Auto Industry update

MARUTI SUZUKI SALES JUMP 22% IN MARCH; UP 4% IN FY09
 
  The Times of India (Web Edition), The Hindu Business Line (Web & Print Edition), Mint (Web Edition), The Tribune (Web Edition), The Indian Express (Web Edition), The Pioneer (Web & Print Edition), Hindustan Times (Delhi Print Edition), The Statesman (Web Edition), The Financial Express (Web & Print Edition)
 
New Delhi: The countrys largest carmaker Maruti Suzuki India reported a 21.87% jump in its total sales during March at 85,669 units as compared to 70,296 units in the same month last year.
 
The company also recorded its highest-ever annual sales in 2008-09 at 7,92,167 units as against 7,64,842 units in the previous fiscal, a rise of 3.57%. The previous highest annual sales were in 2007-08.
 
2008-09 marked Maruti Suzukis Silver Jubilee year in India. Over these 25 years, the company sold over 70 lakh cars in the domestic market. Additionally, over five lakh cars have been exported world-over, Maruti Suzuki India (MSI) said in a statement.
For March, the domestic sales of MSI stood at 73,855 units compared with 64,421 units in the same month a year ago, up by 14.64%, it said.
 
MSI registered an over two-fold increase in its exports last month at 11,814 units as against 5,875 units in the corresponding month last year.
 
After September last year, MSIs sales in October, November and December had declined drastically by 7.1%, 27.4% and 10%, respectively. In January and February, the companys sales, however, rose by 5.39% and 24.08%, respectively.
 
 
AFTER FEB SPURT, CAR SALES SLOW DOWN IN MARCH
 
 
  Domestic sales of passenger cars grew 4.1 per cent in March, ending the hope that the industry has gone back on the fast track after the heady sales growth of February.
 
In February, sales of passenger cars grew by over 21 per cent. Car sales of the leading automakers, which include Maruti Suzuki, Hyundai, Mahindra & Mahindra, Honda-Siel, Tata Motors and Fiat, went up to 152,409 units in March this year from 146,338 units in March 2008.
 
Maruti Suzuki, which officially declared its numbers, saw its domestic sales grow 15 per cent. It saw robust demand for its A2 models like Swift and A-Star and the midsize sedan, Dzire, selling 73,855 units in March. This is a continuation of the double-digit growth managed by the company in January this year.
 
Mahindra & Mahindra (M&M) was the second company to post strong sales for March this year, based on the roaring success of its newly launched utility vehicle, Xylo, which has a waiting period of around six to eight weeks. The firm sold a record 19,973 units of utility vehicles in March, 30 per cent more than the previous year.
 
Fiat India, on the back of the launch of new models, saw its sales go up nearly three-fold, from 450 in March 2008 to 1,817 in March this year.
 
Industry executives say March sales for this year should not be compared with the sales for the same month last year. Since the budget was announced in February 2008, customers postponed buying cars in anticipation of excise duty cuts. Thus, the bunched demand in February was carried out in March last year, which constitutes a high base. A year-on-year comparison isnt possible, said Vaishali Jajoo, analyst, Angel Broking.
While Hyundais sales dipped by 15 per cent to 24,754 units in March, its exports rose by 22 per cent, to 21,406 units. The same trend of falling sales was witnessed by Tata Motors. Despite good sales for Indica Vista and the improved Indigo and Sumo Grande, its March sales dipped by 4 per cent to 23,680 units.
 
Meanwhile, Bajaj Auto reported 14.40 per cent fall in its motorcycle sales in March at 1,32,210 units against 1,54,443 units in the same month last year.
 
 
 
AUTO INDUSTRY STILL DRIVING AHEAD DESPITE ROAD BUMP OF UNCERTAINTY
 
 
New Delhi: Given the state of the global and domestic economies, and the fate that has befallen many of their international counterparts, automobile manufacturers in India are grateful to see fiscal 2008-09 come to an end. However, they are much more concerned about the future.
 
However, Maruti, the undisputed leader of the passenger car segment, has reason to be pleased as it is the only major car manufacturer to have recorded a positive growth in sales in March 2009. Data shows that only Maruti and Hyundai managed to notch up positive cumulative sales growth in FY 2008-09.
 
