here. The reason for this is simple, the growth in India comes from domestic demand and the industry is not based on exports.
WESTERN FIRMS SHOULD COME OUT WITH LOW-COST SMALL CARS FOR INDIANS Yogima Seth The Financial Express
Come 2020 and India will be the third largest car market after China and the US, thanks to the country's rising potential for designing low-cost cars that are fast gaining popularity in the domestic, as well as global markets, says Stephen R D'Arcy, global head (automotive practices), PricewaterhouseCoopers in an interview with FE's Yogima Seth.
Excerpts:
With all major global auto players venturing into India, what potential do you see in the Indian automobile industry over the next few years?
India has a very bright future and is one of the most important markets across the globe with its huge growth potential. It is estimated that there will be 4-5 million cars in the next seven to eight years, compared to 1.5 million cars but this would come on the back of increased investment in infrastructure, growth in exports and alignment of government tax policies in a manner to encourage manufacturers to set up operations in the country. Since the penetration levels in India are very low, to the tune of eight cars per 1,000 people, against 50 cars per 1,000 in China and nearly 600 cars per 1,000 people in the US, and income levels are going up, a lot many people now have the potential to own a small car and India has an expertise in this segment.
Though there are 18-19 car manufacturers in India, a majority of them are struggling to establish themselves on a sustainable basis. What do you think can be the focus area for these global players?
The western companies need to have a complete customer-centric approach. There is a need to understand the kind of products that Indians want and accordingly, come out with low-cost small cars to cater to the domestic market. Further, all these global players who have ventured into India need to set up a strong distribution system and establish easy access to spare parts, either on their own or in alliance with Indian companies. These companies can even enter into alliance with Indian manufacturers for designing new models, since Indian companies have a high level of expertise and these kinds of ventures could be more effective.
What kind of opportunities do you see for Indian component suppliers overseas? Indian suppliers need to learn how to work with purchasing system of the western companies and ensure that delivery schedules are protectable. There has to be greater transparency and risk management involved at their end. The component manufacturers need to capitalise better on their ability to design and engineer parts to be competitive with their counterparts in China.
Is the demand for small cars a temporary phenomenon? What opportunities do we see for the export of made-in-India cars in the US and Europe?
There has been a shift from bigger cars to smaller cars in different parts of the world and the change is a long-term sustainable change in customer preference as fuel prices continue to go upward. Further, the emergence of a large number of new customers in economies like Brazil, Indonesia and others, coupled with the rising concern over green houses gases, will mean that the demand for small cars will continue to be there in the foreseeable future. India has an advantage over China with domestic companies being more advanced in designing low-cost vehicles and has better expertise in conducting business with developed worlds.
What is the potential of hybrid vehicles in India?
Hybrid vehicles could only be successful when they present better economic propositions for consumers. Since the amount of saving in fuel bill, vis- -vis a owning a hybrid vehicle, is not enough to justify the cost of these vehicles, governments can offer subsidies to companies working on hybrid technologies and can also fund the research and development for battery technology so that these vehicles become price competitive. With all this, it will take at least another five years to see a shift from gasoline to electric-run vehicles.
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| CARS, SUVs, MUVs Go To Top AUGUST SALES GROW BY 10.8 PER CENT FOR HYUNDAI Agencies See this story in: Hindustan Times (Web Edition)
New Delhi: India Ltd, the country's second largest car manufacturer and the largest passenger car exporter for the first time in many months saw domestic sales outpace the growth in the overseas market. While the cumulative sales grew at a healthy double digit growth rate of 10.8 per cent, domestic sales went up by 12.9 per cent and exports grew by 8.7 per cent.
HMIL's total sales for August, 2009 stood at 49,521 units against 44,710 units in August, 2008. The domestic sales accounted for 24,401 units as against 21,610 units in August 2008 while the overseas sales grew from 23,100 units last August to 25,120 units in August, 2009.
The segment-wise cumulative sales in the month of August, 2009 are as follows: A2 Segment (Santro, i10, Getz & i20) 45,495 units; A3 Segment (Accent & Verna) 3979 units; A5 Segment (Sonata Transform) 47 units; and SUV Segment (Tucson) 0 unit.
HYUNDAI LAUNCHES FREE CAR CARE CLINIC Deccan Herald (Web Edition), Yahoo India (Web Edition)
Bangalore: Hyundai Motor India Limited, in an effort to extend the advantage of its services and free check-up to a larger number of its customers, announced its seventh nationwide free car care clinic.
http://www.deccanherald.com/content/23393/hyundai-launches-free-car-care.html http://in.biz.yahoo.com/090904/50/bau50f.html
FORD INDIA AIMS TO USE ECOBOOST TO POWER CARS Chanchal Pal Chauhan The Economic Times (Web & Print Edition)
New Delhi: Ford India, is looking to introduce its EcoBoost engine technology in its new cars that the company claims will raise fuel mileage by 20%.
EcoBoost, which uses gasoline turbocharged direct-injection technology, has already been launched by the US-based parent, in its compact cars and large trucks sold in the American market.
FORD INDIA COMMISSIONS NEW FACILITIES AT EXPANDED PLANT NEAR CHENNAI The Hindu Business Line (Web & Print Edition)
Chennai: With the launch of its affordable small car scheduled for the first quarter of 2010, Ford India has started a step-by-step commissioning of the new facilities at its expanded plant at Maraimalai Nagar near here. The more automated and modern plant will be able to eventually manufacture a total of 34 units per hour.
As part of the plan, recently, Ford commissioned a new paint shop that will enable it to introduce a new premium, three-wet high solids paint process that is claimed to be a first in India. The new paint shop will deliver a glossier, more durable and higher quality of paint finish to cars manufactured at the integrated facility. The new process is also said to be more environment-friendly thanks to the lower use of volatile organic compounds and increased recyclability.
Ford has also boosted the automation levels at the plant with the installation of as many as 82 robots 66 of them in the weld shop and 16 in the paint shop. It has expanded its assembly and trim line with the setting up of a new stamping line that is more automated and noiseless, and a flexible body shop and assembly line that can produce as many as six models at any point in time, including left-hand drive and right-hand drive versions.
The investments being poured into the expansion and modernisation of the plant are being timed to coincide with the testing, development and eventual roll-out of Fords much-awaited small car. The US parent had approved a total of $500 million to be invested in the expansion and modernisation of the facility. Till date a total of 70 per cent of the funds have been deployed.
Completion by 2010 Further progress in the form of setting up an engine plant with a capacity to produce 2.5 lakh engines a year is in full swing and is expected to be completed by early 2010.
Speaking to select media at the plant, Mr Micheal Boneham, President and Managing Director of Ford India, said that after completion, all the power plant requirements of Ford India including the ones currently being serviced out of Avtec will be met from this facility.
