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Mumbai: For Maruti Suzuki SX4, the fireworks will begin just after Diwali. That is when the man among cars, as the SX4 is called in its ad campaigns, will be back after a short break. Indias largest car company is however going all out to play down the re-launch of its sedan. Chairman R C Bhargava says minor changes or facelifts are done to all models periodically. Otherwise, the customer gets bored and sales suffer. As a model gets older, its sales drop. The sales of the SX4 were further hit due to a few misleading reports in media about Maruti planning to discontinue the SX4. Hopefully sales would look brighter after the facelift. I am not sure what target has been set for the car, but we will supply what the market will demand, Bhargava says. And, contrary to reports, Bollywood star John Abraham is not being roped in to endorse the refurbished SX4. Sources familiar with the developments say talks were indeed on with Abraham, but did not make much headway over contract details. So what is the facelift all about? The engine will be upgraded to the Bharat Stage IV emission norms, which will kick in from April next year in 11 cities, and the power output will be scaled up to give it a higher pick-up. The car will now drive on the variable valve timing technology. In addition, SX4 will have new bumpers, a sophisticated-looking grille and spruced-up interiors. The new car will also have an additional automatic variant another first for any sedan from Maruti. The new car will of course be more expensive than the current top-end Zxi variant, which comes at Rs 7.5 lakh (ex-showroom Delhi). Predictably, a new brand campaign is also on its way. Maruti has already changed its advertisement once. The first ad showed a bunch of girls ruing the lack of men, but their mood changes when the car arrives to the beat of Its raining men. But the ad was withdrawn following the feedback that it was a bit tame. The second ad had more attitude and conveyed naked aggression when pushed to the wall. Maruti executives are tightlipped about the third version, but the central theme, they say, will continue to be masculinity. The jury is out on whether the changes will revive the fortunes of the SX4. While the company says they will turn around the cars fortunes, others are not that sure. An executive from a competing company says the relaunch will be a costly affair and he isnt sure whether SX4 had reached the stage of a re-launch. Any planned additional cost towards development has to first ensure that the earlier cost is fully or satisfactorily recovered. Otherwise, the cost per unit will shoot up like anything, he says. He has a point. Maruti launched the SX4 in May 2007 primarily to dislodge Honda City from its market leadership in the upper sedan segment. The plan showed huge initial promise. The model, launched in three manual variants, was priced Rs 50,000 cheaper than the second generation Honda City. The advantage of a superior service back-up and a high-voltage media campaign ensured that the SX4 sold 3,000 units a month and outpaced the City in sales growth. However, Honda struck back in September 2008 with the launch of a third generation City which sported futuristic styling coupled with vastly improved interiors and top-of-the-line driving dynamics. The heavier price tag notwithstanding, the new City almost drove the SX4 out of the market, with the sales of the Maruti sedan dropping to just 600-700 units a month. Mahantesh Sabarad, an analyst with Centrum Broking, says the SX4 started out as something which could take on the dominance of Hondas City. But it failed to live up to the potential of the segment. Maruti just lost out to the finesse associated with the City or any of the other products of Honda, he says. Sabarad says one of the major reasons for the Citys success is the timely changes the company made to the car. Besides, the resale demand for the City is a big draw. We are not sure about the changes that Maruti will bring to the SX4, but it will be a real tough task to beat the Honda City, he says. For Maruti, clearly a lot is at stake. The company hasnt really been able to break out of its image of only a champion small car manufacturer an impression reinforced by the fact that the two models that Maruti has been forced to phase out are both from the sedan segment Esteem and Baleno. Maruti doesnt agree with the observation and cites the success of the DZire, which replaced Esteem. Its true that the Swift DZire model, which is placed in the entry level segment, is enjoying an order backlog of over two to three months, thanks to the availability of a diesel option. The company, which controls 60 per cent of the domestic compact car segment, is obviously not willing to give up just yet on the high-margin sedan segment. So wait for the new SX4. http://www.business-standard.com/india/news/the-/men/-will-be-back-soon/372975/ Yogima Seth The Financial Express (Focus) (Oct 11) Small is definitely getting bigger by the day the meltdown and record high fuel prices has put the small car segment in top gear. And all automobile manufacturers across the globe are leaving no stone unturned to cash in on the opportunity. Consider this, in the last 10 months eight new compact cars were launched in the Indian market, taking the total number of new models in the segment to 21, with at least five more lined up for 2010. And this is over and above the Fords Figo and General Motors new mini car, which will hit Indian roads shortly. While Maruti Suzuki India, countrys largest passenger car manufacturer with over 50% market share, has taken a lead in terms of new cars with A-Star launched in November last year followed by Ritz in May and Estilo in August, entry of new players into the compact car category with an eye on both domestic and overseas markets is a sign of an emergence of a trend that is here to stay for long. The demand for small cars is a long-term sustainable phenomenon, which will only grow in the foreseeable future due to the increasing fuel cost and emergence of large number of new customers in BRICs, Stephen RDArcy, Global Head, Automotive Practices, PricewaterhouseCoopers shares. DArcy points out how the growing concerns over green house gases and consequently new government policies like the scrappage scheme in Europe will further boost the demand for compact cars across the globe. Nearly 75% of the total vehicles sold in the US earlier were bigger cars and trucks, now 40% of the US population is moving towards more fuel efficient cars and this has forced players like Ford Motors to think of introducing its small car Fiesta into the US market for the first time, he adds. Honda Siel Cars India forayed into the compact car segment in India for the first time with its premium high-end compact car, the Jazz which will be complimented by another new small car from Honda in two years time from the companys upcoming plant in Rajasthan. The launch of Tata Nano in July created an all new segment priced lower than the earstwhile cheapest car, the Maruti 800. On the other hand, the launch of Fiat 500 has created the priciest segment in the compact car category with the car being priced at around Rs 15 lakh. And this is just the beginning. Other new launches in the category include i20 from Hyundai Motor India and the Grande Punto from Fiat India. Last month, Ford India unveiled its all new small car, Figo, which