Maruti Suzuki India Ltd (MSIL) chairman R C Bhargava said, The coming fiscal is a year of uncertainty. I will need a crystal ball to be able to make any predictions about the industry this year. As this is an election year, a lot will depend on the kind of Government that comes into power.
 
MSIL sold 72,461 units in March 2009, which is triple the number of cars sold by its nearest competitor, Hyundai, and a 13.58 per cent increase over the same month last year when 63,799 units were sold. Despite a dismal third quarter when company sales were deep in the red, MSIL managed to rebounded sufficiently in the fourth quarter to break even.
 
Tata Motors, Honda Siel Cars India, Mahindra and Mahindra and General Motors India (GMI) cannot share so joyful a view as all four companies recorded double digit negative sales growth for March 2009 as well as for fiscal 2008-09.
 
While GMI was celebrating its highest ever sales growth of 6,836 units in March last year, the car manufacturer sold only 5,001 units in the same month this year a 26.84 per cent decline as it continues to suffer from the effects arising from the uncertainly surrounding its parent company.
 
The two-wheeler segment, on the other hand, despite trying credit availability and loan rates, appears to have an idea as to when the market may begin to recover. TVS Motors chief managing director Venu Srinivasan said, Recovery for the industry will be slow at least six to nine months especially if car loans remain ridiculously high. We are only expecting single digit growth of maybe 5-6 per cent from the two-wheeler segment in 2009.
 
While Hero Honda appears to have run away with this segment with a market share of 57 per cent, TVS Motors continues to steadily gain ground on Bajaj Auto, which has seen both sales and market share plummet steadily.
 
 
 
MARUTI: DESIRABLE BUT EXPENSIVE
 
 
Mumbai: March has been a good month for Maruti but it would be surprising if Indias biggest car maker is able to sustain the last quarters momentum, of around 70,000 cars a month, this year.
 
For one, a fair part of the spurt in volumes in the March 2009 quarter is the result of pent up demand in the previous quarter there were those who wanted to wait for the news flow to get more encouraging before they took the plunge. No doubt, the news is better to the extent that the environment may not be showing signs of further deterioration and demand appears to have picked up in some sectors.
 
However, the macro economic environment isnt showing signs of any major improvement either the State Bank of India chairman himself has admitted that the pick up in credit growth hasnt been up to expectations so it seems unlikely that prospective buyers will take the plunge very soon.
 
In other words, even though fuel prices may be lower and interest rates come down further customers arent really expected to rush to buy big ticket items because theyre only slightly more comfortable with the economic outlook than they were three or four months back.
 
Its true that Maruti has come up with a couple of winners in the Swift and the Dzire and their diesel versions will sell in bigger volumes this year since the engines will be more easily available. Also the Star should be able to clock reasonably good volumes in overseas markets. Despite this, however, it doesnt seem like Maruti will be able to grow volumes by more than 10-11 per cent this year. The Maruti stock has rallied by about 45 per cent since January and the stock is a no doubt a great play on the rising incomes and aspirations of middle-class Indians. At the current price of Rs 795 though, it trades at around 14 times estimated 2009-10 earnings. Thats not too expensive except that there isnt enough of a cushion in case demand doesnt come through.
 
 
 
MARUTI 800: STORY OF A LITTLE GIANT
 
 
"The Maruti 800 made India a country that is now on wheels," R C Bhargava, former managing director, Maruti.
 
The iconic Maruti 800, which stood as the symbol of pride in the garages of millions of Indian homes for years together, is set to bid goodbye. For over 25 years, this small car made giant strides, virtually monopolising the roads in India.
 
It was in 1983, that this small car stole the hearts of millions, and its launch was a turning point in the history of Indian automobile sector. The small car soon became an inherent part of many Indian households.
 
The Indian car industry was then represented by two companies, Hindustan Motors and Premier Automobiles, with a volume of 40,000 cars annually. The Maruti-800 changed the dynamics of the trade. It lived up to the aspirations of the Indian middle-class.
The Maruti 800 was Sachin Tendulkar's first car. It was also the first car for many others who could not afford a car for years. . . Priced at Rs 52,500 in 1983, it was a treasure on wheels!
 
 
TOYOTA TAKING FRESH LOOK AT INVESTMENT IN SMALL CAR UNIT
 
 
Bangalore: The economic slowdown has forced Toyota Kirloskar Motor Pvt. Ltd, the Indian venture of Toyota Motor Corp., the worlds biggest car manufacturer by volumesto review its plan to invest in a new factory near Bangalore, to roll out a small car for the Indian market.
 