Further, to enable the plant to be an integrated development and production facility, Ford has completed the setting up of a 3.2 km-long vehicle testing track, which enables the simulation of all types of Indian road conditions. The circuit is located in a new 100-acre plot adjacent to the plant.
Talking about the expanded facility, Mr Boneham said that post-completion the plant will have a production capacity of two lakh cars a year on a three-shift basis. The new small car that will enable Ford to get into the volumes segment or affordable hatchbacks category is largely expected to take up the expanded facility.
The new hatch will fit the Governments stipulation for a small car and will therefore sport a 1.2-litre or smaller petrol engine and a 1.5-litre or smaller diesel engine and measure less than 4,000 mm. While the company remains tight-lipped about the new car, industry sources say that it could be based on Fords existing small car platforms such as the Ka and could also be priced as low as Rs 3 lakh. http://www.thehindubusinessline.com/2009/09/05/stories/2009090550060200.htm
TATA MOTORS LINES UP RS 160 CR FOR E-CAR PROJECT Nandini Sen Gupta The Economic Times (Web & Print Edition)
Indica Vista will, this year, become the second electric car to be exported from India since the Maini Group started selling its Reva as G-Wiz in Europe about five years ago.
AUDI TO SET UP FIVE MORE SHOWROOMS
Mumbai: Audi India is set to open five more showrooms by the end of this calendar year in Delhi, Chennai, Ludhiana, Kolkata and Mumbai (the second), said Mr Benoit Tiers, Managing Director.
The company has sales offices or interim showrooms in these cities but full-fledged showrooms will come up by the end of the year. Mr Tiers said setting up the network in these cities could even extend to the first quarter of 2010.
Rohin Nagrani Business Standard (Motoring)
Mumbai: Resurrection. Few can argue with a concept such as that. Countless Bollywood movies have celebrated it and then followed it up with sequels. They make for lovely back-of-the-book tales in a Readers Digest. And, of course, there are some that are corporate in nature. Right now, the automobile world has one such tale in the making General Motors.
Do a quick check on the Web and you can trace the last few months of GM the company is anything but a Niall Ferguson bestseller in the making. Senate hearings, filing for bankruptcy, change of guard and getting out of bankruptcy... you couldnt have asked for a busier corporation. GM insists the car to get them out of trouble will be the Volt. I say, hell no, its the Cruze, followed by the Beat, the two cars heading to your local Chevrolet showroom this winter. And, of course, many others around the world.
You really cant find a better car than the Cruze to begin a new innings with. In most countries, its a premium C-segment offering, taking on the best the Orient has to offer the Toyota Corolla and Honda Civic. Last year, the two cars sold a couple of million cars between themselves, combined! Now imagine if Chevrolet were to grab even a two-digit share of that figure you would find a whole bunch of suits at Aichi and Minato sweating.
They have more than enough reasons to loosen their tie-knots a bit. First things first, the Cruze will be available with a diesel engine from the word go. In fact, as the meat in the Skoda Octavia-Skoda Laura sandwich, the Civic and Corolla now have a tough task on hand because neither offers an oil burner.
And dont even get me started on the performance front, because this engine is a cracker. But what the Cruze represents is a big leap for the group its a serious effort to make it competitive without losing the essence of what a Chevrolet should be, in terms of offering value and making you feel good you bought one.
GM-DAT never made bad looking cars and it all began with its predecessor in India the Optra. The Cruze looks more grown up and a tad larger. The broad shoulders with its deep recesses that run across the length of the car seem to be inspired by the BMW 3 Series, but give it strong character. The double-decker grille with the bowtie up front is a take on Chevrolets American softroader lineup, while the large headlamps offset it rather well, along with the clamshell bonnet.
Creases are what make this car not another cheaply stamped saloon, thus giving it more character than the competition. Even the large flame-like tail-lamps, the ironed-out wheel arches and the coupe-like roofline exhibit attention to detail that one generally observes in more expensive cars.
From top to toe, it is one handsome car that turns heads wherever you go. In a city like Baroda, where the denizens are used to dime-a-dozen Cruze test mules running around, it still managed to attract quite a bit of attention, despite its not-so-flattering shade of sky grey.
Attention to detail marks the car even as you get inside. You get in via a keyless entry seen among premium D-segment cars. Place the key in your pocket and feel your fingers through to the Start-Stop button on the left side of the steering. Button? Yes, thats another D-segment feature that is a first for the segment that the Cruze fits in.
But before all that, you will be amazed as to how well the interior has been designed. Instead of the traditional beige, GM has adopted a mix of black, silver and grey to work wonders. The funky blue backlit dials carry its theme to the centre console and the overall ambient lighting throughout the cabin. The V-shaped centre console liberates a lot of knee space and the buttons are nice and large, though not very well marked out.
The multi-information display on top of the console lets you fiddle with lights, radio settings, locking systems among others, while the one on the instrument binnacle deals with real-time fuel efficiency and range, among others. This is also the first GM car in known memory to be sold in India with the indicator on the right side. Goes to show that manufacturers have just been plain lazy to shift them so far!
Space management is good too. The front seats are supportive, while the tilt-and-reach adjustable steering helps you choose a good driving position. The rear has good legroom and knee-room too, but the recessed underfloor beneath the front seat makes it odd to find a comfortable position to rest your feet on.
Our car was a pre-production prototype and there were some badly finished plastics, while the aircon seemed more suited to the cold climes of Europe than the Thar desert-like conditions of Gujarat, so we shall put the production car through another battery of BSM tests.
But then, when a car such as the Cruze crosses speeds of 200 kph, you just look up and take notice. You notice the rev-counter needle as it hits against the redline, gear-for-gear. You notice the scenery becoming a blur really fast. Thats pretty much pinned down to the 1991cc turbodiesel that nestles under that clamshell bonnet, developing 148 bhp at 4000 rpm and 33 kgm at 2600 rpm.
Despite sharing the engine with the Captiva, the VCDI as it is called, is no different in terms of power and torque from the SUV. Rather, the tuning changes are limited to the ECU, intake and exhausts. Oh, and before you forget, the Cruze sits lower and weighs nearly 400 kilos less. So when it despatches the tonne in just 10 seconds, you know this car is bloody quick! So quick that it is the smartest moving diesel saloon this side of a BMW 320d.
Registering a top speed of 202.1 kph on our testing equipment, we were mightily impressed with the way it moved. Just like the Optra diesel, the car is extremely quick not only from a standing start, but also through the gears, registering a time of just seven seconds to get from 80 to 120 kph. The only weak link we found was massive turbo lag below 1900 rpm, which is strange for a variable geometry turbo, while the gearbox can be a little notchy when fast shifting is called for.