would be launched in the first quarter of 2010 and General Motors India is already doing trials on its mini car, which is scheduled for a launch towards the end of this year. Joining the party will be Toyotas small car, scheduled for launch towards the end of next year and the ultra low cost car, being developed by Bajaj Auto in association with Renault and Nissan, which will surely spoil the Indian car buyers who were never offered with so many choices in one category, be it in terms of new models or the price range of the vehicles available in the compact car segment. With small cars driving the growth of Indian car industry, the company hopes to triple its sales in India in the next three years on the back of our upcoming small car for the domestic market, says Hiroshi Nakagawa, Managing Director, Toyota Kirloskar Motors. This entire buzz is not without a reason. After all, the compact car segment is the largest selling segment in India contributing nearly 80% to the total passenger cars sold in the country. According to the Society of Indian Automobile Manufacturers (Siam), 96,774 units of small Cars were sold in the domestic market in August out of the total 1,20,669 units of passenger cars sold last month. This is a growth of 34.1% vis--vis August last year when 72,186 units of compact cars were sold in India. The small car segment is expected to double in next 10 years and our focus would be to ensure accelerated development of fuel efficient small cars that will help us develop India as an export hub for Ford globally, Alan Mulally, President and CEO of Ford Motor Company had said on his recent visit to India. While the new offerings are already selling like hot cakes in the domestic market, demand for some of these models in the overseas markets has also exceeded the earlier estimates for export. Actual demand for small cars has gone up post the scrappage schemes announced in Europe and this has resulted in higher sales than earlier envisioned, RC Bhargava, Chairman, Maruti Suzuki India avers, adding that the company is now looking at 1,20,000-1,30,000 units of export as against 70,000 in 2008-09. Bhargava points out that even Nissan is expected to sell higher number of Pixo, the brand name for A-Star, being sold by Nissan in Europe, than the earlier placed order of 50,000 units. They might end up selling 53,000 to 54,000 units as against 50,000 units estimated earlier, he adds. As per Siam, export of compact cars jumped by 46.3% in August at 38,730 units as compared to 26,465 units in August last year. This is 94.7% of total cars exported out of India in August at 40,901 units. There is huge opportunity for Indian manufacturers in export markets as Indian companies are more advanced in designing and made in India cars are more acceptable in developed markets, thanks to their low-cost manufacturing capabilities, concludes DArcy. Given the potential the manufacturers are all geared up to cash in and make India the small car hub of the world. http://www.financialexpress.com/news/geared/527554/2 Murad Ali Baig The Financial Express (Focus) (Oct 11) Despite having had little special encouragement or incentives, Indias auto industry is the worlds largest exporter of small cars selling more little cars than Japan and Korea and even China that is twice as large an auto market. But it is the foreign companies like Hyundai and Maruti who are finding it more economical to market smaller models made in India than from other countries. Ford has now followed their example by announcing that it would make India its production base for a new small global car the Fugo. The reasons are not hard to understand. India has a well developed base of steel and metallurgical industries and very mature vendors of castings, forgings, electricals, brakes and other components. The cost of these raw materials and components constitute over 60% of the value of any car and make an Indian base attractive as also the large pool of good engineers and managers. Equally important is the fact that India has a good domestic market for small cars to offer economic good scales of production. This year India will make about 1.7 million passenger cars of which 75% will be small hatchbacks. Of these 24% will be exports and India will have a domestic market of about 1.3 million cars. India loves small cars. Its old love affair with the Maruti 800 may have ended as this old cutie is now old after 25 years and is now a bit of a garib or poor car. The Indian buyer has changed. He no longer wants just a basic cheap car but one that offers all the style and comfort that he feels he must have. Few cars can sell without air-conditioning, power steering, power windows and fancy music systems. The market is also very fickle with the life spans of new models getting shorter and shorter as buyers are now offered a bewildering array of some 20 very attractive small models to choose from. Lets face it, the car is a buyers most public private possession and he or she wants a set of wheels commensurate with their status or style. The Indian buyer is so spoilt for choice that many are confused. They now also have a choice of petrol and diesel engines. But why is there such a rush for so many new models? When the Santro had done so well why has Hyundai launched the i10 and the bigger i20? When the Alto, Zen, WagonR and Swift already command Indias hatchback market why has Maruti launched the A Star and the bigger Ritz? The answer is that most hatchback buyers are ambitious, young and upwardly mobile people who want change so although the Santro or Swift remain excellent cars capable of many years of trouble-free service, many buyers are now becoming fashion followers and want the funky European styles with taller roof lines, huge popping out headlights and even huger grilles that look like the gaping mouths of a giant fish. As fashion freaks change their expensive luxury watches, shoes and handbags long before they look shoddy and the same is beginning to happen with cars. http://www.financialexpress.com/news/a-mini-revolution/527556/2 R Ravichandran The Financial Express (Focus) (Oct 11) It is time for Ford India to cherish and dream big. Ever since the US parent announced its plans to go for a small car in India in early 2008 followed with a committed and fresh investment of $500 million, it has been an exciting time for the automaker. The enthusiasm heightened when Ford spruced up its manufacturing capacity from 1,00,000 cars per annum to 2,00,000 coupled with a 2,50,000 units per annum flexible engine facility. Fords CEO Alan Mulally revealed India-designed; features-rich small car Ford Figo in a public preview recently. After lying low for a decade since its inception in 1999 in small car segment, Ford now firmly believes that it is well placed to take on competition, particularly from small car majors such as Maruti and Hyundai. Michael Boneham, President and Managing Director, Ford India says, Its going to be very competitive with the current market leaders and offer a tremendous value story for our consumers. We believe Ford Figo is a big game-changer for Ford that will help transform our brand into a volume player in India. Though the company felt it too early to talk about exports, but given the capacity expansion, extensive automation and new engine plant, the employees feel that the Chennai plant will become a global hub for small cars, at least for the South East Asian and Asia