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Motown cautious despite decent first-half numbers INTERVIEWS/FEATURES FINANCE & INSURANCE
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GM expects sales to go up by 10% this year General Motors' electric Spark to hit Indian roads in 12 months Chinese auto companies get scent of Indian market COMMERCIAL VEHICLES Rising truck sales point to increased economic activity CONSTRUCTION & AGRI MACHINERY INTERNATIONAL NEWS Ford reaches tentative deal with union Car sales in China zoom 83.6% in Sept ECONOMY & FINANCE |
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Swaraj Baggonkar Business Standard (Web & Print Edition) Mumbai: Improved liquidity within the system, coupled with strong impetus given to a variety of infrastructural projects by the public and private sectors, have given heavy truck manufacturers the optimism to revise their growth projections to high double-digits for the remaining part of the year. The medium and heavy (M&HCV) truck segment posted growth in sales for the second month in a row in September, clocking 17,401 units against 16,971 units in the same month a year earlier, according to the Society of Indian Automobile Manufacturers (Siam), the apex representative body. K Sridharan, chief financial officer, Ashok Leyland, said: We are running our plant to full capacity, where we are scaling up production to 8,000 units a month to meet the increased demand. There is a phenomenal growth registered in multi-axle and tractor vehicles. The only one where there is no growth is the tipper segment. Chennai-based Leyland, the second biggest truck maker, recorded a drop of 4 per cent in sales last month in the M&HCV segment, at 3,371 units as compared to 3,518 units sold in the corresponding month a year earlier. But, the company is pleased with the sequential monthly growth of 17 per cent over August. "The double-digit growth in the latest IIP (Index of Industrial Production) data has a direct correlation to sales of large trucks since an increase in industrial activity results in a pick-up in their sales. Going forward, we expect the large goods carrier segment to post positive sales on the back of a low base last year, R Seshasayee, managing director, Ashok Leyland, said. He added that new emission norms, which would be enforced in April 2010, would further aid truck sales in the first quarter of calendar year 2010. The new emission norms for next year will result in the old inventory being cleared, resulting in increased CV sales, he pointed out. Positive sentiment and availability of easy finance due to stimulus packages announced by the Centre, which has made banks lend to non-banking finance companies, are some reasons for the demand resurgence. So are positive moves by the Union surface transport ministry to meet the shortage of funds for highway builders and other programmes such as the golden quadrilateral project, say industry watchers. Somnath Banerjee, executive V-P (sales, marketing and after market), VE Commercial Vehicles, said: The issues of availability of funds to buy commercial vehicles and at the right lending rates have eased by a large extent. Demand is looking brighter but interest rates should not move northwards in the coming months. VE Commercial Vehicles is a unit of Delhi-based Eicher Motors and the Swedish auto giant, Volvo. It witnessed its sales grow two-fold during September to 169 units as against 79 units sold in the same month a year before. Meanwhile, medium and heavy truck sales of Mumbai-based Tata Motors, India's largest maker of commercial vehicles, was flat for September at 11,357 units as against 11,360 units. However, it was higher by 22.75 per cent when compared to August, where it clocked 9,252 units. A senior executive from Tata Motors stated, After months of negative growth, the heavy commercial vehicle segment has shown some positive growth, month-on-month. These are not just green shoots but there has been a proper revival in demand and we expect to log double-digit growth in the next six months. Analysts say the positive movement in demand for CVs is evident from the surge seen in their respective stock prices. The average share price of all the three listed companies Tata Motors, Ashok Leyland and Eicher Motors has risen by an average of more than 150 per cent since the start of the financial year, with Tata Motors leading the charts with a growth of 206 per cent. RISING TRUCK SALES POINT TO INCREASED ECONOMIC ACTIVITY Samar Srivastava mint (Web & Print Edition) New Delhi: In an indication that the pickup in economic activity is likely to be sustained, commercial vehicle (CV) sales rose for the third straight month in September. Led by Tata Motors Ltd and Ashok Leyland Ltd, auto makers sold 45,451 trucks and buses in September, up 6.4% from a