Hugging the car to the road is independent suspension at the front and a compound axle at the rear, unlike the all-round independent units of the Optra. This helps to an extent as the car feels more planted at high speeds, and only tends to be affected by crosswinds at speeds above 180 kph. Based on the Delta 2 platform that also anchors the new Opel Astra, the car feels more rigid and has a higher level of neutrality in its chassis tuning.
Unlike the Optra, where the diesel engine felt like an afterthought, the car here is designed around this engine. Because of that, the steering has more feel and is more precise, while the overall damping is also a notch higher. This is also down to the specially-designed-for-Cruze JK Vectra boots that adorn its alloy wheels.
There is close to no body roll, thanks to the presence of anti-roll bars, while it corners flatter and builds a lot of grip around switchbacks. But we still think that GM India shouldnt have deleted the stability programme on the car, which is standard on all variants available in Europe, right from the basic 1.6 petrol onwards.
Which is not what GM will do to begin with. We will have this diesel at launch, while a 1.8 petrol with the manual and a 6-speed automatic are being considered.
Like the Optra, expect a couple of trim levels to be offered, with the base variant slipping in below Rs 12 lakh, while the premium variant LTZ tested here available at Rs 13.5 to 14 lakh, ex-showroom Mumbai. It means a hefty premium for a car that wears the bowtie a working mans car in most markets.
But for once there is a difference here the bowtie feels apt. In terms of kit, performance and value, the Cruze delivers, and delivers a fitting blow to its competition. Now thats a good resurrection story, if there ever was one. http://www.business-standard.com/india/news/cruze-liner/369101/
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| COMMERCIAL VEHICLES Go To Top WEVE MISSED YOUR BUSES, GOVT TO TATA Hindustan Times (Web & Print Edition)
New Delhi: Industrialist Ratan Tata is facing pressure from the Centre after his group slipped up in delivering 4,700 buses ordered by three state governments under the ambitious Jawaharlal Nehru Urban Renewal Mission, (JNNURM) to spruce up their public transport system.
The urban development ministry has shot off a letter to the Tata group chairman, seeking a clarification on the delivery of the vehicles ordered by Delhi, Karnataka and Andhra Pradesh.
The government had sanctioned about Rs 4,000 crore as a one-time grant under the JNNURM for the purchase of buses as part of the second stimulus package to revive the economy in February this year. States were allowed to purchase about 15,000 buses under the package.
The ministry has written to Ratan Tata as the delivery schedule of buses for these states has not been good, a senior official in the ministry told Hindustan Times on conditions of anonymity.
Tata Motors had sought an extension till September from the state governments for delivery of buses that were otherwise to be delivered in June.
We are acting with alacrity to meet the delivery schedule. Delivery schedule is different in different states and we are trying to meet it, a Tata spokesman said. The government in its announcement had promised to provide assistance to 63 cities under the JNNURM on the condition that the buses should be delivered if the delivery of buses took place before June 30.
JNNURM was launched in 2004 by the UPA government. The programme was aimed at bringing an integrated development of infrastructure services by providing adequate funds to meet the deficiencies in urban infrastructure services. This includes funding infrastructure projects relating to water supply and sanitation, sewerage, solid waste management, road network, urban transport, and redevelopment of old city areas. http://www.hindustantimes.com/We-ve-missed-your-buses-Govt-to-Tata/H1-Article1-450395.aspx
EICHER CV SALES RISE 37% See this story in: The Hindu Business Line (Delhi Print Edition)
Mumbai: VE Commercial Vehicles, the joint venture between Eicher Motors and Swedens Volvo, said on Friday it sold 2,443 Eicher branded trucks and buses in August, compares with 1,785 units a year ago, a rise of 36.9 per cent. Domestic sales were at 2,094 units (1,578 units), while exports rose to 349 units from 207 units, the company said in a statement.
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| CONSTRUCTION & AGRI MACHINERY Go To Top - - - - - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/3 WHEELERS Go To Top BAJAJ AUTOS FOCUS ON BIGGER 100CC BIKES PAYS OFF WITH DISCOVER Murali Gopalan The Hindu Business Line
Mumbai: Bajaj Auto believes that the heady market response to the new 100cc Discover clearly vindicates its stand that customers in this segment want bigger motorcycles. The bike reported sales of 48,000 units in the first full month of its launch and this has played a key role in helping the company come out of a phase of de-growth that lasted nearly a year.
After almost a year, our bike sales have turned positive and this is again a result of our changed strategies to bigger and more powerful bikes, Mr Rajiv Bajaj, Managing Director of Bajaj Auto, told Business Line.
This is a perfect validation of our hypothesis that 100cc owners want something bigger and sportier. The brand Discover fulfils this aspiration and is now coming into a category of its own. That is what brands are supposed to do by the end of the day, he added.
Going strong Hero Honda is the market leader in the 100cc segment with its Splendor and Passion brands still going strong. It is here that Bajaj Auto hopes to make a breakthrough with the new strategy of positioning bigger bikes.
During August, the Discover brand notched up sales of 65,000 units (factoring in 17,000 units of the Discover 135) and plans are underway to increase this to 80,000 units in September and October.
This is keeping in line with the companys target of producing 100,000 Discovers by the end of March 2010.
Growth drivers The new brand-led strategy has resulted in a sharper focus on only two models Pulsar and Discover which will be among the key growth drivers of the future.
Incidentally, the Pulsar did equally well in August with sales totalling 47,000 units of which the 150cc version accounted for a lions share followed by the 180cc and 220cc options. As in the case of Discover, Bajaj Auto would ideally like to see Pulsar sales touch 100,000 units by the end of this fiscal.
This month and the next will see the company produce 500,000 motorcycles of which the Pulsar and the Discover could account for over 270,000 units if everything goes according to plan. The XCD and the Platina will take up the balance.
The festival season momentum has been welcome from the viewpoint of boosting sales but Bajaj Auto believes this is a small component, at least in the case of the two big bike brands, since they will draw buyers through the year anyway.
According to Mr Bajaj, September and October will also see exports of 140,000 bikes (which include the XCD and the Platina). Apart from traditional markets such as Sri Lanka and Bangladesh, there has been encouraging feedback from new ones such as Uganda, which are doing 5,000 bikes a month. The Philippines accounts for over 7,000 motorcycles each month and Bajaj Auto is the market leader here with a 51 per cent share.
All this clearly shows that in terms of design, style and performance, our bikes are globally competitive, he added. Exports overall (including three-wheelers) reached a new high of 75,000 units in August and the target is 80,000 units this month. This translates into monthly revenue of at least Rs 300 crore.