Pacific markets. The introduction of the Ford Figo marks a shift for Indias role in Fords strategy. Transformed with a production capacity of two lakh units, the integrated Chennai manufacturing facility is now positioned as a Ford regional centre of excellence for small-car engineering and production, explains Boneham. Ford Figo models will be produced at the plant for export to international markets. The plant is also being groomed to produce diesel and petrol engines for local vehicle production and export within Fords Asia Pacific and Africa region. Created with a best of the best approach, it has been benchmarked against other competitive facilities globally, as well as the current volume manufacturers in the Indian market, for quality and production efficiency, says Tom Chackalackal, Vice-President, Manufacturing, Ford India. It will be a game changer for Ford India as it will enter the heartland of the Indian car market and this great car will be built here in the new and expanded state-of- art facility in Chennai, he says, adding the story in Maraimalai Nagar (the plant site) is about much more than doubling our production capacity. Its going to be exciting. I am proud to be part of this great team which, is building this A1 quality product, shares Karupannan Vijaykumar, Manufacturing Engineer, Quality at the Ford plant. Ford has made quality a priority in its investment in the plant, which is shifting from a totally manual-build, low-volume facility into a high-volume, automated assembly plant that will produce new cars not just for India but also for international markets. Sudesh Sharma, General Manager, Product Development says The high-tech paint shop in Chennais plant is the first in Fords global history to introduce new high quality, three-wet high solids paint process, which depends on robots to paint each vehicle with incredible precision and evenness of coverage. http://www.financialexpress.com/news/ford-bets-on-figo/527559/2 Shweta Bhanot The Financial Express (Focus) (Oct 11) The colour of your car says a lot. The small car players like Maruti Suzuki and Hyundai say the market for them is for whites, silver and other subtle colours. Arvind Saxena, Senior Vice-president, Marketing and Sales, Hyundai Motor India agrees adding, Indians still prefer to buy subtle colours because of the climatic conditions. 50% of the total sales of the industry are still for the perennial favourites, while red stands at 11-13%. Agreeing on the same, a Maruti Suzuki dealer in Mumbai avers, The market reacts as per what is showcased in the television ads and offered on retail outlets. For Maruti it is all about silver, golden and white. Manufacturers point out, the colour red signifies premium and prosperity and is winning hearts of the buyers, while car makers are finding it difficult to meet the delivery dates. Almost 50% of our orders for the new Superb are for Rosso Brunello (red offered by Skoda) and we are gearing up to meet the huge demand for the colour, says Thomas Kuehl, Board Member, Sales and Marketing, Skoda Auto India. He adds the company is also seeing increasing demand for black colour, which till recently was not really preferred. Indians associate colours with different things. While white is seen as power, black is evil and red as prosperity, says VG Ramakrishnan, Director, Automotive and Transportation, Frost and Sullivan, South Asia and Middle East. Contemporary colours including chocolate and blue are getting popular too. Few attribute the popularity of bright colours to the target age of the buyers. Most feel what sells is what is shown. Large number of the car ads feature bright colour cars. For instance, the ads of Fiat Linea and Grande Punto, Skoda Superb and Honda Jazz, feature cars in red. Tarun Khanna, Head Marketing, Fiat India, says, Commercialisation of bright colours by car companies also plays an important role in determining the trends in the market. Khanna shares that the maximum sales of Linea are for red, courtesy the advertisement showcasing Linea in Flamenco Red (wine red for Fiat India). Even Honda says that almost 50% of its sales are off-white and silver. http://www.financialexpress.com/news/cracking-the-colour-code/527557/ WHO DOESNT WANT AN EFFORTLESS DRIVE? Shweta Bhanot The Financial Express (Focus) (Oct 11) Still In its nascent stage, Indian automobile industry is witnessing a rise in the demand for automatic transmission cars year-on-year. According to a JD Power Asia Pacific Forecasting report, the usage of automatic transmission in the country is expected to touch the figure of 12% and 18% by 2016 from 9% in 2008. Despite the expected steady growth in the demand for automatic cars in the market, experts argue on the continued dominance of the traditional manual transmission on back of low awareness, high incremental cost and serviceability. An automatic transmission has an automobile gearbox that can change gear ratios automatically as the vehicle moves, freeing the driver from having to shift gears manually. The technology has prevailed globally for decades and is soon catching up in India. But experts point out that price sensitivity of the Indian market has not helped the technology to flourish much. Automatic transmission costs anywhere between Rs 30,000 to Rs 1.2 lakh approximately, depending on the size and segment of the car. Also, this technology is perceived as low on fuel economy and high on maintenance. Arvind Saxena, Senior Vice-president, Marketing and Sales, Hyundai Motor India, explains, One cannot repair automatic transmission. The only way out is to replace it with new one, meaning import leading to higher cost. But, cons dont win over the pros. Hyundai Motor India has seen a spurt in demand for automatic cars, which sells the i10, i20 and Verna with automatic option. Saxena from Hyundai points out that the company manages to sell 400 units of i10 automatic per month. Hyundai has stopped selling Santro automatic in the market as it did not find the project viable. Maruti Suzuki has its WagonR with automatic transmission and will soon be adding it for SX4. Tata Motors currently does not have automatic transmission on its cars, but the company is expected to get the technology on their cars soon. So, the automatic offerings in the market are increasing, especially in the large car segments, the teething issues of bringing down incremental cost to make it mass affordable and making serviceability easy still hovers around the auto space. This is despite the fact that India is set to become a hub for small cars and has automatic transmission technology presence on export vehicles. There is definitely a potential for the technology in the market but one needs to cater to the related issues of incremental cost, service and fuel economy, says VG Ramakrishnan, Director, Automotive and Transportation, Frost and Sullivan, South Asia and Middle East. He adds that commonly available automatic transmissions in the market are four, five and six speed automatic transmissions. Despite the teething issues, auto companies are witnessing a healthy demand for the automatic machines. Honda sells its City, CR-V, Accord and Civic with automatic transmission. 50% of CR-V and Accord sales are for the automatic version; 25% for Civic and 15% for City. Till September 2008 when we were selling old City, the demand for automatic variant stood at just 5%. From then to 15% now for new City is a strong growth, shares Jnaneswar Sen, Vice-President, Marketing, Honda Siel Cars India. Given the changing market dynamics transmission cars may well witness its sunrise days in the Indian market soon.... http://www.financialexpress.com/news/who-doesnt-want-an-effortless-drive/527561/2 | |