year ago, according to data released by the Society of Indian Automobile Manufacturers (Siam). Significantly, sales of large multi-axle trucks capable of carrying 25 tonnes of cargo more than tripled to 1,559 units in September, compared with the same month last year. This is a classic sign of an economic revival, said Ramnath S., vice-president of research at financial services firm IDFC-SSKI Securities Ltd, referring to the rise in sales of large multi-axle trucks. Ramnath said that this is just the beginning of a revival for the commercial vehicle sector. Domestic demand is up and the decline in exports has been reduced, he added. Makers of cars and two-wheelers also reported a rise in sales. Car sales, which have risen for the past eight months, increased sharply to 129,683 units, up 20.6% from the year-ago period. Still, car makers are wary of how demand will hold up after the festive season. The impact of scanty monsoon rains is also an unknown. For now, sales have been held up in part by new model launches. Nine new cars have been launched in the past year. Siam does not release individual model sales. Two-wheeler sales registered a modest 7.6% increase to 778,424 units. The relatively lower growth was partly due to labour problems at Honda Scooters and Motorcycle India Pvt. Ltd. It registered a 10% drop in production to 81,505 units. Siam, which reports dispatches to dealers and not retail sales, said it would increase its annual sales forecast in November for the fiscal year to 31 March. We have reached the upper end of the forecast we had given in April. So we would need to revise this, Siam director general Dilip Chenoy told the media. Siam had forecast a growth rate of 3-5% for cars for the year that began on 1 April. In the first six months of the year, car sales have risen 14% and two-wheeler sales have grown 15%. Easier availability of financing and low interest rates have played a key role in getting the sales back on track. The average rate for auto loans has fallen by 4% to 10% in the past year, according to Siam. State Bank of India, the countrys largest lender, has moved aggressively to cut rates. It now offers loans at 8% for the first year and 10% for the second and third years. http://www.livemint.com/2009/10/13215810/Rising-truck-sales-point-to-in.html | |
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Meera Mohanty The Hindu Business Line Manoj Bansal recently changed his two-year-old Splendour for a new Passion Pro at the Hero Honda dealership in Sardhana, a small town about 20 km from Meerut, Uttar Pradesh. I had to move on to a sturdier bike. I have gained weight after all, says the sugarcane farmer and a Bahujan Samaj Party worker. The poor monsoon has reduced the yield but with the prices of sugarcane expected to be higher, Bansal hopes to earn about Rs 1-1.5 lakh this year. Farmers of Sardanah are expecting sugarcane prices of Rs 170-220 a quintal, significantly higher than last year. Bansal is the kind of prospering opinion leader that Indias largest two-wheeler company is looking to tap. Rural markets contribute about 40 per cent to Hero Hondas sales, and the company hopes to improve that.
With two-wheeler penetration levels at less than 10 per cent in rural households, it is a large market waiting to be tapped, says a company spokesperson, adding that Hero Honda is mapping the demographic and psychographic landscape of Rural India. In Sardhana, which has a 19th century Basilica built by the courtesan-turned warrior and mercenary queen Begum Samru, professional ear-cleaners are at work on verandas outside shops stashed with DTH boxes. It is a sleepy town surrounded by sugarcane fields and mango groves, and two bike dealerships located within 100 m of each other on the main market street. If you dont like one dealer you can go to the other. And thats why childhood buddies Rupesh Chowdhury and Ojaswi Ram are now back at the Hero Honda showroom. Though they had originally planned to buy a Discover 135cc, they didnt like the sales pitch at Bajaj, but are determined to go home with a bike. Its an auspicious time for big purchases, and its a lucky day for my friend here, says Chowdhury. His red Hero Honda Glamour was a gift from Ram when he couldnt afford one, and Chowdhury is returning the favour. Harvest purchases Demand during the ongoing festival season is buoyant, says Mr Milind Bade, General Manager, Marketing, Bajaj Auto. We will have to wait for a couple of months to see if the impact of poor monsoon leads to a tapering off in sales by the end of the year. Purchases are now being met from the rabi crop in April, and further sales will depend on the kharif harvest. From a growth of 17 per cent, the two-wheeler industry could settle at 11-12 per cent this year, he says. Satyendra Tyagi hasnt had a very healthy crop this