The company also expects to post losses for the first time in six years, on lower demand
for its vehicles and an increase in the cost of imported inputs.
 
In November, Toyota Kirloskar had said it would invest Rs3,200 crore in a second plant to make a small car near its existing factory in Bidadi, on the outskirts of Bangalore. The new plant, set to be operational in 2010, had a planned capacity to make 100,000 cars a year.
 
...the production capacity at the second plant has been reviewed and we are carefully reviewing the investment figure in the light of (the) severe economic downturn, said Shekar Viswanathan, deputy managing director (commercial) at Toyota Kirloskar, in an email. However, this will not in any way affect the second plants operations.
 
The factory will initially produce 70,000 units of the so-called compact vehicle by end-2010. Details of the small car have not been disclosed.
 
Viswanathan did not elaborate on how much the investment figure would change or when it would be finalized.
 
In December, parent Toyota Motor had forecast an operating loss for fiscal 2009, the first in 71 years. In February, it declared losses of 164.7 billion yen, or about $1.68 billion (about Rs8,500 crore) at the rates prevailing then, for the December quarter.
The Japanese currency has appreciated 33% against the rupee between 1 August and now, making imports from that country much more expensive in India and thus increasing costs of production here.
 
Toyota Kirloskar also imports parts from Thailand, paid for in the US currency, which has appreciated 21.6% since August. For instance, the company imports 30% of parts by value for its Innova utility vehicle and 55% for the Corolla Altis car, according to a company spokesperson. It imports completely built units of the sport utility vehicle Prado and Camry, its upper-end sedan.
 
The increase in costs and a slowdown in automobile demand is affecting profitability at the firm here in India, Viswanathan had said in an interview. This year (fiscal year ending March 2010) we are not going to be profitable in India, he told Mint on 31 March.
 
Toyota Kirloskars senior management is set to take a 10-15% pay cut effective April, following pay cuts in Japan, the UK and the US.
 
Toyota Motor, which entered the Indian market through a joint venture with the Kirloskar Group in 2000, has been profitable since 2004. With buyers delaying vehicle purchases, Toyota Kirloskar, which produced a daily average of 200 vehicles, including the Innova and the Corolla, cut it to less than one-third, or 60 vehicles, in December.
 
In March, the plant made 150-160 vehicles a day, but it was difficult to forecast sales for the weeks ahead. In terms of demand, I do think April- May will be muted, said Viswanathan. Its very difficult to isolate and say you know this month is going to be good, this month is going to be bad.
 
Sales of passenger vehicles, which includes cars, utility vehicles and multi-utility vehicles, are expected to have grown up to 3.5% year-on-year (y-o-y), to 1.59 million units for 2008-09, said V.G. Ramakrishnan, senior director (automotive and transportation) at consulting firm Frost and Sullivan India Pvt. Ltd. Y-o-y growth was 13-14% over the last couple of years.
 
For 2008-09, Ramakrishnan projects a growth of 7.5-8% on the back of brisk sales of Tata Motors Ltds recently launched ultra low-cost car, the Nano.
He expects profitability of all car makers to slide on subdued demand, more so for multinationals with large imports. Toyotas compact car next year could help it buffer this impact, but if the firm slows investments on the small car plant, it will probably not be in a market that is a growth market, said Ramakrishnan. The small car is a market that is still continuing to grow.
 
 
 
M&M SALES AT RECORD HIGH
 
 
Chandigarh: Mahindra & Mahindra on Thursday announced domestic sales of 25,748 units in March 2009, its highest ever. The figures also denote the highest-ever monthly sales this year. Domestic utility vehicles have grown by steady 30 per cent, riding on the back of the highest-ever sales of Scorpio, Bolero and the Pik-Up. The recently launched Xylo, too, clocked a sale of 3,171 units. 
 
GM TO LAUNCH TWO NEW CARS
 
 
Chandigarh: Riding high on the success of its small cars, Spark and U-VA, General Motors (GM) will launch another premium hatchback by the end of this year. The company will also be launching its compact sedan, Chevrolet Cruz this year.
This was stated by the president and managing director of General Motors India, Karl Slym, in an interview with The Tribune here. He was in town to inaugurate a new dealership at Panchkula.
 