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| FORD INDIA SLIPS DEEPER INTO RED; HYUNDAIS PROFITS DENTED N. Ramakrishnan The Hindu Business Line (Web & Print Edition) (Oct 11) Chennai: Ford Indias loss for 2008-09 was higher than that of the previous year, while its turnover dipped on fewer vehicles sold during the year. Hyundai Motor India saw its vehicles sales and income increasing appreciably, while net profit was down due to higher costs, exchange rate fluctuation and accelerated marketing efforts for launch of new products. Ford Indias 2008-09 annual report shows its accumulated loss at Rs 937.86 crore. During the year, the company received Rs 875 crore as equity contribution from its shareholders (Ford Motor Company) to fund its expansion activities. Ford India has kick-started a Rs 2,000-crore expansion programme that will cover the launch of new vehicles, capacity expansion and a new engine manufacturing facility. All the civil works have been completed and machinery is in various phases of installation and commissioning. Small car on track It began engine assembly and cylinder block machining operations in a new line from April 2008 and a new cylinder head machining line was put in place by January 2009. Both these will help achieve significant cost reductions, according to the annual report. The company, according to the annual report, is on track to launch the high-volume small car using the new facilities. Ford Motor Companys President and Chief Executive Officer, Mr Alan Mulally, unveiled the small car Figo in Delhi last month. The car will go into production in 2010. Ford India has said that it continued to export completely built Fiestas to South Africa and Ford Ikon components to South Africa and Mexico. The value of exports during the year was Rs 68.10 crore, which helped the company meet its export obligations under the Export Promotion Capital Goods scheme. The company is exploring various alternatives to increase its exports. Hyundai sales up Hyundai Motor Indias domestic sales during the year at 242,540 units were 12 per cent higher than the previous years figure. Its exports at 253,061 units were up 75 per cent over the previous year. Export markets, especially European destinations, were affected by to the global economic meltdown. However, Hyundai Motor India has said it was able to capitalise on the demand for small cars due to the scrapping incentive offered by many European countries to help customers switch to fuel-efficient cars. Hyundai has said there was volatility of currencies during the year with the rupee depreciating by more than 25 per cent. There was high pressure on costs and the company also had to accelerate its marketing efforts due to launch of new products and to counter the economic slowdown. The companys income during the year included other income component of Rs 573 crore (Rs 397 crore), which included Rs 309 crore of export benefits and Rs 111 crore of scrap sales. Hyundai Motor India has recommended a dividend of Rs 122 crore to its parent Hyundai Motor Company of Korea and paid royalty/technical assistance fees of Rs 431 crore (previous year Rs 390 crore) to its parent. According to the annual report, Hyundai Motor Indias foreign exchange earnings amounted to Rs 8,859 crore, while the foreign exchange used totalled Rs 4,725 crore. http://www.thehindubusinessline.com/2009/10/11/stories/2009101150900200.htm FIRMS RIDE ON SMALL CARS FOR BIGGER MARKET SHARE Yogima Seth The Financial Express (Web & Print Edition) (Oct 11) New Delhi: To cash in on the success of small cars in India, leading automobile players are using the small car platform to build bigger ones and grab greater market share in the sedan segment. The newest entrant into the category is Ford India, which recently unveiled its new small car Figo, and says it will build a complete family of Figo over the years. While Figo is still few months away before it hits Indian roads, the buzz is that Tata Motors will shortly launch its new sedan, the Tata Manza, which is based on the platform of Indica Vista. Market leader Maruti Suzuki is already cashing on the success of Swift with Swift Dzire, which continues to have high waiting period of three-four months even after more than a year of its launch. Tata Manza, which would be positioned against Mahindra Logan and Swift Dzire, will be available in two engines, a petrol engine of 1.4 litres and multi jet engine of 1.3 litres. The domestic market is buoying owing to strong festive season sales and compact cars have witnessed a record high. The segment-wise cumulative sales in September 2009 for Hyundai Motor India, for the A2 Segment which includes the Santro, i10, Getz & i20 was 49,482 units. In comparison, for the A3 Segment (Accent & Verna) 4,269 units, the A5 Segment (Sonata Transform) 52 units; and SUV Segment (Tucson) 1 unit, respectively. http://www.financialexpress.com/news/firms-ride-on-small-cars-for-bigger-market-share/527573/ VENTURES WITH M&M, BAJAJ ON TRACK: RENAULT Swati Khandelwal Jain mint (Web Edition) (Oct 12) Mumbai: French car maker Renault SA says the companys joint ventures with both Mahindra and Mahindra Ltd (M&M) and Bajaj Auto Ltd are on track, denying a report that its tie-up with M&M was on shaky ground. There are no issues related to product plan and strategy, Marc Nassif, head of Renaults Indian operations, said in an interview. Renault is looking to replace M&M in their struggling Logan joint venture, The Economic Times reported last week, citing a person with direct knowledge of the matter. The venture, in which M&M owns 51%, was struggling to sustain volumes due to uncompetitive pricing, said the report. Nassif said the company is, in fact, hoping that things will turn around in a few years, and is looking forward to future products the partnership with M&M will pave the way for. There is no breach between M&M and Renault. We had to slow down due to the overall slowdown in the economy, but our commitment to India is still very strong, he said. A decline in sales is not worrying, Nassif said, adding that the company was planning a complete facelift for the Logan. The company sold around 2,000 cars a month in its first year in India, but now manages just 600-700 units a month. When we went to Brazil, it took up 10 years to become successful there. We want to talk about India in the same way in a few years. We are not looking at India on a short-term basis, but with a long-term view, Nassif said. Nassif also denied that Renault may be in talks with Bajaj to replace M&M in the venturea stance Bajaj agrees with. Rajiv Bajaj, managing director of Bajaj Auto, said: Coming away from two and three wheelers and making a sedan is going to hit us so hard that we really cannot afford it. There are too many auto makers in the world already. We have no intention of joining them. A sedan may be out of the question, but Bajajs tie-up with Renault to make a small car is very much on the cards. It is work in progress, said Nassif. http://www.livemint.com/2009/10/11232756/Ventures-with-MampM-Bajaj-o.html TOYOTA CUTS INVESTMENT IN SECOND PLANT BY 25% Poornima Mohandas mint (Web & Print Edition) (Oct 12) Bangalore: The local arm of the worlds largest car maker, Toyota Kirloskar Motor Pvt. Ltd has reduced by one-fourth its proposed investment in a second plant in India for its small-car debut in the country. The savings are from lower construction costs, local sourcing of equipment and a favourable currency exchange rate, a top executive said. Toyota Kirloskar is also in talks with banks for raising Rs900 croreits first fund-raising in the country. The lower investments and savings are crucial for Japans Toyota Motor Corp., which reported its first loss in seven decades in 2008-09 and has put on hold several projects. Shekar Viswanathan, deputy managing director (commercial) at Toyota Kirloskar, said the company will invest Rs2,400 crore in the second plant, near its existing factory at Bidadi on the outskirts of Bangalore, and not Rs3,200 crore as announced in November. The lower investment will not affect the planned capacity for 100,000 cars a year in the second plant, he added. Toyota Kirloskar will also stick to its deadline of constructing the factory by December 2010 and launching the small car in early 2011. The total investment in the second plant, however, may increase by Rs300-500 crore depending on future exchange rate movement and cost overruns on software and other aspects, he said. The rupee has strengthened 2.9% against the yen so far this year, making imports from Japan cheaper. Cost-saving measures are routine in all capital intensive projects but more people are asking questions now, said Viswanathan. Toyota Motor has forecast a net loss of $5 billion (Rs23,250 crore) in the year ending March after it posted a loss of $4.4 billion in 2008-09, its first in 71 years. The firm is also witnessing sliding sales in the US, Europe and Japan as consumers buy fewer cars in a recessionary environment. India is a different story. Toyota Kirloskar, which entered India in 2000 through a joint venture with the Kirloskar Group, has raised its sales targets for 2009 following the runaway success of its newly launched sport utility vehicle (SUV), Fortuner. At the beginning of the year, the company had set a near-flat target to sell 52,000 cars. Now the way things are going, we are looking at over 53,000, said Sandeep Singh, deputy managing director (marketing), Toyota Kirloskar. The Fortuner, launched in end-August, attracted 7,000 bookings, surpassing an anticipated 5,000, forcing Toyota to raise production to 600 units a month from 500. In September, Toyota Kirloskar hit monthly record sales of 6,180 vehicles. Innova, its multi-purpose van, is the companys highest selling vehicle, followed by the Corolla Altis sedan. It also imports completely built units of the Prado SUV and the flagship Camry sedan. Most of the global majors are now seeing India seriously, says Ramnath S., director (research) at brokerage IDFC-SSKI Securities Ltd. He added that Toyota, which has a mere 3% market share in India trailing Maruti Suzuki India Ltd, Hyundai Motors India Ltd and General Motors India Pvt. Ltd, could see a significant growth in market share if it gets its small car right. Nearly three-fourths of the cars sold in India are small cars. As for Toyota Kirloskars fund-raising, the firm is in discussions with a clutch of banks including State Bank of India, ICICI Bank Ltd, HDFC Bank Ltd and Hong Kong and Shanghai Banking Corp. Ltd to raise Rs900 crore between April and December 2010. The remaining amount will be funded from internal accruals, which currently stand at Rs1,600 crore. We will go for a bank borrowing, buyers credit or a deferred payment guarantee, Viswanathan said. http://www.livemint.com/2009/10/11222507/Toyota-cuts-investment-in-seco.html?h=A4 The Hindu (Metro Plus) As small as they both may be in size, the Maruti 800 and the Tata Nano are the two of the largest in-demand cars in India. The Maruti 800 was perhaps the most important car to hit Indian roads shortly after Independence. It was Indias first whiff of modern car technology. Boasting a 796cc in-line three-cylinder engine that was both peppy and frugal, the M800 had a monocoque chassis, overhead cams and disc brakes. It was affordable, it was reliable, it was nimble and it was fun to drive. The car even led to an increasing number of women taking to the wheel. The little car was originally designed for the European and Japanese markets, but here it was happily doing Indian-assigned duties. Little wonder then that for years the Maruti 800 remained the largest-selling car in India. The numbers may have dropped, yet it continues to sell. But its days might well be over.The Nano is the new status symbol. Stop anywhere and hordes of people want to touch it, see it, sit in it and some even ask to drive it. Whats more is that men in their Audis will stop to check out a car that costs a little more than two Audi side mirrors. Why does the Nano catch more eyeballs per km than even the Ferraris did on their Magic Tour of India? The reason is not too hard to see. The Nano is a car that the common man can aspire to own. The 800 too had received a similar welcome in the 1980s. In 1983, there were queues outside Indian Oil petrol pumps where the 800s were first displayed, for the very same reason. Twenty-six years separate the two cars. The M800s 796cc engine develops 39bhp. The Nano is not far off the 624cc engine developing 35bhp. The 800 has a three-cylinder motor, the Nano uses two. Both use two valves a cylinder, driven by a single overhead cam. Though both cars generate about the same power, the 800 is quicker and peppier. The Nano takes 9.1 seconds to get to 60kph. The 800 reaches there a second faster. The gap widens at 80kph and 100kph. After introducing the accelerator to the floor, you have to wait nearly half-a-minute to see 100kph on the speedo. The 800 is nearly four seconds faster. The Nano is designed for the narrow, crowded streets of India, for broken village roads and rush-hour traffic. Despite the lack of grunt, it does its job brilliantly. The Nano runs like a breeze with the engine warmed up. Adequate power, extremely nimble, just what you need. The peppier 800 has no advantage here. So this one is a tie. The Nano can seat five people comfortably, and you can sit higher. The 800 just about squeezes in four and its small dimensions make you feel vulnerable on the road. Back in 1983, the 800s cabin felt upmarket and of high quality compared to the Ambys and Padminis that ruled the streets. The Nanos cabin does not give you the same feeling. It feels crude. You could argue that one cant quibble about it because of the Nanos price, and you will be right. Its also right that the plastic parts and other bits such as switches, knobs and beadings in the Nano are decent. But the point here is that in 1983, when you bought an 800, you felt you were getting a top-quality product. Even owners of motorcycles that cost Rs. 40,000 are used to a certain level of fit and finish. In 2009, when you buy a Nano, you are ready to accept this compromise. When the 800 was launched, it was predicted that if the 800 didnt kill its passengers on hitting a dog they would eat their words. This was before the Indian consumer knew about crumple zones (which the 800 had) and seatbelts (which it didnt). The critics had to eat their words. Safety concerns were also raised about the Nano. It comes with seatbelts. And, more importantly, it has passed the European crash test at MIRA. The Nanos independent suspension