year, but hes done well as a milkman. He employs two people, and recently bought three buffaloes. Unlike Chowdhury, he likes Mr Navneeth Garg who owns the Bajaj dealership. Hondas bikes are better. But Ive already ridden a Splendour, and for a change Ill go with a Discover, he says, waiting for the first free service. Tyagi is less forgiving of the Government which does nothing to improve rural roads, and goes about forgiving defaulters who dont work to pay back their loans. The Discover is a portfolio gap-filler for Bajaj which only had the Platina at the entry level. The brand has been a great success, selling 94,000 units in September alone, making it the third largest in the last two months, claims Mr Bade, estimating that half of these numbers would come from smaller towns. Rural India is now seen as a significant part of the economic growth only because it has been left behind till now. The trickle-down effect and the impact of programmes such as NREGA are being seen. Last year, rural India sustained the economy while urban consumption came down during the slowdown, but lets not forget that 30 per cent of India still accounts for 60 per cent of consumption, points out Mr Venu Srinivasan, Chairman and Managing Director, TVS Motor Company. With the exception of the Italian-style Basilica of Our Lady of Graces, Sardhana has little to boast about. There is no electricity for hours. The yam and textile mills have moved to Meerut, and along with them many of the young hands, says Satyaprakash, an elderly shop-owner. More wheels Chowdhury and Ram have several failed businesses behind them. Five years ago, they tried their hand at a cable business. But the additional expense of running a generator didnt make it viable. Next came a plastic pipe unit for which they even sold their common investment, a Santro that they used for picnics. That failed too. Ram runs his familys goldsmith business and Chowdhury is back to sugarcane farming. What has changed is peoples propensity to spend, says Garg. But the number of cars in the village is going up; and while Tyagi moves to his second and third bikes, for Mohammed Hussain (name changed), a poor farmer from Nainaputhi village, its the familys first purchase of a two-wheeler. He has come to the Hero Honda dealership to buy a vehicle for his Delhi-based son-in-law, with cash in a cloth bag. The cash comes from his savings; money for the marriage will have to be borrowed from his relatives. http://www.thehindubusinessline.com/2009/10/14/stories/2009101450250700.htm | |
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Manu P. Toms, Sagar Bhadra The Hindu Business Line Mumbai: Tyre exports this year are heading towards negative territory largely due to the increasing competition from Chinese manufacturers in the traditional markets of Indian tyre makers. Tyre exports, which clocked a total turnover of Rs 3,000 crore last fiscal, are set to fall by 10-12 per cent, according to Mr Rajiv Budhraja, Director-General, Automotive Tyre Manufacturers Association (ATMA). What is happening is the traditional export markets for Indian companies have been overcrowded by Chinese tyres. The international market is becoming increasingly challenging for Indian tyre companies, he told Business Line. Late last month, the US imposed a 35 per cent tariff on Chinese tyres to protect the American tyre industry. With the US markets (Chinas third largest export destination) turning unfavourable, Chinese manufacturers would be more aggressive targeting other markets. Well before the US impost, Chinese tyre exporters unleashed a price offensive against Indian companies in their traditional markets such as West Asia, Latin America and South-East Asia, according to industry representatives. As a result, from April to July, India exported 15.88 lakh tyres against 20.42 lakh previously, a decline of 22 per cent. Another reason attributed to the fall is the slowdown in the global automotive industry. Since the industry is going through a downturn, the size of the pie for tyre makers remains the same or is shrinking, Mr Budhraja said. Tyre importers and distributors cut down their volume of business in many markets as the cost of finance has gone up, he said. More importantly, each country is trying to help domestic manufacturers. For example, the import restriction on Chinese tyres by the US has not been seen by the Indian companies as an advantage for them. Exports cannot be ramped up all of a sudden as they are governed by long-term contracts. In addition, the first advantage goes to US domestic tyre companies, he said. The Government, under the new Foreign Trade Policy, has granted additional concessions for tyre exports to countries included in the Focussed Market Scheme. As many as 26 markets are added in the list. We welcome it, but it is a bit late and it would take time to reflect in the market, Mr Budhraja said. http://www.thehindubusinessline.com/2009/10/14/stories/2009101451780100.htm | |