The premium hatchback a mini car will be priced around Rs 4 lakh and will have a 50 per cent indigenisation component. We will also launch an LPG variant of Spark this year, and introduce a CNG variant of our mid range cars like Aveo, he said.
 
Slym said this year, the company had managed to grow by 10 per cent over last year, even as growth in automobile sector had shrunk by two per cent.
 
In spite of the gloomy forecasts for this year, we are sure of achieving a similar growth this year. In India, GM plans to grow through introduction of new products at regular intervals. We have already announced plans to introduce Chevrolet Cruz, which will be priced between Rs 12-14 lakh. We are also looking to rationalise versions under a certain product category, he said.
 
Though he refused to comment on the fiscal health of the company in the US, he said that the company was growing rapidly in India, China and Brazil.
 
In India, we are investing heavily. A new plant has just been commissioned at Talegaon, near Pune, which is being constructed at an estimated cost of $300 million. This facility, with a capacity of 1.40 lakh units, is currently being used to manufacture Spark, and this can be scaled up as the demand rises. Another power training (engine manufacturing) plant is under construction there, which will cost $200 million, he said.
 
GM India has not yet kept a sales target for calendar 2009. The first two months of 2009 have shown a recovery in automobile sales. If the economy continues to fare well, sales will grow. Lowering of interest rates on auto loans will also give sales a further boost. We are eyeing to capture 10 per cent of the countrys passenger car vehicles by 2010, he said, adding that they were planning to increase their dealerships from the present 184 to 400 by 2012.
 
 
NANO TO BRING DOWN PRICE OF USED CARS: DEALERS
 
See this story in: The Hindu Business Line (Web Edition), Daily News & Analysis (Web Edition), The Indian Express (Web Edition), Yahoo India (Web Edition)
 
Chennai: With the much awaited world's cheapest car 'Tata Nano' car launched, dealers of used cars forecast around 30-40 per cent dip in the sales of used small car in the country.
 
Due to its low' price tag, many customers opting to buy a used car may plump for a new Nano, though it comes comparatively with lesser cubic capacity, Mr R Srivatsan President of MyTVS, part of the TVS Group engaged in selling used cars said.
It is because of this factor, we are expecting around 30-40 per cent drop in the market of A and B segment vehicles'', he said.
 
However, once the car (Nano) hits the road, we will know the exact figure on that, he said. Stating that the Nano design was very good and attracts more buyers, he said once the booking starts for Nano, there would be less number of people going for us ed small cars.
 
For the exact results, we have to wait and see on how the market responds, he said. Initially, there may be a slump in the sales of used cars especially Maruti 800, Alto and Hyundai Santro range of vehicles, he said.
 
 
BAJAJ CLAIMS VICTORY OVER TVS
 
  Bajaj Auto on Thursday claimed that it has won a patent case against rival TVS Motor Company over the ExhausTEC technology. TVS officials, however, said that they were not aware of any such verdict.
 
In a statement issued here, Bajaj said the Indian patent office has granted Bajaj Auto a patent for its ExhausTEC technology and the verdict has been published in the gazette.
The Indian Patent Office granted Bajaj Auto a patent for its ExhausTEC invention vide patent no. 231498 dated March 5, 2009. This grant was published in the patent gazette dated March 27, 2009, the Bajaj statement said. A senior official of TVS Motor Company, when contacted, declined to comment. The unique invention, named
ExhausTEC, significantly improves low range/ mid range torque in a single cylinder four stroke engine, employing a chamber of predetermined volume attached to the exhaust pipe. Bajaj has employed this innovation on its motorcycles since August 2004 in various models. Bajajs patented DTSi twin spark technology and ExhausTEC together deliver unbeatable fuel efficiency, the statement claimed.
 
According to the statement, Bajaj filed the ExhausTEC patent application on August 6, 2004, and the application was published in the Indian patent gazette on June 22, 2007.
Thereafter, Bajaj observed a chamber attachment looking similar to its ExhausTEC on a product displayed by TVS on August 30, 2007. On December 12, 2007, Bajaj served a notice on TVS Motor regarding the potential infringement.
 
After another series exchanges, on March 5, 2009, the Indian Patent Office dismissed TVS pre-grant opposition and granted patent to Bajaj Auto for a period of 20 years from August 6, 2004, claims the Bajaj statement. The grant of the patent arms Bajaj Auto with rights to seek legal remedy against infringements, if any, the statement added.

