With a recovery in the domestic automobile sector now firmly established, auto ancillary stocks are back on the investment radar, most of whom have more than doubled from the lows in April.

In six months beginning April, shares of Bharat Forge Ltd have moved up from Rs100 to Rs288; Rane Madras Ltd from Rs57 to Rs112; MM Forgings Ltd from Rs43 to Rs72, Apollo Tyres Ltd from Rs18 to Rs52 and Amara Raja Batteries Ltd from Rs38 to Rs157.

The auto sector has grown at an impressive rate of 12% so far this calendar year and is expected to continue doing well in the medium term. While much of the incremental demand is from two-wheeler and passenger vehicles, even commercial vehicle sales have begun to look up. With truck and bus sales catching up in the past four months, it would result in greater revenue expansion as auto parts of these vehicles have higher value.

Theres good news on the export front, too. Recovery signals are evident in parts of Europe and the US, which is good news for large companies such as Bharat Forge, which have a strong presence in those regions.

The fact that many firms in the sector scaled down their expansion plans in the past two years will translate into better profitability for auto ancillary companies in the turnaround.

Operating profit margins could expand by 100-200 basis points in the current fiscal (to 31 March), says S. Krishna Kumar, vice-president (research) at Sundaram BNP Paribas Mutual Fund. One basis point is one-hundredth of a percentage point.

Margins had, after peaking at 15% in 2007-08, dipped sharply to 12% last fiscal, because of the double whammy of demand contraction and an increase in commodity prices. Forgings, castings and tyre manufacturers should see a greater improvement in profitability given the benefit of comparatively low base.

On the back of the expected positive news flow, auto ancillary stocks should do well in the near term, although the fact that most of these stocks have risen sharply would limit returns.

http://www.livemint.com/2009/10/19232340/Auto-sector-recovery-lifts-sto.html

INTERVIEWS / FEATURES

SMALL IS SENSIBLE

Bhupesh Bhandari

Business Standard (The strategist)

New Delhi: The balloons, streamers, stars and flowers are all over. Workers ready cars for delivery there are number plates to screw in, wheels to polish and accessories to fit. Visitors glide in and out of cars. Located off the busy road that connects Faridabad with Delhi, the Hyundai showroom hopes to sell at least 600 cars in October. The period is auspicious for Hindus, with Diwali smack in the middle of the month. The Central government has handed out another lot of pay arrears that resulted from the award of the Sixth Pay Commission. Companies have given bonuses to employees. And people are keen to put their money to good use.

In his office above the showroom, Hyundai Motor India Managing Director & CEO Heung Soo Lheem looks satisfied with the state of affairs. We are running full three shifts at our two plants (in Tamil Nadu). We hope the momentum will continue after Diwali as well. Lheem has worked 37 years in Hyundai, last close to four in India.

Car makers reckon sales will grow at least ten per cent in 2009. For Hyundai, it is important that sales grow at a fast clip. Its production (600,000 cars per annum or 50,000 per month) is at present split equally between local sales and exports. Several countries in the West had announced scrappage incentives for buyers of fuel-efficient cars. This gave a huge momentum to exporters like Hyundai. But now the incentives have begun to run out. Lheem admits getting new export orders has become tough. Hyundai Motor India Senior Vice-president (marketing & sales) Arvind Saxena says exports in 2009 may fall about 10,000 short of local sales, and the gap may double in 2010. It is therefore crucial for Hyundai to do well in India.

Hyundai sits on 23 per cent of the Indian car market. But the market place is turning crowded by the day. Leader Maruti Suzuki (market share: 52 per cent) has strengthened its small car portfolio with launches like the A-Star, Ritz and new Zen Estillo. Fiat has begun its new innings with the Linea and Punto. Ford has announced a new small car for India called the Figo. Nissan has set its sights on a 5 per cent market share. General Motors wants a 10 per cent slice of the pie.

Portfolio makeover
Small cars account for over 75 per cent of the Indian market. The economic slowdown of the last one year has reinforced consumers preference for fuel-efficient and inexpensive small cars. According to Saxena, almost a quarter of Hyundais repeat customers now own two small cars. In the past, the second purchase was invariably a mid-sized sedan.

And Hyundai knows this is where the future lies. The Korean chaebol has made India its hub for small cars in the world. Models like the Santro, i10 and i20 are not made anywhere else in the world. This ensures, Lheem claims, that the cars sold in India are of global standards. But it cuts the other way too. Often cars for the overseas market need to be fitted with expensive components and material; this drives up the price in India.

To consolidate its position, Hyundai launched the i10 in October 2007 and the i20 in December 2008. In September, it gave a facelift to its old warhorse, the Santro. The company has sold 11,000 to 12,000 i10s, about 7,000 Santros and between 4,200 and 5,000 i20s every month this year. The surprise here was the i20. We expected to sell not more than 700 every month, says Lheem. The cars export volumes have been cut, says Saxena, to feed the domestic market.

The Getz will be taken off the road soon. In the works is a new 800-cc, 3-cylinder car somewhere in a Hyundai laboratory in South Korea. The brief to the engineers, says Lheem, is to keep the price below $6,000 (approximately Rs 300,000). It will be smaller than the Santro in price as well as size, adds Saxena. The car, which is yet to get a name, could take another two or three years before it launches.

The focus on small cars has had an unexpected fallout. Sector experts say that Hyundai faces a problem similar to Maruti Suzuki consumers feel that it is good only with small cars. Globally, Hyundai is strong in middle- and large-sized cars. But that imagery is somehow missing in India, says Synovate Motoresearch Associate Director Sumit Arora.

Lheem says his mix of small and big cars mirrors that of the industry 75:25 but admits that people perhaps are more familiar with the brand Santro than Hyundai.

Privately, car makers admit that real money is in middle- and large-sized cars. The profit margins in small cars are just a fraction. To be fair, Hyundai does have more than one brand in this segment: the Verna, Accent, Sonata and Tuscon. It has withdrawn the Elantra and wants to plug that gap between the Accent and Sonata with a new brand. The SUV portfolio will see the Santa Fe in addition to the Tuscon.

Still, Lheem says he has to fight an unfair battle against the likes of Honda and Toyota in this segment as they import parts free of duty from Thailand. (India and Thailand have a free-trade agreement.) The answer, he says, is to buy more and more components from within India. Lheem admits that not all his cars sell at a profit, in India as well as abroad. He doesnt name them but says some exports of developing country models are being done at a loss.

Some experts believe there is enough headroom in the small car market for all to grow. More car buyers are getting into the market, says Ernst & Young Partner Kapil Arora. Customers were always price-sensitive; they have now become value conscious they want small cars with more features. This might be true. Saxena says Hyundai gets almost 45 per cent of its volumes from first-time buyers, up from 33 per cent a few years ago.

To cater to price-sensitive customers, several car makers have extracted the last ounce of profit from their vendors. Component manufacturers have complained for long that business is tough. Car makers have used the threat of sourcing from China to beat down prices. More and more of them also want full control over sales in the lucrative retail market. Lheem says he has offered all vendors who get a majority of their business from Hyundai financial compensation in case they begin to lose money. Thankfully, nobody has come to me so far, says he.

Diesel for growth
India has for long subsidised diesel more heavily than petrol. As a result, a growing number of consumers want to buy cars that run on diesel engines. This was about 20 per cent of the market three years ago. Now, it stands at 27 per cent. The projections are that the figure will hit 35 per cent in the next three years.

Maruti Suzuki got a strong foothold in this market after it set up a plant at Manesar near Delhi to make 100,000 diesel engines per annum. Hyundai has a limited play in the diesel market. Its only presence is the diesel i20 fitted with an imported diesel engine. But the company knows that if it wants to increase its market share, it needs to do much more. At the moment, the company is studying the feasibility of a factory to make 120,000 to 150,000 small diesel engines every year. The investment, according to Saxena, could be as much as Rs 1,200 crore. A decision is expected by the end of the year. The industry has to move towards diesel, says Arora of Synovate. Hyundai needs to move fast with its plans.

Dealer upgrade
Recent research by Synovate shows that when markets turn bad, as they did in the country till a few months back, buyers prefer to go for brands that have a wider presence. It reassures them that the company will not go out of business. And for that a large dealer network for sales as well as repairs and service is essential. At present, Hyundai has 272 dealers across 190 cities and towns. The company plans to raise the network to 300 across 230 cities and towns by the end of the year, though Lheem feels 295 would be a more reasonable number.