The company plans to have one more major product launch in December and is hopeful of notching up 50 per cent year-on-year growth in the second half of this fiscal. http://www.thehindubusinessline.com/2009/09/05/stories/2009090551950300.htm
IT WONT BE CHEAP. BUT ITS A HARLEY-DAVIDSON! Malabika Sarkar, Radhika Sachdev
India is an emerging market in terms of leisure motorbikes. This is the appropriate time to bring in our products, when the economic condition is changing and the infrastructure is developing. This is the perfect time, a perfect brand and a perfect place, said Matthew Levatich, president and chief operating officer, Harley-Davidson Motor Company, while announcing the entry of the iconic brand in India last week.
He has a reason to be happy. After at least two years of spadeworkHarley-Davidson was granted permission to start operations in India by the Foreign Investment Promotion Board as early as in April 2007it was setting foot into the second largest motorcycle market in the world. Of course, sales are dominated by small, inexpensive bikes used as basic transportation, but Indias rapidly growing economy, rising middle class and significant investment in construction of new highways have opened the door to leisure motorcycle riding.
So the bigger draw is the rapidly evolving super bike segmentbikes that have engine displacement of around 1,000 cc, are priced between Rs 9 lakh and Rs 12 lakh in India. According to industry estimates, around 200 super bikes were sold in Indian in calender 2008, the first year since the launch of the big machines by Yamaha, Ducati and Suzuki in India. The market this year is expected to log around 500 in sales. Says Kapil Arora, partner, automotive practice, Ernst & Young, Harley-Davidsons entry is an exciting and positive development for the Indian two-wheeler market. It reinforces Indias importance as a fast growing automotive market that all OEMs want to tap into.
While it has managed to create a buzz, the journey for Harley-Davidson in India may not be as easy as an upcountry cruise. At home in the US, it faces competition from bikes that are decidedly anti-Harleylight sports bikes, a segment that Suzuki, Honda, Yamaha and Kawasaki ride with great panache. These brands are already in India and are leading the show with bleeding edge products and a fast expanding dealership network.
To give credit where its due, Harley-Davidson has skimped when it comes to new product development. The Harley V-Rod, a low-slung, high-powered machine is meant for hard-charging youths. Harley has a number to tackle Japanese sport bikes, Buell Firebolt, targeted at the youth, besides the starter motorbike Buell Blast.
But there is also the issue of price. High customs duty of 105% on these bikes, which adds to the final pricethe price tag in the end could be as high as Rs 7 to 15 lakh a piecewill put Harleys out of bounds for many aspirants. Says Arora of Ernst & Young, While there is long-term market potential, it would take at least three-five years to evolve. Given the high price tag associated with the bike owing to the steep import tariffs, unit sales will be modest in the immediate short term.
Lets not forget after-sales service, that can really make or break a brand. Opening many dealerships and training a retinue of service personnel may not make sense when volumesre low.
Evidently, the Harley-Davidson team will be busy sorting all this in its first year, unless it has found a few answers already. As it revs up, the brand unlikely to send shivers down the spines of competition. As VG Ramakrishnan, director, automotive and transportation, Frost & Sullivan, South Asia and Middle East, rightly points out, This is for people who have the moolah and want to be part of the cult group. I dont think Hero Honda or Bajaj would be bothered about Harley-Davidsons entryit is a different league all together. Its completely different in terms of engine segment, the cc segment and the type of customers they target.
HS Goindi, president, marketing, TVS Motor Company, echoes the sentiment when he says, Harleys entry is good news. With this, a whole new segment of motoring enthusiasts will venture into this market and hence it would mature. the Indian market?
Harley-Davidsons unique brand and distinctive motorcycles appeal to a wide variety of enthusiasts on different levels. Above all, Harley-Davidson motorcycles are an experience.
While our products and the Harley-Davidson experience have a strong appeal globally, each market is different and we approach each market in ways that reflect the specific needs of riders locally. The team at Harley-Davidson Indiaand the dealers we will be establishingwill be extremely focused on how best to connect with riders on an emotional level.
What will be your early focus areas in this market?
We expect sales to start out gradually, and we anticipate that as Indias economy continues to develop and its middle class continues to grow, there will be increasing opportunities to introduce our motorcycles to riders more broadly. We also plan to explore strategies to allow enthusiasts various routes to ownership, primarily through financing opportunities. Our current approach is to import our motorcycles, accessories and riding gear into India.
How do you plan to develop your dealershipa key for a brand like Harley-Davidson? Our success in India will, in many ways, be shaped by the degree to which our dealer network connects with riders and builds upon our core brand values in ways that are relevant to that market. We are looking for dealers who are highly committed, passionate, and dedicated to providing outstanding customer experiences. Harley-Davidson has the best dealer network in the world, and our expectations from our dealers are very high.
Why India matters Ranked No 1 in cruising and touring motorcycle brands, the story of Harley-Davidson is the stuff of fables. In 1903, two rookie bikers, William S Harley (21) and Arthur Davidson (20) set up a bootstrap operation at their 10-feet by 15-feet shed and rolled out the first Harley-Davidson bike. Harleys leave others in the dust for leadership in the most lucrative segment of the market, the big cruiser bike with sales in over 70 countries.
Arthurs brother, Walter, joined them in 1907 and business began to grow so well that Walters brother William also quit his well-paying job with the railroad to come on board. The hand-painted signboard on the old shed that read The Harley-Davidson Motorcycle Company, may be no more, but the original bar and the shield logo that was used for the first time in 1910 survives, as does the brand reputation for designing the worlds best mean machines. Harley-Davidson Inc is the parent company for the group of companies doing business as Harley-Davidson Motor Company, Buell Motorcycle Company, MV Agusta and Harley-Davidson Financial Services.
Across the world, the Harley Owners Group (HOG) is over a million strong members club. On July 12, 2008, in Milwaukee, Wisconsin, home of Harley-Davidson, the company opened a Harley-Davidson Museum.
It has 43 models in the portfolio, of which 12-15 will be brought to India as completely assembled lines. The baby boomers who comprise much of the HOG are now getting olderand this poses a problem. The company has admitted, the average age of a Harley owner is now 46, up from 37 in 1990. A strong footprint in India is designed to change that demographic. http://www.financialexpress.com/news/it-wont-be-cheap.-but-its-a-harleydavidson/512993/4
A STRONG LOCAL DEALER NETWORK WILL BE KEY TO SUCCESS: MD, HARLEY-DAVIDSON INDIA The Financial Express (Motoring)
What is the potential market size for Harley-Davidson in India?
Over the coming months, we are focused on four priorities: develop a strong local team of professionals who share Harley-Davidsons passion and embod your brand; build up on the already strong admiration for Harley Davidson in India by importing our motorcycles, accessories and apparel; develop a strong local dealer network committed to delivering exceptional quality and outstanding customer experiences; and enhance our understanding of the market, and deepen our insight into the best ways for Harley-Davidson to connect with India in the years ahead. Given this background, how are you looking to approach the Indian market?