MARUTI TO MAKE A SPLASH WITH RITZ

Passenger car market leader Maruti Suzuki will launch its sixth global car, Ritz, in May. The mass market car will be launched in the popular small car segment with a 1.2 litre KB series petrol and 1.3 litre multijet diesel engine simultaneously. The Ritz will be built on Marutis successful Splash platform and will be priced between Rs 4 lakh and Rs 5 lakh, which is just below the Swifts price tag. It will be shorter than the Swift (by 30 mm), but will be spacious due to high roof structure.

The Ritz will be positioned between the A-star and the Swift, and will counter Hyundais i10 and i20, Skodas Fabia, Fords Fusion, Fiats Palio and Tata Motors Indica Vista. This car is Marutis ninth small car that will consolidate its position in the crowded market. Dubbed as a multi-purpose vehicle, it will cater to small urban families and sport BS-IV engines and a 5-speed manual gearbox.

The Ritz, known as Splash in Europe and other developed markets, will coexist with the ageing WagonR platform, just as the newly-launched A-Star is thriving with the Alto. A Maruti spokesman confirmed that the car will be launched sometime in the first half of the year. We have not decided the date, but it will be launched as per schedule, he said.

According to dealers, the Ritz will be launched prior to Hondas small car, Jazz, which is slated to hit the roads in June and Fiats premium hatchback, Grande Punto. The Ritz has cleared all the homologation tests and has been approved by the International Centre of Automotive Technology (iCAT) at Manesar in Haryana last week for launch in the Indian market.

RATAN TATA VOTED INDIA INCS MOST POWERFUL CEO

 

The wait is finally over for the corner-room denizens of Corporate India. That most definitive of power listings, The Economic Times Corporate Dossier India Incs Most Powerful CEOs, is here and it reinforces what we have said all along: Power is not just about controlling assets or generating profitsits about inspiring positive change.

All through 2008-09, the dramatic story of the Nano captured the public imagination and Ratan Tata, the driving force behind the little car, demonstrated tremendous fortitude through all the trials and travails he faced. Mr Tata deservedly ascends to the top spot in the power rankings this year, displacing Mukesh Ambani of Reliance Industries, who is now in the second position.

Mr Ambanis year has been marked by his remarkable adventures in the Krishna-Godavari basin and IPL cricket, both of which promise to energise the country in the years to come. Much of a CEOs power is derived from his companys brand, so it should not be surprising that three of India Incs most powerful individuals are from Infosys.

Chairman NR Narayana Murthy continues his hold on the third place for the second year in a row, while co-chairman Nandan Nilekani moves up one place to eight. The top newcomer in the rankings this year is S Gopalakrishnan, the new CEO and managing director of Infosys, who enters at 13. Narayan Murthys advice to those who might seek to be in the power listings in the future, You must have humility because that brings an open mind-set, which allows you to learn from others and improve yourself constantly.

In a year of crashing stocks and slowing growth, the CEOs who have climbed the rankings seem to be those who have brought a measure of cheer amidst the gloom. The gung-ho Vijay Mallya, with his purchase of Gandhi memorabilia, Formula One racing, IPL and the Kingfisher calendar, has climbed four places to emerge as India Incs sixth most powerful CEO.

Now in its fifth year, the India Incs Most Powerful CEOs survey is conducted by IMRB International. The survey covers around 500 executives in senior, middle and junior management in prominent companies across five cities.

Rankings are a zero-sum game and for every CEO who moves up, there are a few who move down. Anil Ambani, with his Big global plans in entertainment, has moved up one place to four, while ICICI Banks KV Kamath, in his new avatar as the highly visible, very influential CII president has moved a rank up to five. Among this years top 10, Azim Premji has dropped three places to 10. Sunil Mittal, now at nine, says: Power should not be confused with authority. True power diminishes every time you exercise it.
 

History may remember 2008-09 as the year of Satyam, but even corporate scandals have a way of throwing up heroes. Banking stalwart Deepak Parekh, roped in by the government to lend credence to the board of the fraud-hit Satyam Computers, has moved up 11 places to the seventh position in the rankings. His take on power: Wield it with care. It is an engine that can wreak havoc if unleashed unwisely.