provides a better ride. This, along with the cars massive 180mm ground clearance, means that the Nano handles rough roads, potholes and ditches with poise. Well, the first time you drive the Nano, you will bounce off the redline in the first two gears, but you quickly learn to stay in the engines mid-range. Since its a rear-engined, rear-wheel-drive car, the engineers have given it narrow tyres in the front, and wider ones at the rear to dial in understeer. So if you want the tail to step out, you will be disappointed. Corner hard, and there will be a lot of body roll, but you never fear that you are going to keel over. On the other hand when the 800 was launched in 1983, it caught the imagination of enthusiastic drivers who till then had to make good by modifying their Padminis. The M800 cost Rs. 48,000 when it was launched. And, the price of petrol was about Rs. 6.20 a litre. So, the cost of a Maruti 800 equalled 7,741 litres of petrol. The price of petrol hovers around the Rs. 48 mark. If the cost of a Tata Nano too equalled 7,741 litres of petrol, the price would be Rs. 3.7 lakh. But the top-line Nano costs just over two lakh. So, the Tata Nano offers you value for money and good mileage. http://www.hindu.com/mp/2009/10/12/stories/2009101250430300.htm The Hindu (Metro Plus) Electronic Arts has recently added the 13th edition to their Need For Speed line-up NFS Shift. The newest edition of the franchise replicates the true feeling of driving high-end performance cars on real-life tracks as compared to the arcade-style, on-road racing in earlier titles. Graphics have been taken a notch higher with minute attention to details such as the real-time interior and exterior features of the cars right from the slick second-generation 1972 Nissan Skyline 2000 GT-R to the beefy 2009 BMW M3 GT2. Besides allowing gamers to get right under-the-hood, additional features include convulsive breathing sounds from the driver and even a temporary blurring of the screen following a crash. Categories of events range from traditional circuit races, time trials and sprints to specialised drifting events and one-on-one car battle modes. NFS Shift is now available on PS3, PSP, Xbox 360, PC and even some mobile phone platforms. http://www.hindu.com/mp/2009/10/12/stories/2009101250440300.htm
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| CONSTRUCTION EQUIPMENT MAKING A MARK The Hindu Business Line (Oct 11)
It was not all that long ago when Indian contractors felt that only imported machines could work in their mines and job sites and that excavating involved tough challenges. Hard surfaces brought in problems of premature breakage, wear and tear and this was too much for Indian design engineers to cope with. Low quality India did turn out excavating and earth-moving equipment but these invariably broke down and landed the contractor with problems of timely completion, resulting in liquidity damages. Again, parts supply and field services were major issues. An Indian manufacturer could not be trusted. If the machine broke down the required part was invariably not available in stock and would take a long time to reach the site. The manufacturer kept large inventories but surprisingly what he kept never failed and was never required, leaving him with huge inventory-holding costs, Satisfaction levels were very low and trustworthy products difficult to segregate. Indian planners as well as foreign investors regarded India as a low-skill, low-productivity country producing third-rate construction and mining equipment the small size of the Indian market creating serious scale diseconomies. Indian consumers are price-sensitive, so design changes to reduce costs are simply vital. Competition required a dialogue seeking constant design improvements quickly and cheaply. Construction equipment companies compete by constantly producing new models with improved features, such as fuel-efficiency requiring innovative changes all the time. Improved productivity The world soon realised that Indias big advantage was not cheap labour but cheap skills. Productivity improved vastly through technology-based divisions that have no blue collar workers at all only engineers yielding huge increases in innovation and productivity. What typically takes three months to go from concept to design, prototype, testing, removal of glitches, and final manufacture can sequentially be completed in just one month. At BEML Ltd, for instance, the R&D group came up with one innovation after another. It could be joystick controls on the dozers one day or the Unified Electronic Controller, for dumpers to continuously monitor and display equipment parameters such as engine RPM for over-speeding and equipment payload. Designs of complete excavators and new functionalities for existing equipment came up for production one after the other. BEMLs products are accepted in 55 countries. The M&C equipment export clocked an increase of 52 per cent over the previous years exports by further increasing its global foot print, successfully marking a presence in Sudan, Angola, Malawi, Uganda and the Honduras where in-house Indian technology calls the shots. Alongside manufacture of construction and mining equipment, parts and aggregates could be enhanced by using cheap skills to constantly produce better and cheaper parts and aggregates. Where BEML once relied on knowledge from the Japanese, it soon found that its own R&D produced better parts and aggregates for Indian conditions. Just the way Tata Motors created the Nano, the worlds cheapest car, making the world sit up, Indian manufacturers shine on the R&D front, rolling out innovative products and aggregates. Rapid strides It is this technology and the rapid strides taken by Indian industry that the 5th International Construction Equipment & Construction Technology Trade Fair, the EXCON 2009, showcases. Indian construction equipment industry is in a position to enhance the capabilities of construction and contracting companies. The sky is the limit the Indian construction equipment industry has only taken a few steps there is a considerable way to go. Our construction equipment sector has become world class. (The author is Executive Director (Marketing), BEML Ltd.) http://www.thehindubusinessline.com/iw/2009/10/11/stories/2009101150731500.htm
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| RIVALS GAIN MARKET SHARE ON HONDA STRIKE Danny Goodman Business Standard (Oct 11) New Delhi: The 45-day-long labour unrest at the Honda Motorcycle & Scooter India factory at Manesar in Haryana has doubled the waiting period for its scooters to two months and given market share on a platter to rivals. There are people who must have a new vehicle for the Diwali season. So theres a palpable spillover in the increased demand for our models, said a Bajaj Auto executive. Added Suzuki Motorcycles India Vice-president (sales and marketing) Atul Gupta: We are confident of touching 31,000 units both for September and October, which represents a 40 per cent growth against similar period last year. A Honda executive confirmed the drop in production. Due to the 50 per cent dip in daily output at our factory, the waiting period for our scooters now stands at around two months. But the customers who walk into our showrooms have agreed to wait to get delivery of their two wheelers. Honda has lost production of around 55,000 two-wheelers because of the workers agitation so far. The company