While our products and the Harley Davidson experience have a strong appeal globally, each market is different and we approach each market in ways that reflect the specific needs of riders locally. The team at Harley-Davidson India--and the dealers we will be establishing--will be extremely focused on how best to connect with riders on an emotional level. What will be your early focus areas in this market? We expect sales to start out gradually, and we anticipate that as India's economy continues to develop and its middle class continues to grow, there will be increasing opportunities to introduce our motorcycles to riders more broadly. We also plan to explore strategies to allow enthusiasts various routes to ownership, primarily through financing opportunities. Our current approach is to import our motorcycles, accessories and riding gear into India.
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| COMPONENTS Go To Top AMTEK TURNS TO DOMESTIC MARKET, TO STEP UP NON-AUTO BUSINESS Shally Seth mint
Mumbai: New Delhi-based Amtek group, one of Indias largest auto component makers, is shifting plant and machinery from overseas subsidiaries to India to lower manufacturing costs, besides cutting excess capacity and diversifying into the aeronautics business.
Two group companies Amtek India Ltd and Amtek Auto Ltd, which are being merged, have been hit by a 50% drop in revenue because of a slump in demand for auto parts overseas. Apart from this, both the firms have $300 million (Rs147 crore) of debt on their books.
The company had raised $150 million in 2005 and another $250 million in 2006 through foreign currency convertible bonds or FCCBs and loans from commercial banks. About $100 million of this has been retired.
Amtek is relocating units in Letchworth and Tipton in the UK and Stanberry and Kellogg in the US. We are restructuring the overseas operations and moving them to India, said Arvind Dham, chairman of the group.
This, according to him, will create capacities in a low-cost manufacturing base that will give exports relatively higher margins.
The sharp fall in revenue as well as profits has largely been on account of large-scale inorganic expansion, including overseas acquisitions, between 2002 and 2007. The objective was to access technology as well as developed country markets.
The global auto industry has been severely hit by the economic downturn that began in early 2008 and those investments now weigh heavily on the firms balance sheet.
This has also forced Amtek to reverse its export-led business model as revenue from overseas operations plummeted from $250 million in the fiscal year to March 2008 to $20 million last year.
For the fiscal year ending March 2008, the group had sales of Rs5,700 crore and profit of Rs550 crore. In 2009, sales dropped to Rs2,200 crore and sales to Rs350 crore.
Exports are finished, conceded Santosh Singhi, chief financial officer at the group.
Branching out With countries like China, Hungary, Poland and Thailand also saddled with excess capacity and looking for markets for their products that are more cost-competitive than Amtek, Singhi is sceptical about the firms exports recovering. Amtek is also increasing its focus on non-auto businesses in the domestic market, such as railways, aerospace and defence.
The group is targeting business of Rs300-Rs500 crore from the defence industry and at least Rs2,000 crore from railways where margins are relatively higher.
It is also studying the aeronautics business for opportunities in aircraft and airport equipment.
We still believe what we did was right and we will again follow the same path to grow, Dham insisted, adding that he is scouting for an overseas acquisition in the aerospace industry. Even if we buy a company abroad, lots of key functions will have to be relocated to India, so that we enjoy high margins on them, he said.
In the next three to five years, Dham is confident that the non-auto segment should contribute 40% in the turnover.
An uphill drive Amtek, like Bharat Forge Ltd, Sona Group Ltd and Mahindra Systech Ltd, wanted to leapfrog into the big league through aggressive acquisitions overseas. In fact, between 2002 and 2007, it has made at least a dozen acquisitions in the US, UK and Germany.
Nobody expected the industry to go through such a traumatic experience outside India, said Dham, adding that the company suffered mainly because of acquisitions made in the US and Europe.
In the US, which is struggling with a deep recession, the demand for cars was down to nine million from 17 million in 2007. In Europe, it had shrunk 30%.
But Dham is optimistic that the restructuring will yield quick results. We will now be in a growth phase, he said.
Analysts, however, are not convinced yet. Its going to be a struggle for them as the market in Europe and the US has still to revive, said Ramnath S., an analyst at SSKI-Securities Ltd, a Mumbai-based brokerage. According to him, Amteks entire outsourcing story has gone wrong.
Abdul Majeed, partner at accounting and advisory firm PricewatehouseCoopers India, said the larger question should be how quickly the company is able to leverage the cost efficiency of its India units to offset high costs in developed markets.
It throws up interesting opportunities for such firms, Majeed said. After the financial crisis, the global manufacturers have heightened their pace to shave off costs by sourcing from low-cost countries.
Singhi, the groups chief financial officer, said while Amteks profit margins have fallen to 14%-15% in 2008-09 from 18%-19% in 2007-08, margins from the exports business have dropped from 28% to 7%, largely because of underutilized capacity and high fixed costs.
However, because of capacity expansion at its Daruhera unit near Gurgaon and at Pune, margins will be unchanged on increased depreciation costs, he said.
In a 4 August report, Ramnath said that given the sustained margin pressure at its key subsidiaries, SSKI-Securities expects the company to post a loss of Rs52.5 crore for the fiscal year ending March 2010 and a profit after tax of Rs62 crore the year after.
While Dham fixes structural weaknesses, Singhi has his hands full paying off at least $300 million in liabilities due June 2011. With this problem in mind, I cant look forward, Singhi admitted.
Several options The company is considering a series of steps to reduce the $300 million liability. It is negotiating with the bondholders and weighing several options, including conversion of FCCBs into equity and rolling over part of the debt beyond 2011.
The debt restructuring, according to Singhi, will be finalized in September. Meanwhile, on 3 September, in a statement issued to the Bombay Stock Exchange, Amtek Auto said it had opened a foreign currency convertible bond issue to raise $175 million. Jefferies International Ltd will manage the issue of the securities that are to be listed on the Singapore Stock Exchange, the auto parts maker said. The money raised will be used to retire part of the old debt.
Both Dham and Singhi are confident that the worst is over for the company. While Dham is bullish, Singhi prefers to be realistic.
I think things have bottomed out and one can see a small curve going up, said Dham. Singhi had a slightly different take. We feel the (global) auto sector will start coming back from 2011 onwards. We need another two three years from there to meet all our obligations.
The merger of Amtek India with Amtek Auto awaits approvals from lenders and will be done in another six months.