Saxena feels this more or less covers the entire country. The top ten cities sell 60 per cent of the cars in the country, and the top 20 sell 75 per cent. Beyond what we plan is not profitable, says he.

Dealers are clearly an important cog in the Hyundai game plan. The key therefore is to boost the profitability of the dealers. What Lheem has done is that he has channeled all sales of spare parts through the dealers. Even the 700-odd authorised service stations have no option but to buy components from dealers. The logic is simple: While the profit margins on car sales are low (the industry average is below eight per cent), those on spares can be as high as 60 per cent. Hyundai has been around for ten years in the country now and there are 1.5 million Santros on the road. The service volume is not negligible.

Meanwhile, the company has also worked with dealers to improve their showrooms and service infrastructure. Hyundai every year rates its dealers collectively on a scale of 1,000. Last year, the score was 800. Lheem had set a target of 950 by the end of 2009. By mid-October, it has hit 905. We have seen at least 15 per cent improvement in most of our dealers, says Lheem. He also plans to convert 100 of them into elite dealers.

Finance matters
A large dealer network may be fine, but for footfalls to convert into purchases, credit is the key. In the last one year, private banks as well as non-bank finance companies, which had fuelled the last boom in car sales, have turned conservative. Earlier, they had financed up to 90 per cent of the cars sold only around 10 per cent customers bought cash down. The number shot up to 40 per cent in December 2008, thanks to the financial meltdown, it has since dropped to 33 per cent.

Saxena is of the view that unless it falls to 15 per cent to 20 per cent, car sales are unlikely to boom like in 2006 and 2007. Hyundai has thus quietly tied up with about a dozen state-owned banks which have been gently persuaded by the government to lend freely. (This is a part of its stimulus to revive the fortunes of the economy.) These banks lend freely to Hyundais customers. In return, Hyundai dealers have given business to these banks. They source, for instance, all their working capital from them. So far, the trick seems to have worked. State-owned banks accounted for about 15 per cent of Hyundais sales a year ago; they contribute as much as 29 per cent.

It is every chief executives job, Lheem waxes philosophical, to aim for market leadership. Though he refuses to disclose his targets, these initiatives he hopes will help bridge the gap with Maruti Suzuki.

http://www.business-standard.com/india/news/small-is-sensible/373666/

GENERAL MOTORS: READY TO CRUZE?

Srivats Uniyal

Business Standard (The strategist)

Barely three months after emerging out of bankruptcy, General Motors has launched its luxury Sedan, the Chevrolet Cruze, in India. Built on a global platform called the 300 series, the Cruze will compete with the Honda Civic, Skoda Laura and Volkswagen Jetta for a space in the executive segment.

The car comes in two manual diesel variants priced between Rs 10.99 lakh and Rs 12.45 lakh, ex-showroom, New Delhi. The petrol and automatic variants are planned by early next year.

So, what makes GM so confident of beating away the competition from the established players?

Our offer price is cheaper than competition. The fuel efficiency of the Cruze is 18.3 km per litre. Besides, we have introduced features like push-button start and smart-screen system for the first time in the D segment. If consumers get better style and features at a low cost, why would they not go for it, says General Motors Vice-president (sales and marketing) Ankush Arora.

It is not just the aggressive pricing that General Motors is betting on. It is spending big bucks on a digital media campaign as well. We have allocated more than Rs 1 crore for digital marketing for a span of just four to five weeks, says Arora.

This is for the first time that General Motors has allocated such a huge budget for a digital media campaign. Usually, a car brand spends about Rs 50 lakh, except of course for Maruti Suzuki which always invests more than Rs 1 crore on such campaigns.

It was on October 5, a week before the launch of the Cruze, that we began the online teaser campaign which consisted mainly of banner ads and pre-poll video-teaser ads on websites like Yahoo, Rediff and Indiatimes. The response has been extremely good so far. As of October 14, we have received 1,200 confirmed bookings for the Cruze and are deluged with test-drive requests, says Arora.

The company is also working on an executive ad roadblock campaign in which Cruze ads will be displayed on more than 16 major portals. We have booked the homepages of various prominent websites like Moneycontrol and Reuters, says Arora.

The company is expecting to reach 70 per cent of all internet users through the roadblock campaign. After the roadblock campaign, we will focus on more tactical and targeted banner advertising and content sponsorship across popular websites, says Arora.

This will include the search marketing strategy on the internet with 2,500 keywords. A sponsored link of the Cruze will be pushed to internet users when they search for premium products or automobile-related products, says Arora.

Besides, General Motors is planning to increase the number of its authorised service centres to 250 from present 198, across the country. This will make us more reachable to the consumer, says Arora.

The Cruze may get some momentum as it has been launched in the festive season. But will it maintain its momentum once this festive season gets over?

http://www.business-standard.com/india/news/general-motors-ready-to-cruze/373670/

CARs,SUVS & MUVs

CAR SALES SPARKLE IN DIWALI WEEKEND

Manu P. Toms

The Hindu Business Line (Web & Print Edition)

Mumbai: This has been a heady Diwali weekend for carmakers which could pave the way for good sales numbers this month. Market leader Maruti Suzuki sold 10,000-12,000 cars in three days from Dhanteras to Diwali, considered an auspicious period for buying.

Sales were exceptionally good during this Diwali. Given the fact that the same month last year was slowdown-hit, this October seems to show good growth, said Mr Shashank Srivastava, Chief General Manager, Maruti Suzuki.

Mr Arvind Saxena, Senior Vice-President, Hyundai Motor India, said the three-day period from Dhanteras to Diwali saw sales up by 50-60 per cent. Right from Navaratra, sales were good this festival season. All our models, especially the i10 and i20 are doing well, he said.

General Motors India clocked sales of 2,000 units in the three-day period thanks largely to the Spark and the recently launched Chevrolet Cruze. We have received 1,200 bookings for the Cruze so far and will be able to deliver 800 cars this month, said Mr P. Balendran, Vice-President, Corporate Affairs.

Premium car manufacturers Honda too posted good sales. On Dhanteras alone we sold 1100-1200 cars. In fact, in some cases our dealers could not meet the demand, said Mr Jnaneswar Sen, Vice President, Honda Siel Cars India Ltd.

With ten days still to go, carmakers hope that October numbers would show substantial year-on-year growth.

http://www.thehindubusinessline.com/2009/10/20/stories/2009102050960200.htm

GMS READY-TO-DO-IT-ALL APPROACH IS HELPING IT GET BACK ON TRACK

Ravi Balakrishnan

mint (Web & Print Edition)

Last week, when General Motors India Pvt. Ltd launched its new sedan, the Chevrolet Cruze, the timing was just rightpoised to catch the climax of the festive season and bargain-hunting frenzy.

The buzz around this latest model quickly focused on its priceat Rs10.99 lakh for the bare-bones diesel version, it is the cheapest car in the premium D segment. The Cruze is not the only new offering from GM for the Indian market. In early 2010, a new small carthe Beatis expected to be launched. It will be followed later in the year by an eco-friendly electric car in association with Reva Electric Car Co. Pvt. Ltd. Besides, Chinas largest auto maker SAIC Motor Co. Ltd is set to buy a stake in GM India, securing an entry into the Indian market.

The first products to come out of this venture are likely to be another small car or light trucks. New and proposed launches apart, September was GMs best month yet in India, with 7,654 units sold. All this action makes it hard to believe that a mere four months ago, serious doubts were being raised over the future of GM in India. Shortly after declaring bankruptcy in June, the US operation of GM sold marquee brands such as the Hummer and Saab. Having failed to find a buyer for its Saturn unit, the company seems on course to liquidate the brand by October 2010. While not directly affected by these developments, they nevertheless cast a shadow on GM India. Ankush Arora, vice-president, sales, marketing and after-sales, GM India, recalls, It did have an impact on consumer sentiment and consumer confidence.

Except that local market conditions had perhaps given GM India more of a fighting chance. The company was saddled with negative perceptions about American cars being very expensive to purchase and maintain. And so it had already fired its first salvo in changing the minds of Indian consumersthe Chevrolet promise campaign which began in mid-2008 and offered three years of free service. Given the seriousness of the message, GM India opted to bring its managing director, British expatriate Karl Slym, instead of celebrities on its roster such as Saif Ali Khan and Rani Mukherjee. In the months leading up to and immediately after the bankruptcy, the campaign also served the purpose of reassuring consumers that GM was here to stay.