attributed the unrest to disagreement in long-term wage settlement with a section of the temporary workers. According to Honda executives, these workers have prevented other workers from operating a new vehicle assembly line which would have helped the company to meet the current festival demand. Honda, like most other two-wheeler companies, derives about 10 per cent of its annual sales in the festive months of September and October. Honda executives said they are close to a settlement with the union. Honda Motorcycle and Scooters India Employees Union President Ashok Yadav, however, denied that the workers were on strike and said the decline in production was due to non-availability of components as some supplier factories were on strike. The production at our factory is low but it is not that we are on strike or we are going slow; the ongoing labour strike in some ancillary companies has led to a drop in component supplies, the Press Trust of India quoted Yadav as saying. The Honda executive added that the company has a long-term plan to move out of Manesar if the confrontation which has been simmering for the last three years is not resolved. All our investments have been made in Manesar. Its too early to comment to where we would shift if the need arises, he said. The company employs around 1,900 employees in the temporary cadre and an equal number as permanent employees. http://www.business-standard.com/india/news/rivals-gain-market-sharehonda-strike/372905/ MAHINDRA EYES SALES OF 7,000 SCOOTERS THIS MONTH Manu P. Toms Manu P. Toms The Hindu Business Line (Oct 11) Mumbai: With two new products in its portfolio, Mahindra Two Wheelers is targeting sales of 7,000 scooters this month. The company has in its kitty the Flyte, acquired from Kinetic Motors which is averaging 4,000 units a month, and the recently launched Rodeo and Duro. The three models are fitted with the same 125 cc engine developed by the Taiwan-based scooter manufacturers SYM. While the Flyte is focused on women, the Rodeo has been earmarked for youngsters and the Duro for families. We started selling the new models in the first week of this month and do about 300 units a day. Sales in October will be anywhere between 6,000 and 7,000 scooters, Mr Sanjay Mittal, Vice-President, Sales & Customer Care, Mahindra Two Wheelers, told Business Line. With its 300 dealerships and 80 service centres, Mahindra would like to remain an urban and semi-urban player for the moment. Nearly half the dealers are from the Kinetic Motor fraternity, while about 10 per cent are from Mahindras network of tractor and utility vehicle dealers. 2,000 Touch Points The gearless scooter is largely an urban product. By the time our motorcycles are ready for launch, we will go to Tier-II and III cities and even up to the Taluka level. In two to three years, we will have 2,000 touch points, Mr Mittal said. Mahindra has positioned its scooter range as value-for-money products. The Flyte and Rodeo are tipped to give nearly 58 km per litre under standard conditions, while it is nearly 52 km in the case of the Duro. http://www.thehindubusinessline.com/2009/10/11/stories/2009101150870200.htm LOHIA AUTO PLANS TO ENTER EUROPE, US MARKET PTI See this story in: The Hindu Business Line (Oct 12) New Delhi: Electric two-wheeler maker Lohia Auto Industries intends to enter the US market as part of its global expansion plans that will also see the company exporting its bikes to SAARC countries and Europe. While the company has already started holding discussions with some European distributors for shipments, it is working on making its products suitable for the US market. We will start exporting our scooters by January or February next year to the neighbouring nations, mainly the SAARC countries, Lohia Auto Industries Chief Executive Officer, Mr Ayush Lohia said. He, however, did not disclose details on how many units the company is planning to export. On plans of exporting to developed markets such as Europe and the US, Mr Lohia said: We are planning to sell our bikes within the first half of next fiscal. At present, we are looking for tie ups for distributing the products there (in Europe). As far as the US is concerned, he said: Our R&D team is already working on products to make it suitable for the US market. By the end of next fiscal, the company plans to enter the US, but volume would be low as the market there is dominated by the four-wheeler segment, Mr Lohia said. http://www.thehindubusinessline.com/blnus/14111308.htm Lohia Auto plans to enter Europe, US market Business Standard Lohia Auto plans to enter Europe The Economic Times
John Sarkar The Economic Times (Consumer Life) (Oct 11) Its Not fair. They shouldnt make stuff like this. I am growing old and a doctor named common sense advised me to stay away from machines that are mean. But so did my dad! A few days ago, I was at another party, sipping one of those lonely malts with ice cubes for company. And as usual, a slightly dazed but happy man walked up, slapped my back and complimented me on my fun job. You know, I want to buy a nice bike, he slurred. Four lakh, five lakhhow much is it going to cost? Nopes, I want to. A 650-cc bike is what I am looking for. Yeah, a 650cc!
Within five minutes, we were doing silly things. I tried hard to lift the front end but the big kerb weight kept the baby down. Or perhaps, I was scared. Who knows. Overall, the V-Max felt well built with topnotch fit and finish quality. The hostile aluminium air intakes on the front left and right side of the fake fuel tank are my favourites and set the bike apart from anything that you see on the roads here the mighty Suzuki Intruder notwithstanding. The riding position is sweet and it corners with a peg-scraping grace that only polished sports cruisers are capable of. It also packs in a slipper clutch, which takes care of the butterflies before any variety of chicane curry. Throw in a shaft drive and you have it all. I was with the bike for exactly 10 minutes and please dont ask me why. But in those 10 minutes I realised how right my father was. The V-Max is mean. Its a point-andshoot motorcycle and may I say, a bit impractical. But after the ride, as I stood there on the road, watching it disappear into the horizon, life felt good. It helps to know that there are machines, which can turn you into Superman, or for that matter a post modern Terminator. Hasta la vista, baby! Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved" | |