In July 2008, Amtek had announced the merger of Amtek India, Ahmednagar Forgings and three unlisted companies with Amtek Auto through a share swap to strengthen its balance sheet and minimize overhead costs. The merger was to be concluded by December 2008. http://www.livemint.com/2009/09/04231913/Amtek-turns-to-domestic-market.html?pg=2
LUMAX MAY TAKE JV ROUTE FOR INFRA FORAY The Economic Times
Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved"
AT 60, TII PLANS EXPANSION INTO VARIOUS SEGMENTS The Economic Times
Though this is lower than the Rs 124 crore that it invested in 2008-09, the capex will go into key investments like a component manufacturing plant for the Tata Nano at Sanand, R&D for the face of TII - the bicycle business, and manufacturing railway components. Rs 30 crore has been earmarked for the plant at Sanand to manufacture doorframes for the Tata Nano; this was originally planned at Singur, in fact, said TII MD L Ramkumar. Tata has estimated volumes of 350,000 per annum, which we hope to cater to. The company will invest about Rs 20 crore in its bicycle business, which the company has aggressively revamped and re-branded recently. We are trying to remodel the business around the theme of faster, fitter and greener, which is also the theme of our 60th anniversary year, Mr Ramkumar said. The company also launched a range of electric two-wheelers under the newly created brand BSA Motors in 2008. TII is the oldest of the Murugappa group of companies, incepted as TI Cycles of India, in collaboration with Tube Investments, UK in 1949. As early as 1955 it began the process of expansion through a backward integration into the manufacture of tubes through Tube Products of India, with which it subsequently merged in 1959 to become Tube Investments of India. It was 1982 by the time it forayed into the auto-components industry by setting up a factory for metal forming at Avadi near Chennai. A Rs 24-crore company in 1974, its revenues stood at Rs 2,214 crore for FY09. Our focus is now on the bottom line as we have adapted ourselves to the modern western model of outsourcing many components of your business while focusing on marketing, brand building, customer relations etc., Mr Ramkumar said. This is where the bicycle business, being the face of TII to the consumer, becomes vital. The company sold 30 lakh bicycles in 2008-09, with 30% market share. For our total population of 1.3 billion, we only sell 10 million bicycles. There is tremendous potential for growth there, Mr Ramkumar said. The company has given its bicycles premium branding (prices begin at Rs 2,500 per bicycle) and has entered into retailing strategies to penetrate the rural and semi-urban markets. It has set up 101 exclusive branded showrooms and 322 shop-in-shops, with plans to increase this number to 450 by March 2010. We are on a movement from selling cycles to cycling itself. We have been and will be conducting a host of bicycling activities in major cities across the country, Mr.Ramkumar said. TII is looking out to expand its potential across markets - geographically as well as sector wise. A significant percentage of chains, especially the industrial chains, are already exported, and growth will come from there for this product, Mr.Ramkumar said. For tubes, we export only about 10% as of now, but expect it to increase to 30-40% soon. The company is exploring export of two-wheeler components to the eastern countries and four-wheeler components to the western countries. In the former, we have expertise and in the latter we have a cost advantage, Mr Ramkumar said. But on the whole we are looking at decreasing our leveraging in the automobile sector alone. We expect the sector to comprise only about 35-40% of our total sales in about three years. Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved"
TI ARM TO INVEST RS 30 CR IN SANAND CAR DOOR FRAME PLANT The Hindu Business Line (Web & Print Edition)
Chennai: TI Metal Forming, a division of Tube Investments of India, expects to invest Rs 30 crore at its Sanand plant in Gujarat, which would manufacture door frames for Tatas Nano car.
Addressing a press conference on TI completing 60 years, Mr Ramkumar, Managing Director, said the capacity of its plant would match the Nano production capacity. Initially the plant would manufacture 3.5 lakh door frames.
The company has earmarked about Rs 75 crore of capital expenditure this year, which will include the investment to be made in Sanand plant. He said that the company is in talks with Ford as well as Toyota to supply door frames for their small car. However, Toyota plans to bring a component manufacturer from Japan for its small car, said Mr Ramkumar.
We are looking at a European collaborator for technology to grow our tubes and chains business, he said. The company plans to acquire new technology such as carbon fibre, copper, titanium and non ferrous so that the entire cycle design would be revamped.
On the metal forms, the company has slowly been reducing its dependence on auto companies and expanding to other sectors such as railways and infrastructure sectors. He said the growth in the chain segment is driven by the industrial sector. http://www.thehindubusinessline.com/2009/09/05/stories/2009090551930300.htm
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| ALLIED INDUSTRY Go To Top MRF SAYS ONGOING STRIKE HAS COST RS 1,000 CR Business Standard See similar story in: Rediff India
Chennai: The ongoing strike, now in its 118th day, by workers at two of tyre giant MRFs factories has resulted is Rs 1,000 crore of losses, according to K M Mammen, managing director.
Speaking to reporters here, he said, Because of the strike at Arakkonam and Puducherry factories in the last four-five months, we would have seen Rs 1,000-crore loss. The company, he said, is talking to the Tamil Nadu government to resolve the issue and, we are hopeful the strike would come to an end anytime at Arakkonam.
Workers at these two factories went on strike on May 9, demanding management recognition for the MRF United Workers Union (MUWU). The strikers say this union has majority support and the management must negotiate pay with it.
However, MRFs management has declined and the matter is before the High Court here. The verdict is expected next week. http://www.business-standard.com/india/news/mrf-says-ongoing-strike-has-cost-rs-1000-cr/369142/ http://business.rediff.com/report/2009/sep/05/mrf-says-ongoing-strike-has-cost-rs-1000-crore.htm
STRIKES COST US RS 1,000 CR, SAYS MRF CMD MAMMEN The Economic Times
Excerpts:
One of the bigger challenge we which we are facing is that we have a serious problem on shortage of raw materials. We have to pay import duty of 20% for rubber, but you can import tyres for 5%. So it is ridiculous and I dont know why the government is taking time to change this. If it goes on like that, the tyre industry is going to suffer a lot. But MRF is a company that has a lot of customer pull because we have always delivered what we promised. So, right now our challenge is that we are on our expansion but hopefully these duties will be removed. Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved"
DUNLOP SAHAGUNJ UNIT TO RESTART SOON The Hindu Kolkata: P. K. Ruia-controlled Dunlop India Ltd (DIL) is planning to restart operations at its mother plant at Sahagunj by this month-end following the settlement of a dispute over arrears between the West Bengal State Electricity Distribution Company and DIL.
An official spokesman said that as per the agreement, DIL would settle the dues of Rs. 13.40 crore in monthly instalments over nine years. This would be over and above the monthly energy bill to be incurred once production resumes.
Reacting to the development which has lifted a veil of uncertainty over the plant, Mr. Ruia said: The Sahagunj plant will resume production either just before the Pujas or right after. Resumption of production will take about 15 days from the restoration of power supply, which may take three to four days. At the moment, we are evaluating whether to restart production before the Pujas and then close again or to start it after the Puja holidays and move ahead with uninterrupted production. The company was now looking at an early restoration of power, he said.