In June, GM launched its There For You, There For India initiative, encompassing both online and offline media. Sirish Chandran, editor of Overdrive magazine, remarks on GMs high decibel campaign: They didnt stop advertising. You didnt stop seeing Chevy hoardings all over the place. Everybody piped down after talking about the bankruptcy for the first month. The Indian customer does not have a long memory. Once he forgot, he went back to buying the Spark because it made a lot of sense since compared with other cars it was cheaper and offered good value for money.

Reassuring dealers required an entirely different strategy, though. According to Arora, There was some amount of anxiety that would be there with any businessman if he invested in your business or for your brand. But one thing we truly believe in and have been practising with our dealer partners is honesty and transparency. The company kept the dealers in the loop through the course of the bankruptcy proceedings, helping them understand what the impact on India could possibly be. Besides, GM stationed personnel at its dealerships as a part of its There For You, There For India initiative and personally reassured both existing and potential Chevrolet owners. I think we had the complete confidence of the dealers who were all out to support us in all our initiatives because if we did not have that, to be honest, we could not have really gained back consumer confidence, says Arora.

It also helped that proof of GM Indias financial commitment to the market was there to see month after month, where it mattered the moston the roads. Spark Music edition and an LPG version of Chevrolets small car were both launched this year.

According to K.V. Sridhar, national creative director, Leo Burnett USA, Inc. one of Chevrolets agencies in the Indian market, People wouldnt have believed GM was serious about a commitment to this country if the vehicles were not out on the streets.

GMs target for the Indian market has been a modest 10% share, but the aggression with which it is gunning for this number is greater than ever before. Be it launches, associations or one-of-a-kind schemes, GM has shown itself ready to do it all.

The recent success has borne out its efforts but many believe it is at least in part a function of a very buoyant auto industry. The true challenge as Chevrolet steps on the gas will be to maintain its sales trajectory even after the current auto boom subsides.

http://www.livemint.com/2009/10/19211920/GM8217s-readytodoitall.html

CAPITAL, NEED FOR NEW PRODUCTS MAY PUSH GM DILUTION

Sindhu Bhattacharya

Daily News & Analysis (Web Edition)

New Delhi: The need to fund new product development and working capital needs may be behind the General Motors India bid to offload some equity to Chinese partner SAIC Motor Corp.

GM recently entered into an alliance with Bangalore-based Reva Electric Car to develop an electric 'Spark'.

Sources said this kind of product development, which would mean significant redesigning of the Spark (and not just altering the powertrain) could need anywhere between Rs50-100 crore.

GM may also be looking to utilise manufacturing capacity at its Talegaon manufacturing

facility by letting SAIC manufacture its light commercial vehicles there.

Responding to DNA queries, GM India said in a statement: "We keep pursuing and evaluating opportunities with our partners across the globe to leverage each other's strengths for technology and product introductions.

"This also gives us an opportunity to widen our product portfolio in the countries we operate and meet the requirements of the local market," the automaker's statement added.

An industry expert pointed out that though the two may be willing to forge an alliance, it remains to be seen whether the current political tension between India and China would come in the way of any equity deal.

But an automobile consultant dismissed this as skepticism, saying that the two companies were free to decide on an equity partnership if it suited their respective purposes.

Yet another source wondered whether SAIC's bid to enter the Indian market isn't a bit premature, considering that the Chinese major has "no new products from the GM-DAT alliance. Everyone present in the LCV space in India is getting aggressive on new products so SAIC would be committing an error of judgement if it comes with no new product pipeline".

http://www.dnaindia.com/money/report_capital-need-for-new-products-may-push-gm-dilution_1300694

REVA PLANS BATTERY LEASING TO PUSH CAR SALES

Danny Goodman

Business Standard (Web & Print Edition)

New Delhi: Come 2010 and Bangalore-based Reva Electric Car Company (RECC) will try various initiatives to increase sales of its electric cars in the domestic market, so far at only around 200 units a year.

One strategy involves charging customers only for the electric car, minus the battery pack which propels it. The project is called battery leasing. By doing this, we will be able to reduce the cost of an electric car by about Rs 60,000. We are in talks with banks for the battery leasing project, says Chetan Maini, deputy chairman & chief technology officer.

Battery leasing would bring down the cost of the lead acid fuelled car to around Rs 2.40 lakh (ex-Delhi showroom), and of an advanced lithium battery car to around Rs 3 lakh.

Battery leasing is the first leg in Mainis four-pronged approach to increase sales of electric cars in the domestic market. The next step is to expand Revas dealerships, which have clustered in Bangalore and Delhi. Last month, RECC signed a technological joint venture with General Motors India to supply its plug-in electric car technology for GMs entry car, Spark. The electric Spark will debut in 2010. This joint venture also gives us an opportunity to sell the Reva brand of cars in the 175 sales outlets of General Motors, says R Chandramouli, president (sales & marketing) of RECC. In the first phase, Reva electric cars would be available at GMs 30 dealerships.

The third leg to increase sales of electric cars in the country revolves on persuading state governments to reduce the various taxes levied on these. Currently, the excise duty on electric vehicles is nil. But manufactures say the components used in an electric vehicle are taxed at 8 per cent, while those that are imported are taxed between 7.5 and 10 per cent. This duty is passed on to the customer, since there is no way a component manufacturer can take credit on the taxes he has already paid while manufacturing the spare parts, says Chandramouli. He says by bringing the excise duty on components to nil, the cost of an electric car could be reduced by around 6 per cent.

Delhi city is the most generous in offering subsidies for electric vehicle buyers. First, it offers a subsidy of 15 per cent on the price of the vehicle, then an exemption of the 12.5 per cent value added tax (VAT), and it has also removed the road tax on these vehicles. Prices of electric vehicles are cheaper by 18 per cent in Delhi when compared to prices in the other states. Chandramouli says tax exemption on electric vehicles should be uniform across the country, which will further boost usage.

The fourth leg revolves around the new models, Reva NXR and NXG, which the company unveiled recently at the 63rd Frankfurt Auto Show. Executives say these models which will go into production post-2009, the NXR in 2010 and NXG in 2011, have already got good customer response. Further, at the Commonwealth Games 2010, Chandramouli says the NXR will be showcased.

With these initiatives, RECC hopes to increase the number of electric cars it sells in the domestic market to around 1,500 units yearly from the 200 units it sells now. It hopes to export a similar number. It has recently increased production capacity from 6,000 to 30,000 units a year. Production at the new facility will begin in the first quarter of 2010, says Maini, who began selling electric cars in the country in 2001.

http://www.business-standard.com/india/news/reva-plans-battery-leasing-to-push-car-sales/373759/

SKODAAUTOS ONLINE SALES PROJECT

The Hindu (Web & Print Edition)

Chennai: SkodaAuto India, in association with CarWale.com has launched Fabia online sales project. Three variants of Skoda Fabia can now be booked over the Internet. The objective is to make car buying a hassle-free and haggle-free experience by providing complete and transparent information while also streamlining the buying process, says a release.

http://www.hindu.com/2009/10/20/stories/2009102055161400.htm

COMMERCIAL VEHICLES

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CONSTRUCTION & AGRI MACHINERY

TRACTOR ANCILLARIES ON HIGH GROWTH PATH

Komal Amit Gera

Business Standard

Chandigarh: The industry has grown by 9 per cent in April-August 2009.

Tractor ancillaries located in and around Chandigarh have defied the downturn and are on a high growth path, at a time when all other industrial clusters in the region are going through difficult times.

Most small and medium enterprises (SMEs) catering to such tractor companies as International Tractors Limited (ITL), Hoshiarpur; HMT Tractors Limited, Pinjore; and Mahindra & Mahindra Swaraj Division, Mohali (the former Punjab Tractors Limited, which M&M acquired over two years back) are planning to upgrade their operations.

Tractor manufacturers have put slack sales (caused by internal management problems and stagnant agricultural growth) behind them and bounced back in the past few months. The industry has grown by 9 per cent in April-August 2009, according to data compiled by the Tractor Manufacturers Association, said the Chairman and Managing Director of HMT Tractors, Pinjore, A V Kamath.

More than 200 SMEs located in Chandigarh, Mohali and Panchkula, which supply components to tractor manufacturers, are revamping their operations to meet the increasing orders of their mother units.