| LABOUR UNREST AT GURGAON'S COMPONENT FIRMS HURTS AUTO MAKERS PTI See this story in: The Economic Times (Oct 12) New Delhi: Labour unrest in factories of auto component makers at Gurgaon, one of the automobile hubs of India, is pinching vehicle manufacturers and threatens to take the sheen away from Haryana's celebrated industrial belt. Labour unrest at Gurgaon's component firms hurts auto makers Deccan Chronicle http://www.deccanchronicle.com/business/labour-unrest-gurgaons-component-firms-hurts-auto-makers-811 Labour unrest at Gurgaon hurts auto makers The Hindu Business Line http://www.thehindubusinessline.com/blnus/03111406.htm SUNDRAM FASTENERS: RIDING THE AUTO RECOVERY Manas chakravarty, Ravi Ananthanarayanan and Vatsala Kama mint (Oct 12) Sundram Fasteners Ltd (SFL), a TVS Group company that controls half the market in high-tensile fasteners and has nearly 40% of turnover accruing from the automotive segment, is likely to be among the beneficiaries. In fact, during the first quarter of FY10, SFL had already pulled off a smart recovery in revenue and net profit, both of which had been steadily falling in the previous three quarters. Stringent cost control and lower raw material prices, together with a firm 15-20% increase in demand from the domestic passenger vehicles industry, fuelled the turnaround. That turnaround continues. A slew of new models are due to hit the market, says a company official. That implies a better order book for SFL, whose client list includes MarutiSuzuki India Ltd, Tata Motors Ltd and Mahindra and Mahindra Ltd. Besides, the commercial vehicle (CV) segment too has started to improvesupplies to CVs are of higher value and account for nearly 35% of SFLs turnover. In the June quarter, SFLs revenue grew 26% over the previous quarter and the September quarter is expected to show similar growth. Operating profit margin (OPM), which had dropped from 16% in Q1 FY09 to 7% by Q4 of the same fiscal, is now gradually expanding. For all of FY10, the OPM should be around 10-11%. Net profit growth would be more robust compared with the year-ago period as FY09 reflected forex losses of around Rs60 crore on overseas borrowings. Exports contribute about 30% of sales for SFL and while there are signals of recovery in the overseas markets, its still heavy going. Also, the dollar has been weakening. Assuming a 2% drop in the dollar value, SFLs profits could be impacted by around Rs5-10 crore at the present turnover level. Of course, company officials say that a judicious level of imports (raw materials) could help reduce the negative impact. Also, it may be a while before the firm reaches peak utilization. In volume terms, we are about 35-40% away from the peak level of FY09, says SFL president (finance) V.G. Jagannathan. Much depends on whether the current momentum is sustained in the months ahead. Meanwhile, new capacities at Uttarakhand and Chennai could bring in tax savings as they go onstream around Q4 FY10. The new plant at Hosur, which will supply parts for Maruti engines, will bring in higher revenue and tax savings from next year. At a projected earnings per share of around Rs4 for this fiscal, the current price of Rs37 discounts current earnings about nine times. Analysts reckon that SFL is a sound play to ride the auto recovery, given its strong management and customer line-up. http://www.livemint.com/2009/10/11235748/Sundram-Fasteners-riding-the.html | |
| JK TYRE, CEAT UP TYRE PRICES BY UP TO 4 PC PTI See this story in: The Economic Times (Oct 12) Mumbai: Tyre manufacturers have hiked their prices by two to 4 per cent from October 1 due to a substantial escalation in the price of its key raw material, natural rubber, in the last five to six months. JK Tyre, Ceat up tyre prices by up to 4% Daily News & Analysis Tyre price The Telegraph http://www.telegraphindia.com/1091012/jsp/business/story_11604432.jsp | |
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Business Standard (Oct 12) Mumbai: Attributing rising food prices to the drought, Prime Minister Manmohan Singh said the worst was over and predicted that the situation would improve with the ensuing rabi (winter) crop. "If the rabi crop ... is normal, it would surely have its impact on the situation," he said at a press conference here. Although overall inflation is below 1 per cent, prices of essential goods, especially vegetables like potato and onion, have risen sharply. The prime minister, who was in Mumbai ahead of the Maharashtra Assembly elections on October 13, also ruled out any move to restrict CEO salaries, saying the issue was best left to the boards. "We still believe that the salaries are best determined by the boards of various companies and the government has no intention of imposing restrictions on CEO salaries," he said. Explaining the context of remarks on CEO salaries he had made two years ago, Singh said, "In my address to one of the meetings of CII, I had raised the issue in a general way," adding the government has not taken any view on the issue. The debate on the pay packets of CEOs was triggered by remarks by Corporate Affairs Minister Salman Khurshid the week before last. On the implementation of the Goods and Services Tax (GST), Singh said efforts were on to build consensus and introduce the new tax regime. The government is proposing to implement the GST, which will subsume various taxes like excise, service tax and octroi, with effect from April 1, 2010, a deadline that is looking increasingly unlikely owing to differences among states over several procedural issues. Earlier, while addressing a conference of state food processing ministers, Singh had said, "The states should work towards early implementation of the GST while removing subjectivity in treatment and classification of food products." On the possibility of another farm debt waiver scheme, the Prime Minister said, "It will not be proper." Pointing out that the loan waiver scheme was a one-time measure, Singh said the government would try to find meaningful solutions to the problems of farmers if they continue to face problems after the debt waiver scheme was implemented. On the Naxalite activities, Singh said the government is determined to take "effective measures" against the guerrillas but wont use the military forces against them. "We are not in favour of using the armed forces against the Naxalites. The para-military forces and police are adequate (for operations against Naxals)," he said. Earlier in the day, Singh met corporate leaders and prominent people from other walks of life in an interaction aimed at propagating the Congress-led government's achievements. To a query on several candidates, including many fielded by Congress, declaring assets of crores of rupees in their poll affidavits, Singh said, "This information is available to people. If there is any false declaration, the opportunity is available to people to challenge that." http://www.business-standard.com/india/news/the-worst-is-over-for-inflation-pm/372989/ 8% GROWTH IN 11TH PLAN PERIOD WILL BE SATISFACTORY: MONTEK The Hindu Business Line (Oct 11) New Delhi: Dr Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission said on Friday that it is unrealistic to expect a double-digit growth in the next few years and an average growth rate of over 8 per cent during the Eleventh Plan period would be satisfactory. More lobbying Speaking at the 88th Annual General Meeting of Asscocham, Dr Ahluwalia said that the industry should lobby more with the State Governments on their demands for better infrastructure, stable power supply and other civil amenities, because the Centre has no effective command over their resources. What the Centre can do is subject its allocations to States to certain conditionalities in order to ensure that the States perform according to the expectation, which it already has been doing, he said. Consistent records On a query jointly raised by the outgoing President of the Assocham, Mr Sajjan Jindal, and newly elected President, Dr Swati Piramal, about double-digit growth, Dr Ahluwalia said that as far as a growth rate of over 15 per cent is concerned, India would be able to do it if it consistently records a 10 per cent growth for the next 10 years. http://www.thehindubusinessline.com/2009/10/11/stories/2009101150320500.htm | |
Monday, October 19, 2009
Indian Auto Industry Update October 12, 2009
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