The dispute over the bill, raised at a time when the plant was closed for several years under its erstwhile owner, the late Manu Chhabria, had hindered the smooth running of the plant which now employs around 1,100 people. While the new owners had maintained that the arrears were not admissible as probably power theft and misuse had taken place, the WBSEDCL was not willing to give up on its claims.
The workers woes were further increased when last November, the company announced production stoppage after its efforts to continue operations while paying workers a consolidated package in the wake of global meltdown, fell through. The stoppage was lifted earlier this year, but until now only maintenance work was being carried on with skeletal staff. http://www.hindu.com/2009/09/05/stories/2009090555541400.htm
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| FINANCE & INSURANCE Go To Top - - - - -
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| OIL, LUBRICANTS & ALTERNATIVE FUELS Go To Top OIL RECOVERS IN ASIAN TRADE
See this story in: The Times of India
Singapore: Oil rebounded in Asian trade on Friday ahead of the release of a closely monitored US jobs report that will give fresh clues on the health of the world's biggest economy, analysts said. http://timesofindia.indiatimes.com/news/business/international-business/Oil-recovers-in-Asian-trade/articleshow/4970573.cms
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| INTERNATIONAL NEWS Go To Top TOYOTA, HONDA FACE FAMINE AFTER FEAST Bloomberg See this story in: Business Standard
Tokyo: Kenichi Ishida saw monthly sales at his Toyota dealership surge by up to 50 per cent under the Japanese governments stimulus plans to boost car demand. Now he frets that famine will follow feast.
Im so afraid for next year, Ishida, 47, said in his showroom in Tokyos Setagaya ward. Our sales will plunge. I know its coming.
As government incentive programmes end in Japan, Europe and the US, automakers and dealers say they may have to continue the discounts or face a return to declining sales. Either scenario may add to losses for carmakers including Toyota Motor Corp, the worlds biggest.
We are very worried about the backslide after the programmes end, said Kiyoshi Ozaki, chief financial officer at Hiroshima-based Mazda Motor Corp.
We fear we may be forced to give incentives, in the place of the governments. Japans 370 billion yen ($4 billion) programme, which offers rebates of as much as 250,000 yen for people who trade in older cars for newer, more fuel-efficient models, is scheduled to end in March.
Cars registered since April 10 are eligible for the programme. The initiative and new tax cuts for fuel-efficient cars may generate 1 million sales in the fiscal year ending March 31, according to the Japan Automobile Manufacturers Association.
In Europe, Ford Motor Co is lobbying governments to extend incentive programmemes, including Germanys 5 billion ($7.1 billion) plan, which ran out of money September 2. The $2.88 billion US cash for clunkers plan, which generated almost 700,000 new car sales, expired August 24.
The stimulus policies spurred car sales that were set to fall to the lowest in about three decades in Japan and the US Japans car sales rose 2.3 per cent last month from a year earlier, the first gain in 13 months, while US demand grew 1 per cent, the first monthly increase since October 2007. European car sales rose 2.4 per cent in June, the first gain in 14 months.
The impact of the incentives and tax breaks is huge, said Atsushi Sugiyama, managing director of the Japan Automobile Dealers Association. We hope the programme continues for a longer time, but we know there are budgetary limitations.
Global auto sales fell 20 per cent to 17.8 million vehicles in the four months to April this year from a year earlier, according to the latest available figures from CSM Worldwide, a Northville, Michigan-based auto consulting company. The worst recession since the Great Depression pummeled demand, driving General Motors Corp and Chrysler LLC into bankruptcy and forcing Toyota to post a loss for the year ended March 31, its first in six decades. Toyota has gained 33 per cent this year. Honda has risen 51 per cent.
The Toyota City, Japan-based company last month forecast a net loss of 450 billion yen for the year ending March 31. Nissan Motor Co is expecting a 170 billion yen loss and Honda Motor Co forecasts net income of 55 billion yen.
US consumer spending, which accounts for about 70 per cent of the worlds largest economy, fell at a 1 per cent pace in the second quarter this year. Forecasts call for below-average gains in spending because of stagnant incomes and an unemployment rate that may reach 10 per cent early next year for the first time since 1983, according to a Bloomberg survey last month.
Japanese wages fell for a 14th month and the jobless rate rose to a record 5.7 per cent in July. The International Monetary Fund forecasts economies in developed countries including Japan, US and the Euro zone will recover only 0.6 per cent in 2010 from a 3.8 per cent contraction this year.
While the US car-rebate programme provided a short-term boost, it may have taken away from future growth, said Peter Boockvar, an equity strategist at Miller Tabak & Co in New York.
Likewise, Japans incentives may be cannibalising sales that would otherwise have come later, Hondas Chief Financial Officer Yoichi Hojo said August 5.
Goldman Sachs Group Inc predicts auto sales in Japan and Western Europe next year may drop 10 per cent from 2009 estimates to 4.27 million vehicles and 13 million vehicles, respectively, mainly due to incentive programmes phasing out.
The market is seeing a temporary boom, Toyota spokesman Yuta Kaga said. For fiscal 2010, we cant forecast sales as economic and business environments are still unclear. As incentives disappear, carmakers will need to absorb the price gap to sell cars, said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments Ltd. in Tokyo, which manages 3.4 trillion yen.
Toyota and Nissan have said theres no plan to offer discounts after the government rebates end. Its too far away, and we dont know at this point, Honda spokeswoman Yasuko Matsuura said.
Compounding carmakers woes, the incentive programmes may also have accelerated a shift away from larger cars to smaller, more fuel-efficient models that generate less profit, said Hitoshi Yamamoto, chief executive officer of Tokyo-based Fortis Asset Management Japan Co.
Nine of Japans top-10 selling vehicles in July were compacts or minicars. Toyotas Prius gasoline-electric hybrid topped the rankings with sales almost quadrupling from a year earlier to 27,712 vehicles, while Hondas Insight hybrid ranked seventh. http://www.business-standard.com/india/news/toyota-honda-face-famine-after-feast/369127/
Bloomberg See this story in: Business Standard
Washington: Toyota Motor Corp, the worlds biggest seller of autos powered by a combination of gasoline and electricity, faces a patent-infringement claim that may result in a US import ban on its Prius and other hybrid models.
Closely held Paice LLC filed a complaint yesterday with the US International Trade Commission in Washington, claiming Toyota is infringing its patent. The company seeks an order to ban imports of Toyota products using its invention.
Paice won a jury verdict in 2005 that the Prius and hybrid Highlander and Lexus RX400h sport-utility vehicles used Paice inventions related to drive trains.