  

Another man of the moment is L&Ts AM Naik, the recipient of the ET Award for Business Leader of The Year and the prime bidder for Satyam, who has shot 29 places up the rankings to 15. Also entering the top 20 for the first time are SBIs OP Bhatt, ITCs Yogi Deveshwar and M&Ms Anand Mahindra, whose large cap companies seem to be weathering the slowdown better the most. Rahul Bajaj has fallen seven places to number 19 this year, but we suspect he might be secretly pleased. Hes finally fallen behind his son Rajiv, who is at number 18.

TATAS TO DISCUSS SINGUR ISSUE WITH WB GOVT

Tata Motors said it will have talks with the West Bengal government on the Singur land when the Nano factory was originally slated to come up, a day after state Principal Industry Secretary Sabyasachi Sen said the world's smallest car would be made there.

 

"Tata Motors will discuss with the West Bengal government matters related to the Singur plot, which is on lease with the company," the firm said in a statement when asked about Principal Industry Secretary Sabyasachi Sen's claim that the Rs 1 lakh car Nano would "definitely be made in West Bengal".

 

Sen's comments came seven months after the Tatas announced relocating the Nano facility, citing an adverse political environment in the face of the Trinamool Congress's unrelenting opposition.

 

"Tata Motors does not have any other information to share," the statement said but did not detail the issues that the company would take up with the state government

PUNE ENGINEERS GET BUSY WITH NANO EUROPA

With the Tata Nano having been launched, designers and engineers at the Tata Motors plant in Pune are now busy giving final shape to Nano Europa, the car for the international market.

 

Tata Motors chairman Ratan Tata had showcased the prototype at the 79th Geneva Motor Show last month. A team of close to 500 members is working on the Nano Europa, which is scheduled to be launched in 2011.

 

"With work on the Indian version of the Nano over, the R&D team at the Pune plant is working on Nano Europa project," confirmed a Tata Motors official working on the project. The Indian version was developed by the same team.

 

The Europa, unlike the Indian model, would sport enhanced features, including a three-cylinder engine and several safety gadgets, including airbags.  "To meet the driving needs of its target customers, the Tata Nano Europa will be powered by a 3-cylinder all-aluminum multi point fuel injection (MPFI)engine matched with a 5-speed automatic transmission, and electric power steering. The engine will provide high fuel efficiency and low carbo dioxide emission which will be environmentally friendly," an official said. The Nano for India is a 624 cc, 2-cylinder, MPFI engine.

 

"The Nano Europa meets all safety regulations. One of the most enhanced features in the new car would be safety gadgets that are being installed in the car," said an official working at the Pune plant. In addition to the all sheet-metal body and its energy absorbing design, it would use an antilock braking system and an electronic stability programme to help prevent crashes and air bags.

 

Asked if the international version would be made available close to the India price, Debasis Ray, head, corporate communication, at Tata Motors, said, "The pricing of the car would be finalised closer to the launch."

 

The Nano Europa, as compared to the Indian version, would be a little more spacious. It will be 3.29 metres long and 1.58 metres wide, against 3.09 metres and 1.45 metres respectively for the Indian version.

 

AUTO EUPHORIA MAY NOT LAST

But according to estimates by analysts such as HSBC Securities' Sachin Gupta, growth in vehicle sales is expected to taper off, at least in the first quarter of 2009-10. And Hero Honda managing director Pawan Munjal concurs, predicting a "tough" time for two-wheeler companies in the entire first half of the new fiscal. Even Maruti Suzuki, though unwilling to give out projections, appears to be in agreement. It has adopted a "wait and watch" policy and is already gearing up for "flexible" manufacturing to keep pace with fickle demand in the coming months.

 

Let's begin with Maruti's prognosis. The country's largest carmaker has indeed witnessed very good growth between January and March this year, with March numbers springing a welcome surprise at almost 15% growth in domestic car sales and export volumes doubling.

 

But in a conference call with analysts on Thursday, Maruti officials remained cautious about the coming months. Ajay Seth, chief financial officer, said, "The first quarter (of the current fiscal) is critical to watch....we should not get carried away by the (good sales) in March quarter. Let's see if the stimulus packages, Sixth Pay Commission payouts etc -- the positives -- continue into this fiscal." The company is capable of making a million cars on an annualised basis and Seth said capacity utilisation "would be highly flexible, depending on demand", without giving out any forecasts.