The spurt in demand for tractors is attributed largely to the revision in the minimum support prices of eagricultural crops, as well as more remunerative prices due to market forces. This has helped agriculturists to opt for greater farm mechanisation, triggering an increased demand for tractors.

The impact of the downturn and the delayed monsoon on the tractor industry has been minimal, according to Kamath, since tractors are now being increasingly put to non-agricultural uses in mines, airports and the infrastructure sector.

The Vice-Chairman of ITL, Hoshiarpur, A S Mittal, said he expected the companys flagship brand Sonalika Tractors to grow 35 per cent over the previous year.

In anticipation of sluggish demand last year, the company had diversified into generator sets and construction equipment at the Hoshiarpur plant, Mittal added. But the good response from the agriculture sector in the past few months had encouraged them to move towards better utilisation of capacity. Sonalika has an annual capacity of 60,000 tractors.

Mittal said: There has been a shortage of foodgrain worldwide. New pockets in the African continent, Iran, Iraq and Egypt have been developed for cultivation and farm mechanisation is indispensable for them. Due to the financial crunch, traditional suppliers from developed countries were not able to meet the requirements of these countries. This opened a new avenue for Indian players. So an increase in demand has come from the export market as well.

He said they had told their vendors to ramp up capacities to match the increase in demand and that they were doing so. Swaraj Tractors vendors are also streamlining operations, after being told by the company to do so. The company has an annual capacity of 72,000 tractors.

One vendor said that Swaraj Tractors had advised its suppliers to limit the categories of components and increase volumes. The company plans to reduce delays in the delivery of consignments by encouraging vendors to focus on a few products rather than dividing their energies on a variety of components.

Those who are running tiny units have been advised to supply through tier-1 suppliers to reduce the inconvenience of dealing with a large number of vendors.

Ancillaries supplying HMT Tractors, which earlier complained about delayed payments, are also breathing easier now, on the ground that the payment cycle has been cut short.

The revival of the tractor industry has also been aided by the boom in construction activity (in sectors such as roads, bridges and irrigation projects) across India.

Kamath said that HMT Tractors intends to enter the agricultural implements sector in the near future: The agricultural implements sector is controlled by the unorganised sector. We expect this sector to grow and are exploring avenues available for the manufacture of quality implements required for better sowing and harvesting operations.

http://www.business-standard.com/india/news/tractor-ancillarieshigh-growth-path/373662/

TWO & THREE WHEELERS

TVS SET TO LAUNCH INDIAS FIRST AUTO-CLUTCH BIKE

Murali Gopalan

The Hindu Business Line

Mumbai: TVS Motor Company is gearing up to launch the countrys first motorcycle with automatic clutch by the end of this calendar year.

This motorcycle will spare the rider of constantly having to engage the clutch to shift gears, which would be a welcome relief in choked traffic conditions.

Only the gears need to be changed and there would not be any compromise on pickup or speed so that thrill and joy of biking are intact, sources in the know said.

When asked about the new motorcycle, TVS Motor declined to comment, stating that any announcement relating to new product launches would be made at an appropriate time.

However, insiders say that the company has been working over the last 18 months on this motorcycle.

Mileage, pricing

Experts say that the key will lie in mileage and pricing. On both counts, the company is believed to have done its homework. They say that the motorcycle could create the same kind of impact as gearless scooters did when they hit the Indian roads over two decades ago. The new motorcycle will be positioned in the executive segment, which accounts for a lions share of overall sales.

On an average, monthly sales in this segment are around 350,000 units with Hero Honda leading the pack with its Splendor and Passion brands. Bikes in this segment fall in the Rs 41,000-45,000 price band (ex-showroom).

Sources say this motorcycle may attract women riders too, as it will be easier to operate, especially on crowded roads.

Will women bite the bullet?

Gearless scooters have emerged the best mode of transport for women over the years and some of them may well opt for a motorcycle which assures equally comfortable riding, they add. Women have emerged an important buyer segment be it two-wheelers or cars. Companies have been quick to acknowledge this and have ensured that their ad campaigns do not focus on men alone handling their machines.

TVS Motor is also readying a new scooter which would be more powerful than the existing 80cc Scooty. It is expected to be launched in the coming months.

http://www.thehindubusinessline.com/2009/10/20/stories/2009102051290100.htm

TVS MOTOR RECEIVES AWARD FROM TAMIL NADU FOR CSR ACTIVITIES

PTI

See this story in: Daily News & Analysis
Mumbai: Automaker TVS Motor Company received an award from the Tamil Nadu government for its contribution in the areas of healthcare, education, environment, infrastructure and economic growth.

Srinivasan Services Trust (SST), the social arm of the company, had joined hands with research organisations, NGOs, financial bodies, governmental agencies and local institutions, to help villagers become self-reliant.

"It has made a difference to the lives of 55,740 families in the states of Tamil Nadu, Karnataka, Maharashtra and Himachal Pradesh," the company said in a press release.

The initiative has also had far-reaching impact on the environment as well by preventing soil erosion, thus helping farmers earn a steady income.

"Over 1,00,000 hectares of degraded forests have been reforested. Successful implementation of watershed development programmes has raised the water table and prevented soil erosion in 5,800 hectares of land," the release said.

The trust has partnered with government bodies in the construction of roads, drinking water facilities, proper sewage and sanitation, improving school, balwadis, health centres and community buildings in cooperation with the local communities.

The award was given away by Tamil Nadu deputy chief minister MK Stalin to TVS Motor's Chairman Venu Srinivasan.

http://www.dnaindia.com/money/report_tvs-motor-receives-award-from-tamil-nadu-for-csr-activities_1300605

TVS Motor receives award from Tamil Nadu for CSR activities

Hindustan Times
http://www.hindustantimes.com/News/auto/TVS-Motor-receives-award-from-Tamil-Nadu-for-CSR-activities/Article1-466911.aspx

BANGALORE FIRM GEARS UP TO MAKE ELECTRIC 3-WHEELERS

Shreya Roy

The Financial Express

Bangalore: The great Indian auto-rickshaw is set to get a major overhaul, with Bangalore based Go Green BOV (battery-operated vehicle) designing the countrys first electric three-wheeler. The battery operated auto, being designed with the objective of improving the work conditions of the hitherto ignored autowala, would have a host of features such as ergonomically designed and climate controlled seats, improved navigation systems, and tracking devices, and most importantly, zero noise emission, says Dhivik Ashok, executive director of Go Green BOV.

In addition to such flamboyant next-gen features and environmental benefits, the electric auto would also come with the promise of reducing the humble autowalas daily outgo on his vehicle. According to Ashok, the Go Green three-wheeler would save up to 95% of the daily cost for the auto-drivers, going the same distance at an average speed of 45-55 kmph. Usually an auto-driver in a city like Bangalore rides 150 km a day and spends around Rs 300-Rs 350 on gas," pointed out Ashok. "With an electric three-wheeler he can go the same distance at roughly Rs 15 per day which is just 5% of his daily cost.

So what's the price for the upgrade? Ashok says the company has not yet worked out the pricing, but expects it to be on par with the contemporary LPG powered three-wheeler that is priced in the vicinity of Rs 1.60 lakh.

Almost 90% of the design and the technology that goes into this will be indigenous. Its taking a little longer to source components and finalise the design. We expect to freeze the final design, pricing and all our research soon and we will try to go into production in our plant which is coming up in Rayalpad by mid to end of 2010, says Ashok.

The company is also gearing up to bring the first two of its range of seven two-wheelers by the end of this year. While Go Green will initially assemble the parts imported from Germany and China, it will start manufacturing these two-wheelers locally through a technology transfer sometime next year, says Ashok.

The two-wheelers, which will be available in two variants in the below 250 watt segment, and five in the 250-watt-plus segment, to be launched in February 2010, will be priced in the Rs 28,500-Rs 38,000 range. Ashok says, We are looking at sales of about 20,000 vehicles by June 2010 and by December 2010 we are looking at 55,000 vehicles plying on Indian roads.

But is there enough demand for electric bikes in the country to merit those projections? Ashok says, According to some reports, India may have to pay Rs 110 per litre of petrol by 2015. People are going to have to look at other sources of energy.

http://www.financialexpress.com/news/bangalore-firm-gears-up-to-make-electric-3wheelers/530721/2

BSA MOTORS: FROM BICYCLES TO SCOOTERS

Sayantani Kar

Business Standard (The strategist)

Mumbai: Tube Investments, which manufactures Hercules and BSA bicycles, has diversified into electric scooters in the hope that it will be able to replicate its success with bicycles. Bicycles have stopped being relevant to urban commuting and are increasingly used for recreation. With e-scooters, we are looking to get back in the urban commuting space, says BSA Motors Vice-president K B Srinivasan.