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The Telegraph New York: Crude oil rose to near $74 a barrel after the Organisation of the Petroleum Exporting Countries (Opec) raised its 2010 demand forecast and the dollar weakened. Opec said a recovering world economy would boost crude demand by 700,000 barrels per day (bpd) next year to 84.93 million bpd. http://www.telegraphindia.com/1091014/jsp/business/story_11612351.jsp | |
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Reuters See this story in: The Economic Times Shanghai: General Motors Co Chief Executive Fritz Henderson said on Tuesday that it was possible a deal on the sale of a majority stake in Opel, its European carmaking arm, could come this week. GM may sign Opel deal this week: CEO The Indian Express GM may sign Opel deal this week: CEO Yahoo India http://in.biz.yahoo.com/091013/50/baucdx.html GM CEO says possible to sign Opel deal this week mint http://www.livemint.com/2009/10/13140339/GM-CEO-says-possible-to-sign-O.html GM likely to finalise Opel deal this week The Financial Express http://www.financialexpress.com/news/gm-likely-to-finalise-opel-deal-this-week/528700/ FORD REACHES TENTATIVE DEAL WITH UNION Agencies See this story in: The Economic Times Detroit: Ford Motor Co reached a tentative deal with its main union that includes the same concessions granted to rivals General Motors and Chrysler as they restructured under bankruptcy protection, union sources said on Tuesday. CAR SALES IN CHINA ZOOM 83.6% IN SEPT See this story in: The Economic Times Shanghai/Hong Kong: Chinese car sales soared to a record in recent months on government incentives, but the same money tap that turbocharged sales could easily be turned off in 2010 if Beijing frets about an overheating economy.
China auto sales soar 77.9 pc | |
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PTI See this story in: The Hindu Business Line New Delhi: India received foreign direct investment of $3.26 billion in August, a robust growth of 40.51 per cent over the same month last year, in spite of the persisting global financial crisis. FDI inflows, in August last year, stood at $2.32 billion, the Reserve Bank said in its bulletin. The country attracted $3.51 billion FDI in July this year against $2.25 billion in the same month last fiscal. Portfolio investment in August also increased by 56.15 per cent to $926 million compared to $593 million, the bulletin said. The total FDI inflows during April-August, however, contracted by about 3.41 per cent to $14.14 billion compared to the same period in 2008-09, due to poor accruals in the opening months of the fiscal. In the first five months of 2008-09, it was at $14.64 billion. During the first five months of this fiscal, portfolio investment increased to $11.23 billion from $4 billion in the same period last year. In 2008-09, the Government had set a target of attracting $35 billion FDI, but was able to receive only $27.3 billion due to the global financial crisis. http://www.thehindubusinessline.com/blnus/01131301.htm INFLATION MAY RISE TO 6% BY END-MARCH: D&B PTI See this story in: The Hindu Business Line Mumbai: Inflation may touch the six per cent mark by end-March 2010 led by surging food prices and decline in agricultural output because of poor rainfall, business information provider, Dun & Bradstreet, said. Echoing the words of Reserve Bank Governor, Dr D Subbarao, D&B said India's wholesale price index (WPI) inflation entered positive territory sooner than expected. Given the high prices of primary food articles and waning base effect and an expected dec line in agriculture production, the WPI inflation might surge to around 6 per cent by end of the current fiscal, Dun & Bradstreet India, Chief Operating Officer, Mr Kaushal Sampat said here. He said inflation in primary food articles stood at 13.3 per cent, a figure last seen in December 1998. India's inflation stood at 0.70 per cent for the week ending September 26. However, the rate of price rise fell from 0.83 per cent in the previous wee k on slight easing of food prices over the week. The drought-hit kharif crop, which accounts for over 50 per cent of total agriculture output, will impact rural consumption and industrial sector subsequently, Mr Sampat said. Lower agriculture growth might have a negative impact on the rural consumptio n demand and subsequently on the industrial sector. Expected lower agriculture production might also put downward pressure on agriculture exports, which accounts for around 11.3 per cent of total exports, he said. | |
Monday, October 19, 2009
Indian Auto Industry Update October 14, 2009
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