The new ITC complaint claims the hybrid Camry, third-generation Prius, Lexus HS250h sedan and Lexus RX450h SUV infringe the same patent.
Given the momentum Toyota hybrids have in the marketplace, I dont foresee a situation where their hybrid sales stop, said Ed Kim, an analyst at Auto Pacific Inc in Tustin, California. http://www.business-standard.com/india/news/toyota-patent-trade-case/369126/
TOYOTA HYBRID VEHICLE SALES CROSSES TWO MN MARK See this story in: The Indian Express, The Financial Express, The Hindu Business Line
Tokyo: World's largest car maker Toyota Motor Corporation said it has crossed the two million units mark in cumulative sales of its hybrid vehicles globally.
The company said it sold 2.01 million units of hybrid models worldwide as on August 31 this year.
It had first ventured into the hybrid segment in 1997 with the launch of its 'Coaster Hybrid EV' followed by the launch of its first mass-produced hybrid model 'Prius'. Japan continues to be the main market for its hybrids with a total of over 6,15,800 units sold there till August, Toyota Motors Corporation (TMC) said in a statement. In the overseas markets, TMC has sold over 14,01,100 units since 2000, when the company started exports.
It had topped the one million units mark for global sales in May 2007, the company added. Among its best selling models is the Prius with cumulative sales of over 14,29,300 units, the Camry Hybrid (1,67,400 units) which is sold only outside Japan and the Lexus (1,46,400 units).
The company has expanded its hybrid portfolio during 2009 with new launches including the Lexus 'RX450h' in April, followed by the third-generation version of Prius in May and the first dedicated Lexus model -- the Lexus 'HS250h' in July.
TMC currently sells 13 hybrid vehicle models in around 50 countries, including three commercial vehicles in the home market of Japan. http://www.indianexpress.com/news/toyota-hybrid-vehicle-sales-crosses-two-mn-mark/512944/ http://www.financialexpress.com/news/toyota-hybrid-sales-touch-2m-mark/512992/
PSA PEUGEOT CITROEN EYES MITSUBISHI TIE UP: PHILIPPE VARIN AFP See this story in: mint, The Hindu Business Line
Paris: French auto maker PSA Peugeot Citroen is considering a tie-up with Mitsubishi of Japan, the financial newspaper La Tribune reported on Friday, and the price of PSA shares jumped.
The paper, citing no source, said that Peugeot head Philippe Varin was actively considering an alliance with Mitsubishi.
The two groups have already joined forces to develop an electric vehicle and have a partnership in Russia. The paper described a Peugeot-Mitsubishi alliance as technically and geographically ideal.
The price of shares in PSA Peugeot Citroen jumped by 6.57% to 19.87 here. The overall market as measured by the CAC 40 index was showing a gain of 0.53%.
Shares in rival French group Renault rose by 3.72% to 29.87, and stock in French tyre maker Michelin by 3.89% to 51.44.
At Natixis Securities, analysts said in a note to clients: The idea (of an alliance with Mitsubishi) is not new and could make sense for several reasons, particularly since BMW has totally ruled out any idea of a capital alliance.
Natixis said, Peugeot sells mainly in Europe while Mitsubishi is present mainly in Japan. Mitsubishi also had a presence in the United States.
At CM-CIC Securities, analyst Guillaume Angue said that the purpose was to make the French group more international and to strengthen its presence on growing markets and he thought that an alliance was probable.
Currently Europe accounts for 66% of PSA Peugeot Citroen sales, he said. Mitsubishi seemed to be a reasonable target for PSA in terms of size because it had sold 1.06 billion vehicles last year compared to 3.26 billion by PSA.
He said that PSA had limited financial means but that a deal could be arranged via an exchange of paper.
Peugeot, Mitsubishi to launch electric car
Both companies have agreed to launch an electric car in Europe by the end of 2010, the companies said on Friday.
The French and Japanese car makers said the as-yet unnamed vehicle will be based on Mitsubishis i-MieV, which was launched on the Japanese market in June.
The car will be built in Japan and the carmakers target eventual annual global sales of 50,000 vehicles, PSA Peugeot Citroen spokesman Jean-Marc Sarret said. Half of these sales will be made by Peugeot and Citroen in Europe, the rest by Mitsubishi in Japan and elsewhere, Sarret said.
Peugeot and Citroen will announce the names of their respective electric cars in the coming days, Sarret said.
The car will be able to drive for 130 kilometers (81 miles) between charges, with a battery that can be fully recharged in six hours, Sarret said. http://www.livemint.com/2009/09/04145612/8216PSA-Peugeot-Citroen-eye.html
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| ECONOMY & FINANCE Go To Top The Hindu Business Line
Mumbai: Foreign exchange reserves rose $4.4 billion to $276.3 billion for the week ended August 28, according to figures released in the Reserve Bank of Indias weekly statistical supplement.
The rise in the reserves was mainly because of the $4.82 billion increase in special drawing rights (SDRs). The International Monetary Fund had increased the SDR allocation for countries last month.
This was done so that countries could utilise the allocation in case of liquidity problems. For the week ended August 21, the reserves increased by $932 million to $271.957. In the week under consideration, the foreign currency assets decreased by $415 million to $260.523 billion.
Foreign currency assets expressed in US dollar terms include the effect of appreciation or depreciation of non-US currencies.
Gold reserves remained unchanged at $9.67 billion. The reserve position in the IMF decreased by $1 million to $1.347 billion. http://www.thehindubusinessline.com/2009/09/05/stories/2009090551080600.htm
SENSEX SURGES 290 POINTS; AUTO, METALS MOVE UP The Hindu Business Line
Mumbai: The Bombay Stock Exchange benchmark index Sensex on Friday rallied over 300 points in the afternoon session after opening firm on emergence of buying by funds and retail investors, triggered by firm trends in other Asian bourses.
The Sensex closed at 15,689.12, up by 290.79 points with the sectoral indices rising between 2.75 per cent and 1 per cent. The Sensex was mainly driven by auto index, which rose 2.88% to 6,079.27 and followed by Metal, which was up 2.76% at 12,496.06. The BSE barometer had lost nearly 525 points, or 3.40 per cent in the past four sessions. The wide-based National Stock Exchange index Nifty recovered by 85.65 points, or 2 per cent to 4,679.20 points.
Brokers said buying activity emerged on the domestic markets mostly on the back of firm trend at other Asian equity markets, buoyed by overnight gains on the US markets. http://www.thehindubusinessline.com/blnus/05041901.htm
Last Financial closing
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| PLEASE NOTE text matter of each news item.
NURC News Update -- AUTOMOBILES
News on Indian Auto Industry. Copyright 1999 NURC MediaNext Pvt. Ltd.
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Friday, September 4, 2009
Indian Auto Industry Update September 05, 2009
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