With its five e-scooters, BSA has entered the Rs 400-crore market which is growing at 10 per cent per annum. The e-scooters are available in the southern markets and Delhi. Seventy-five exclusive franchises in 10 states could go up to 125 exclusive dealers by the end of 2009-10 in 13 states.

What will work in its favour, the company thinks, is the low density of two-wheelers in the market. Only forty-five out of 1,000 people in India own a two-wheeler; that is half of China and one-sixth of other Asian countries, according to Srinivasan.

BSAs expertise in engineering and retailing (it boasts of 300 exclusive bicycle outlets) and a Rs 30-crore plant in Chennai (with a maximum production capacity of 300 units daily) has helped it set a target of 15,000 to 18,000 e-scooters this year in a market that sells around 1,30,000 e-scooters yearly.

With a mix of low-speed and high-speed models, BSA hopes to cover the market for short-distance commuting. With its three low-speed scooters that dont require a licence and registration and can run at 25 km per hour, BSA will address teens, homemakers across its markets and self-employed men below 35 in Tier II towns. The low-speed e-scooters have beaten their high-speed counterparts, comprising 75 per cent of BSAs sales.

Lower Tier towns, in fact, will see more aggressive communication from BSA for now, even as it rolls out pan-India in the next six months. That will be followed by its TV campaign with a budget of Rs 10 crore. Breaking the clutter and creating awareness is more effective in Tier II towns, says Srinivasan. For now, it is happy gaining ground with local cost-effective campaigns in print, out-of-home, in-theatre and cable network spaces. Events around schools, colleges, malls and exhibitions have helped it induce test drives.

Its e-scooters could lead to savings of up to Rs 23,340 over petrol scooters in two years by dint of their running on electricity and also various offers such as free insurance, cash cards and extended warranties. BSA Motors still has to reckon with the growth in petrol-run scooters that has the muscle of players such as Honda, Hero Honda, TVS and Suzuki. Srinivasan is looking at more product innovations to establish its range of e-scooters.

Helped by its technological partners from Japan, South Korea and the US (names could not be shared due to confidentiality clauses), BSA Motors would aim at increasing top-speeds from 45 km per hour to 60 km per hour, range (the distances for the electric charge to last) from 80 km to 100 km and power from 800 watts to 2,000 watts.

http://www.business-standard.com/india/news/bsa-motorsbicycles-to-scooters/373669/

AUTO COMPONENTS

GURGAON FACTORY TENSE AFTER LABOUR UNREST CLAIMS LIFE

IANS

See this story in: The Economic Times

Gurgaon: The situation at a Gurgaon-based auto component factory in Haryana continued to be tense Monday, a day after after labour unrest there left one worker dead and at least six injured.

While a case of murder has been registered by Gurgaon police, around 200 striking workers at RICO, an auto-parts manufacturing unit, sat outside the factory gate in protest on Monday.

The management, they claimed, was responsible for triggering the violence Sunday evening.

Gurgaon Police Commissioner S.S. Deswal told news agency: "The workers' strike is illegal and we have given them repeated warnings to leave the place. We have adequate police presence to handle the situation."

"One factory worker has been killed and nearly six to seven have been injured," he added.

RICO has been seeing labour unrest for the past one month. While the workers want to form a union, the management is not heeding to their demand saying the workers have had pay hikes and the unit is continuously seeing low productivity.

Late Sunday, a clash broke out in the factory between workers who were on strike and those who wanted to get back to work. The situation soon spun out of control with violence and arson that left a worker dead.
http://economictimes.indiatimes.com/news/news-by-industry/auto/auto-components/Gurgaon-factory-tense-after-labour-unrest-claims-life/articleshow/5139056.cms

Gurgaon auto belt unrest turns violent

The Hindu Business Line

http://www.thehindubusinessline.com/2009/10/20/stories/2009102051370100.htm

Auto stir

The Telegraph

http://www.telegraphindia.com/1091020/jsp/business/story_11634485.jsp

Cops register case over death of RICO worker

Asian Age

Gurgaon workers plan stir after violence at Rico auto

mint

One killed in workers clash at Gurgaon

The Times of India

One dead in sacked workers stir

The Pioneer

STRIKE BY PARTS MAKERS TO HIT AUTOCOS PRODUCTION PLAN

Chanchal Pal Chauhan

The Economic Times

New Delhi: A Strike by workers on Tuesday at over two dozen midsize and small component makers in the Gurgaon-Manesar belt, the countrys largest auto manufacturing hub, will lead to production bottlenecks for top automakers and delivery delays for waiting customers.

The workers are protesting the death of a fellow worker on Sunday evening at the Gurgaon plant of components maker Rico Auto after a clash between workers and company security that also left over 50 injured. The protesting workers have called a meeting on Monday night to decide future course of action.

There has been no conclusive outcome of the ongoing agitation. Now it has turned violent and we will resort to mass protest to raise our issues with the management and the Haryana government, said DL Sachdev, national secretary of All Indian Trade Union Congress.
The labour strike at the moment is limited to component makers, with workforce at major automakers such as Maruti Suzuki and Hero Honda not joining the protest. We have no information of a strike and no notice has been served to us, Maruti Suzuki spokesperson said.
The break in auto components production comes at a time when demand for new cars and two-wheelers is at an all-time high. The festival season this year saw the highest offtake of vehicles from showrooms with all major companies posting years highest sales over the last few weeks.

The worker unrest in the Gurgaon-Manesar belt has been simmering for some time, with the current trouble at auto component makers Rico Auto and Sunbeam Auto following worker protests at others such as Sona Koyo, Automax, Micro Tech and Musasi in recent months.

The labour unrest has hit output in the auto manufacturing hub with an erratic components supply affecting production at Maruti Suzuki, Hero Honda, Honda Motorcycle and Scooter India (HMSI), Hyundai Motor India and Honda Siel Cars. HMSI saw its sales dip 10% to 81,505 units in September due to worker strike over revision of wages even as the two-wheeler industry grew 8% to 8.38 lakh units in the month over the year-ago period.

A production delay will add to the customers waiting period, which has already touched a high of three months due to unprecedented demand in the festival season. There is a huge demand for cars, especially our newer models, and the ongoing strike in many component units has impacted our production and has increased the supply lag, a senior executive at Maruti Suzuki said.

Auto belt on the brink

Hindustan Times

http://www.hindustantimes.com/business-news/auto/Auto-belt-on-the-brink/Article1-466912.aspx

Worker stir may jam Motown wheels

Daily News & Analysis
http://www.dnaindia.com/money/report_worker-stir-today-may-jam-motown-wheels_1300684

ALLIED INDUSTRIES

DUNLOP BEGINS PRODUCTION AT TN UNIT

The Hindu Business Line

Chennai: Dunlop India has restarted production at its Ambattur factory with the rubber mixing plant going on stream on Monday and the first tyre is expected to roll out in a weeks time, according to the Dunlop Factory Employees Union.

This follows an agreement signed between the union led by its President, Mr A. Krishnaswamy, Member of Parliament, and the management last July. The factory was expected to start operation in September but there was a delay in resumption of power supply. The State Government had intervened on behalf of the employees to enable the unit to start functioning, the union officials said.

Over 600 of the 644 employees at the factory have reported for work. The factory stopped commercial production in April 2008 because of a financial crunch. The unit will manufacture truck tyres initially and has plans to get into two-wheeler tyre production in about a month.

The agreement provides for a 7-day week at the factory with the management having the option to recruit contract labour to keep costs down. The workers are also to be compensated through an allowance of Rs 5,000 for the earlier loss of wages.

At the time the agreement was signed, the management representatives had said Dunlop would collaborate with a sister concern Falcon Tyres to manufacture two-wheeler tyres. Dunlop, which has surplus capacity in its rubber compound mixing plant, can supply raw material to Falcon. This is expected to provide readymade work order and augment cash flow for the company.

http://www.thehindubusinessline.com/2009/10/20/stories/2009102050970200.htm

Dunlop India commences production after one year gap

Daily News & Analysis
http://www.dnaindia.com/money/report_dunlop-india-commences-production-after-one-year-gap_1300629

Production starts at Dunlop Ambattur unit

The Hindu
http://www.hindu.com/2009/10/20/stories/2009102055111400.htm

Dunlop

The Statesman

http://www.thestatesman.net/page.news.php?clid=12&theme=&usrsess=1&id=272342

FINANCE & INSURANCE

TVS INKS DEAL WITH BANK OF INDIA

The Hindu

Coimbatore: Bank of India has signed a Memorandum of Understanding (MoU) with TVS Motor Company to provide finance for customers who intend to buy the latters TVS Flame SR 125 motorcycle.

Talking to reporters recently, Munesh Sham, Territory Manager, Dinesh Babu, Territory Service Manager of TVS and M.S. Ramachandran, Senior Branch Manager, Bank of India said that a special scheme that would coincide with the festival season has also been launched.

As per the scheme which is valid up to October 20, customers could avail of an attractive 8.5 per cent interest for TVS flame SR 125 for a tenure of up to five years with funding up to 90 per cent

The scheme also has lowest processing fee of Rs. 500 for loan amounts below Rs. 30,000 and Rs. 700 for loan amounts above Rs. 30,000.

http://www.hindu.com/2009/10/20/stories/2009102054170500.htm

OILS, LUBES & ALTERNATIVE FUELS

OIL STEADIES AFTER 1-YEAR HIGH ABOVE $79

Reuters

See this story in: Daily News & Analysis

Perth: Oil prices steadied after hitting a fresh 12-month high above $79 a barrel on Monday, taking a break from seven straight sessions of gains to see if corporate results continue to point to a strong global economic recovery.

U.S. earnings results could again be a key driver of oil prices this week with a spate of earnings from bellwethers including Apple Inc and Caterpillar Inc, after strong results lifted commodities across the board last week.

On Friday weak numbers from General Electric and Bank of America again clouded the economic outlook and may spur profit taking from oil's recent rally. U.S. crude for November delivery touched a fresh high of $79.05 in early trading, but pared some gains to be up 4 cents at $78.57 a barrel by 0514 GMT. London Brent crude crept up 6 cents to $77.05.

"Oil prices are now trading at very high levels considering the fact that we're still seeing very high stockpiles in the U.S.," said David Moore, a commodities analyst at the Commonwealth Bank of Australia.

"Crude may trade sideways, getting direction from the U.S. dollar and the equities market." Crude oil prices, which rose 9.4 % last week, have surged 13 %, or nearly $9 a barrel since Oct. 7, thanks to a weak U.S. dollar and a surge in optimism stemming from robust quarterly earnings from U.S. companies. The U.S. dollar index rose 0.3 % against a basket of currencies to 75.848 points on Monday, with the yen holding near a 3-week low against the greenback.

A positive economic outlook from China, the world's second-largest energy consumer, lent some support to oil prices on Monday. China's gross domestic product grew more than 7 % in the first nine months, a senior official from the National Development and Reform Commission said on Monday, adding that the country would have no difficulty reaching the government's full-year GDP growth target of 8 %.

At least some of the recent gains come from speculative flows, with money managers hiking net long crude oil positions on the New York Mercantile Exchange in the week to Oct. 13, the Commodity Futures Trading Commission said in a report on Friday.

On the economic front, investors will scrutinise reports on September housing starts due on Tuesday and September existing home sales due on Friday.

http://www.dnaindia.com/money/report_oil-steadies-after-1-year-high-above-79_1300428

INTERNATIONAL

ELECTRIC CARS DON'T DESERVE HALO YET: STUDY

Reuters

See this story in: The Economic Times

New York: Electric cars will not be dramatically cleaner than autos powered by fossil fuels until they rely less on electricity produced from conventional coal-fired power plants, scientists said on Monday.

"For electric vehicles to become a major green alternative, the power fuel mix has to move away from coal, or cleaner coal technologies have to be developed," said Jared Cohon, the chair of a National Research Council report released on Monday called "Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use."

About half of US power is generated by burning coal, which emits many times more of traditional pollutants, such as particulates and smog components, than natural gas, and about twice as much of the main greenhouse gas carbon dioxide.

Nuclear and renewable power would have to generate a larger portion of US power for electric cars to become much greener compared to gasoline-powered cars, Cohan, who is also president of Carnegie Mellon University, said in an interview.

Advances in coal burning, like capturing carbon at power plants for permanent burial underground, could also help electric cars become a cleaner alternative to vehicles powered by fossil fuels, he said.

Pollution from energy sources did $120 billion worth of damage to human health, agriculture and recreation in 2005, said the NRC report, which was requested by the US Congress in 2005 and sponsored by the US Department of the Treasury. Electricity was responsible for more than half of the damage, the report said.

Electric cars have other benefits such as reducing imports of foreign oil. But they can also have hidden costs

Materials in electric car batteries are hard to produce, which adds to the energy it takes to make them. In fact, the health and environmental costs of making electric cars can be 20 percent greater than conventional cars, and manufacturing efficiencies will have to be achieved in order for the cars to become greener, the report said.

Emissions from operating and building electric cars in 2005 cost about 0.20 cents to 15 cents per vehicle mile traveled, it said. In comparison, gasoline-powered cars cost about 0.34 cents to 5.04 cents per vehicle mile traveled.

The report estimated that electric cars could still cost more than gasoline-powered cars to operate and manufacture in 2030 unless US power production becomes cleaner.

Hybrid gasoline-electric vehicles with batteries that are charged by the driver hitting the brakes scored slightly better than both gasoline-powered cars and plug-in hybrid cars, which have batteries that are charged by the power grid.

http://economictimes.indiatimes.com/news/news-by-industry/auto/automobiles/Electric-cars-dont-deserve-halo-yet-Study/articleshow/5140362.cms

GM FOCUSED ON CLOSING OPEL DEAL: REPORT

Agencies

See this story in: The Economic Times

London: General Motors remains focused on the sale of its loss-making European unit Opel despite EU concerns about the deal, the Financial Times reported on Tuesday.

"We've had a number of exhaustive discussions with our board on the deal, the rationale for it, and the need to support the Magna transaction," GM chief executive Fritz Henderson told the financial daily.

"If facts fundamentally change, we would go back and consult with our board. But right now, we're spending all of our time trying to get the Magna deal closed."

European regulators raised concerns on Friday over a German offer of 4.5 billion euros (6.7 billion dollars) in state aid to support the proposed sale of a 55-percent stake in Opel to Canada's Magna and Russian lender Sberbank. But Berlin said there was no need to go over the decision again.

Henderson told the FT: "The German government is in dialogue with the EU, and that's kind of in their job responsibility code, if you will."

http://economictimes.indiatimes.com/news/international-business/GM-focused-on-closing-Opel-deal-Report/articleshow/5140477.cms

GM has 'plan B' if Opel sale falls through: report

Hindustan Times
http://www.hindustantimes.com/business-news/auto/GM-has-plan-B-if-Opel-sale-falls-through-report/Article1-466738.aspx

GM has plan B if Opel sale falls through: report

mint

http://www.livemint.com/2009/10/19135920/GM-has-8216plan-B8217-if.html

HONDA MISSES $255 MILLION F-1 EXPOSURE: MEDIA RESEARCHER

Bloomberg

See this story in: Business Standard

Madrid: Honda Motor Co missed at least $255 million of brand exposure on television by selling the Formula One team that swept the world championship titles on Sunday, a media analysis company said.

The Japanese car maker sold the team to manager Ross Brawn in March, depriving it of 8 1/2 hours of international coverage the squads cars got in the first 15 of 17 races, according to Godalming, England-based Margaux Matrix, which analysed broadcasts and advertising rates in 18 countries.

Thats more broadcast time than rivals including Ferrari SpAs team and more than three times what Honda got when it finished ninth last year, the media monitoring company said.

Im sure there have been some conversations internally in Japan saying Whoops, did we get that wrong? said Zak Brown, chief executive officer of Zionsville, Indiana-based Just Marketing Corp, an auto-racing consultant.

Brawn wrapped up the drivers and constructors titles with one race remaining yesterday when its driver Jenson Button came fifth in the Brazilian Grand Prix in Sao Paulo.

Honda quit the sport to save at least 20 billion yen ($221 million) a year in costs after slashing its earnings forecast and firing assembly workers as the credit crunch hurt sales.

Winning its first title since buying the team in 2005 would have been an immense boost for the Honda brand, according to Mark Jenkins, a business strategy professor at the UKs Cranfield University who writes a Formula One blog.

It would have been the icing on the cake if Honda had held in there, Jenkins said. It would have been worth a few points of global market share.

Instead, Hondas investment has paid off for Brawn. Button won six of the first seven races this year, while teammate Rubens Barrichello has won two. Much of the teams white car has been bare of sponsorship branding because there wasnt enough time to secure deals with top-paying advertisers, Jenkins said.

Honda Chief Executive Officer Takanobu Ito said he doesnt regret predecessor Takeo Fukuis decision to pull out. Its using the F-1 money to speed fuel-efficiency research, redeploying 400 engineers to mass-produced cars.

Fukuis decision was absolutely right and I say thank you to him, Ito said in an October 1 interview.

Automakers are hastening to meet stricter pollution regulations. The US will force carmakers to produce vehicles that get an average of 35.5 miles per gallon by 2016. The Honda fleets average fuel economy ranked second at 29.6 mpg last year, behind Toyota Motor Corp at 29.7 mpg, according to the US Environmental Protection Agency.

Toyota, Hondas main competitor in Japan, is one of four carmakers including Ferrari that in July signed up to stay in F-1 through 2012. Toyota is fifth in this years team championship. Bayerische Motoren Werke AG is withdrawing after this season.

One of the biggest winners from Brawns success this season is Virgin Group, a UK company owned by billionaire entrepreneur Richard Branson, Just Marketing CEO Brown said. Virgin probably paid less than $5 million for putting its logo on Brawn cars this season, Brown added. Brawn has done other minor deals with companies including MIG Investments, a foreign-exchange broker based in Neuchatel, Switzerland.

Virgin got $59 million worth of television exposure in the first 15 races, more than the Renault teams title sponsor ING Groep NV got from a bigger deal, according to Margaux Matrix. ING withdrew its support of Renault on September 24 after the team was involved in a cheating scandal.

Theres probably a little bit of an embarrassment factor at Honda for missing out on the publicity, Brown said. But no one has a crystal ball.

http://www.business-standard.com/india/news/honda-misses-255-million-f-1-exposure-media-researcher/373771/

ECONOMY

INFLATION DATA TO BE MONTHLY

Business Standard

New Delhi: The government has approved the release of the headline inflation data on a monthly basis, in line with the global practice, for most of the items tracked by the Wholesale Price Index (WPI). It also decided to upgrade the base year for inflation from 1993-94 to 2004-05.

With the new series, the food and fuel category would have less representation in the index, while manufactured products, which at present have a weight of 63.75 per cent in the index, will have an increased weight of around 80 per cent in the series.

Analysts and economists believe that the monthly released data would reduce gaps and enhance the quality of the data. At present, only about a fourth of the data are collected and the rest are extrapolated from the existing index.

The base change is important, as it would make the data more relevant. Moreover, the release of data on a monthly basis will reduce the reliance on revised figures. It will be more accurate, said DK Joshi, principal economist with ratings firm Crisil.

Though data on manufactured products will be released monthly, those on primary and fuel items will continue to be released every week, since they change more frequently. The new series of WPI, with a base of 2004-05, will be launched soon, said Commerce and Industry Minister Anand Sharma after after a meeting of the Cabinet Committee on Economic Affairs (CCEA). The government intends to release the new series after November 14, Sharma later told reporters.

Analysts also feel that the monthly release of data would bring stability in the way inflation guides the monetary policy. The unnecessary excitement and anxiety, which has become the norm, will die down. It may bring about stability in the process of monetary formulation and enhance the understanding of the situation. It will probably give the Reserve Bank of India more headroom to make policy decisions, said Abheek Barua , chief economist, HDFC Bank.

Essential commodities
The government said it would ensure the availability of rice, wheat, sugar and other essential commodities at reasonable prices, amid growing concerns about rising prices.

The Cabinet Committee on Prices, at a meeting chaired by Prime Minister Manmohan Singh, reviewed comprehensively the prices and availability of essential commodities like wheat, rice and sugar, Commerce and Industry Minister Anand Sharma told reporters after the meeting.

http://www.business-standard.com/india/news/inflation-data-to-be-monthly/373766/

lato<:/span>

See this story in: The Economic Times

(Oct 17)

Paris: As a boost from state-sponsored schemes to help consumers replace old vehicles with newer ones tapers off, investors will be looking at the auto sector's longer-term prospects when European carmakers and suppliers post third-quarter results in the coming weeks.

Governments around the world introduced so-called scrappage incentive schemes earlier this year to stimulate demand for new cars and help automakers who were badly hit by the global financial crisis, while at the same time removing environmentally-unfriendly vehicles from the roads.

Analysts do not expect a repeat of the good news on cash flow that was seen with first-half results in July, when production moved up a gear as the scrappage schemes kicked in.

Instead they will look for updates on cost-cutting and how companies plan to negotiate the end of the scrappage schemes in some markets.

"There'll probably be a much longer-term focus than at a normal set of quarterly results," said Credit Suisse analyst Stuart Pearson.

Companies have reduced their inventories and cut costs in the face of the economic downturn, and without the benefit of the scrappage stimuli, more pragmatic views on automakers' finances and prospects are likely to come into focus.

"Those big working capital moves are already behind us, and from here on in generating cash gets a bit tougher," said Pearson.

Nomura analyst Michael Tyndall agreed, noting that carmakers' predictions for the fourth quarter were likely to be positive. "However, uncertainty around 2010 remains, particularly for the volume makers who are likely to see a pay-back effect from scrapping incentives in terms of both sales and pricing."

In contrast, premium automakers may be more optimistic about a gradual recovery, he added.

Presentations by German carmakers, BMW Mercedes parent Daimler and Volkswagen, which also owns the Audi brand, take place towards the end of the month.

They are likely to be viewed through the prism of the end of that market's highly successful scrapping scheme in August.

http://economictimes.indiatimes.com/news/international-business/Auto-investors-look-beyond-Q3-scrapping-boost/articleshow/5131105.cms

VW EYES CASH CALL TO FUND PORSCHE

Reuters

See this story in: Business Standard

(Oct 17)

Volkswagen AG set out plans to raise as much as 10 billion euros ($14.9 billion) from shareholders, which analysts said would be enough to make fresh acquisitions as well as merge with Porsche.

Volkswagen, which has a market value of 43 billion euros, said on Friday it will seek clearance in December to issue up to 135 million new preferred shares by December 2014, a large portion of which could enter the market by the middle of next year.

News of the share issue plans, whose scale took some observers by surprise, followed comments by VW's powerful chairman last month hinting that Europe's largest automaker -- which had a global market share of 11.7 percent in September -- could expand its stable of brands to 12 from 9.

SKOREA BANK COLLECTS 108 MLN DLR REPAYMENT FROM GM SUBSIDIARY

AFP

See this story in: Hindustan Times
(Oct 18)

Seoul: A South Korean state bank on Friday collected $108 million in loan repayments from the struggling local unit of US auto giant General Motors as negotiations continued on a survival plan.

"Our bank is collecting some 125.8 billion won in maturing loans to GM Daewoo because there has been no request from the company to roll them over," a Korea Development Bank (KDB) spokesman said.

The move followed talks Wednesday between GM chief executive Fritz Henderson and top officials of KDB, the key creditor of GM Daewoo. It has a 28 percent stake in the local carmaker while GM holds 51 percent.

GM Daewoo, hit by falling demand amid the global downturn, is seeking a one trillion won (855 million dollar) loan after using up a two billion dollar credit line.

It also plans to raise 491.2 billion won in a rights offering this month to secure working capital. Henderson Thursday reiterated the US parent would take part in the rights offering.

KDB is demanding that GM increase the size of the rights offering, arguing that the US parent should raise more money for its subsidiary.

KDB chief Min Euoo-Sung last week urged the US company to offer part of its stake in the local unit as collateral. He also insisted GM Daewoo should be allowed to retain licences for cars that it develops itself. Newspapers said Friday that KDB also wants a say in management.

http://www.hindustantimes.com/News/auto/SKorea-bank-collects-108-mln-dlr-repayment-from-GM-subsidiary/Article1-465967.aspx#

GM SHOULD RECONSIDER EARLIER BIDS FOR OPEL: EU

Bloomberg

See this story in: Business Standard

(Oct 19)

Berlin: General Motors Co should be allowed to reconsider all bids for its Adam Opel GmbH unit after German aid policies pushed the US carmaker to choose Magna International Inc as the buyer, the European Union said.

Germanys offer of 4.5 billion euros ($6.9 billion) in state loans and guarantees for Opels sale must be available to all suitors to meet antitrust rules, the EU said on Friday in a statement outlining a letter that European Competition Commissioner Neelie Kroes sent to Economy Minister Karl Theodor zu Guttenberg. Authorities should inform GM and the trust that owns Opel that the aid is available to any buyer, the EU said.

Guttenberg said on Saturday that Germany will work to assuage EU concerns and that the sale is likely to proceed. Chancellor Angela Merkels government chose Magna, Canadas biggest auto-parts maker, and Russian partner OAO Sberbank as Opels preferred bidder in May, saying they wanted to preserve jobs. GM agreed in September to sell the unit to Magna, turning down a bid from Brussels-based investment company RHJ International SA.

If there are misunderstandings that need to be cleared up, we will do that, Guttenberg told reporters in Berlin. Im confident this will happen in the coming days. Answers will be given, and theyll be the right answers.

A preliminary EU inquiry showed significant indications that Germany improperly favored Aurora, Ontario-based Magna over other suitors for Opel, Kroes said in her letter. A precondition for the aid would be incompatible with EU rules that seek to limit state involvement in industries, she said. Karin Kirchner, a spokeswoman in Zurich for GMs European operations, declined to comment on Saturday.

Opel, which has its headquarters in the Frankfurt suburb of Ruesselsheim, received an initial 1.5 billion euros in emergency loans from Germany as Detroit-based GM sought Chapter 11 bankruptcy protection in the US in early June. A number of German politicians, including Roland Koch, prime minister of Opels home state of Hesse and a member of Merkels Christian Democratic Union party, said in May that they favoured Magna.

A trust of executives and politicians from Germany and the US now controls a 65 per cent stake in Opel, with GM owning the other 35 per cent. The trust chose Magna in September on GMs recommendation. RHJ had been the only other contender after GM negotiators and government aides agreed in July to stop looking at a bid from Beijing Automotive Industry Holding Co.

GM and the Opel trust should be given the opportunity to reconsider the outcome of the bidding process on the basis of firm written assurances by the German authorities that the aid would be available, irrespective of the choice of investor or plan, Kroes said.

RHJ, which agreed on October 15 to buy Commerzbank AGs Kleinwort Benson private-bank unit in the UK, isnt interested in reviving a bid for Opel, said Arnaud Denis, a spokesman. We are not considering it, Denis said. This isnt in the cards.

Edda Graf, a spokeswoman based at Magnas European headquarters in Oberwaltersdorf, Austria, declined to comment.

Other contenders for the Opel stake have found alternative automotive investments. Fiat SpA, Italys biggest manufacturer, was already buying a stake in Auburn Hills, Michigan-based Chrysler LLC when it submitted a non-cash offer for Opel that included factories and other assets from its own car operations.

http://www.business-standard.com/india/news/gm-should-reconsider-earlier-bids-for-opel-eu/373608/

4.5 billion euros in aid for Opel to a Magna takeover

Daily News & Analysis
http://www.dnaindia.com/money/report_4-5-billion-euros-in-aid-for-opel-to-a-magna-takeover_1300176

JAPANESE CAR MAKERS OUT TO ELECTRIFY TOKYO SHOW

AFP

See this story in: The Hindu Business Line

(Oct 19)

Move over hybrids -- the biggest buzz at this year's Tokyo Motor Show looks set to come from electric cars as the dream of affordable zero-emission vehicles moves closer to reality.

Japanese automakers, pioneers in hybrid cars powered by a mixture of petrol and electricity, are now looking to take fuel-efficient motoring to the next level with vehicles that run on rechargeable batteries.

Nissan will put its electric car, the Leaf, on display to the public for the first time at the Tokyo Motor Show, which kicks off on Wednesday with press previews and opens to general visitors on Saturday.

The mid-sized hatchback, which will go on sale in late 2010 in Japan, is billed by Nissan as "the world's first affordable, zero-emission car."

It can travel more than 160 kilometres (100 miles) on a single charge, at a top speed of 140 kilometres per hour.

The world's largest automaker Toyota, which has said it aims to launch an electric vehicle by 2012, will display a new version of its electric concept car -- the FT-EV II -- at the show.

"We think the time is almost ripe for cost levels, batteries and performance to evolve one step further," said Toyota's Akihiro Yanaka, who oversees the project.

Nissan will also show off a futuristic electric concept car that leans to the side when going around bends.

The "Land Glider," just 1.1 metres (3 feet 7 inches) wide, seats two people -- one in the front and one in the back. Inspired by motorbikes and glider aircraft, it has tilting wheels that enable it to lean by up to 17 degrees.

From Honda comes the EV-N, a cute new electric concept car that can store a one-wheel personal mobility device inside its door.

The dream of an electric car, which has been around since the time of Thomas Edison, has so far failed to break into the mainstream because of the high cost and limited battery life.

ECONOMY

FOREX RESERVES RISE BY $1.5 BILLION

The Hindu Business Line

(Oct 17)

Mumbai: The countrys foreign exchange reserves gained by $1.521 billion to touch $281.861 billion for the week ended October 9, according to the latest figures from the Reserve Bank of India.

This is the second week in a row that foreign exchange reserves have increased.

In the previous week ended September 25, reserves had increased by $430 billion to touch $280.340 billion. For the week under review, most of the gains have been on account of currency revaluation. Foreign currency assets increased by $1.477 billion to touch $265.942 billion.

Gold was unchanged at $10.316 billion. SDRs increased by $35 million to $5.235 billion. The reserve position in the IMF increased by $9 million to touch $1.368 billion.

Next week, the rupee could see resistance at 46.80 and could trade at around 46.40/50 levels, said a forex dealer with a pubic sector bank. The rupees movement will depend on the equities. A substantial correction in the equities is possible due to profit booking and a similar situation is also likely to be seen in the rupee, the dealer said.

http://www.thehindubusinessline.com/2009/10/17/stories/2009101751270600.htm

SENSEX ENDS FLAT AFTER AN HOUR OF DIWALI MAHURAT TRADING

The Economic Times

(Oct 18)

Mumbai: Indian equities ended Mahurat trading, first day of trade of Samvat 2066 (first day of Hindu calendar), on a flat note. Traders booked profits after indices hit new 52-week highs. However, the second rung stocks outperformed the benchmarks.

Markets opened higher on bullish sentiments following growth of Indian economy which was reflected in second quarter earnings.

After one hour of trade, Bombay Stock Exchanges Sensex closed at 17326.01, up 3.19 points or 0.02 per cent. The index hit a 52-wek high of 17493.17 and low of 17260.66.

National Stock Exchanges Nifty ended at 5141.80, down 0.35 points or 0.01 per cent. It touched a 12-month high of 5176.80 and low of 5140. BSE Midcap Index was up 0.65 per cent and BSE Smallcap Index gained 1.36 per cent.

Amongst the sectoral indices, BSE Metal Index jumped 0.65 per cent, BSE IT Index rose 0.39 per cent and BSE Auto Index moved 0.33 per cent higher. BSE Bankex was down 0.30 per cent and BSE FMCG Index slipped 0.09 per cent.

Sterlite Industries (2.89%), Reliance Communications (1.86 %), Bharti Airtel (1.74%), TCS (1.61%) and ACC (1.36%) were the top Sensex gainers.

Losers included ICICI Bank (-1.05%), HDFC Bank (-0.93%), Hindalco Industries (-0.70%), ITC (-0.65%) and BHEL (-0.65%).

Tata Consultancy Services bettered expectations to post a 29% jump in net profits for the second quarter. The company reported net profit of Rs 1,642 crore and revenues rose 7% to Rs 7,435 crore. Market breadth was positive on the BSE with 1930 advances and 582 declines.

Meanwhile, the US markets ended in the red. The Dow Jones Industrial Average closed 0.7 per cent lower, The S&P 500 Index slipped 0.8 per cent and the Nasdaq Composite Index declined 0.8 per cent.
Copyright 2009, Bennett, Coleman & Co. Ltd. All Rights Reserved"

http://timesofindia.indiatimes.com/business/india-business/Sensex-ends-flat-after-an-hour-of-Diwali-Mahurat-trading/articleshow/5134812.cms

Indian Auto Industry News

Monday, October 19, 2009

Indian Auto Industry Update October 20, 2009

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Indian Auto Industry Update October 20, 2009

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