 

On the exports front too, Maruti appears cautious. The A Star, its export-oriented model, was initially expected to help the company ramp up total exports to 2 lakh units by 2010-11. But with the contract manufacturing deal with Nissan (which was initially meant for 50,000 units from this year) yet to be firmed up and European markets looking weak, it remains to be seen if this ambitious export target is met.

 

HSBC's Gupta points to several factors that could hamper overall sales growth in the coming months -- a drop in purchases by central government employees, limited scope for inventory push and of course, the base effect. His predictions paint a grim picture for almost all sectors. On two-wheelers, he cites marginal growth in domestic sales for TVS Motor and Bajaj Auto's declining bike numbers but says that sales in this category are better than in cars.

 

Commercial vehicles, which has seen bloodbath through the second half of FY09, also seems unlikely to show any real growth in the near term although the extent of sales decline may fall. Indian Foundation of Transport Research and Training (IFTRT) estimates that sales in the 5-49 tonne truck/trailer range fell 49% to 17,483 units (34,431 units) while light commercial vehicle sales dropped by 21.02% last month at 2,707 units (3,428 units).

 

Bajaj gets patent for EshausTEC technology

 

Two-wheeler maker Bajaj  today said it has received a patent for a new technology, which has been a bone of contention with rival TVS Motor Co.

"The Indian Patent Office granted Bajaj Auto a patent for its 'ExhausTEC' invention vide Patent No 231498 dated March 5, 2009. This grant was published in Patent Gazette, dated March 27, 2009," Bajaj Auto Ltd (BAL) Vice-President (Business Development) S Ravikumar said in a statement.

Bajaj Auto claimed that ExhausTEC significantly improves low- and mid-range torque (tendency of a force to rotate an object about an axis) in a single cylinder four stroke engine, employing a chamber of predetermined volume attached to the exhaust pipe.

"Bajaj has employed this innovation on its motorcycles since August 2004 in various models," Ravikumar said.

Earlier, BAL had applied for patent of this technology in 2004. Later, TVS unveiled a series of new products, which Bajaj alleged of patent infringement of its ExhausTEC technology and served notice to the Chennai-based firm in December, 2007.

Bajaj March sales fall over 14%; FY'09 sales dip 11%

Two-wheeler maker Bajaj Auto on Thursday reported a 14.40 per cent fall in its motorcycle sales in March at 1,32,210 units against 1,54,443 units in the same month last year.

The company's total motorcycle sales during 2008-09 also dipped by 10.84 per cent at 19,07,810 units against 21,39,779 units in the previous fiscal.

Total two-wheeler sales during March stood at 1,32,640 units, a 14.70 per cent decrease over the same month last year, Bajaj Auto Ltd (BAL) said in a statement. The company had sold 1,55,504 units of two-wheelers in the year-ago period.

BAL's exports also plummeted by 8.15 per cent at 46,874 units in March from 51,035 units a year ago.

The company's total vehicle sales stood at 1,54,093 units last month compared to 1,76,280 units in the year-ago period, down by 12.59 per cent, the statement said.

During the financial year 2008-09, BAL's total two- wheeler sales fell by 11.18 per cent at 19,19,582 units compared to 21,61,095 units in the previous fiscal.

The company reported a decline of 10.50 per cent in its total vehicle sales in FY'09 at 21,94,108 units as against 24,51,407 units in FY'08.

"Bajaj expects stronger growth in the first quarter of FY'10 powered by the continuing success of the XCD 135 DTS-Si as also the launch of product upgrades off the Pulsar platform," BAL said.

NATURAL RUBBER PRICES HIKE PUSHES TYRE COS INTO LOSSES

 

The surge in natural rubber (NR) prices has pushed tyre companies to post net losses, instead of the profits they recorded last year.  The 22% increase in NR price, runs counter to rubber boards latest predictions, says ATMA (Automotive Tyre Manufacturers Association).

 

The board had predicted that NR prices will hover around Rs 72 as global economic crisis had dented the demand from consuming interests.  But by March-end, the price has touched Rs 84 per kilo. This was only Rs 69 per kilo on March 1. Stimulus packages helped. But the rubber prices didnt, says Rajiv Budhiraja, director general, ATMA. With demand from vehicle makers dipping by as much as 70% in the December quarter, tyre companies were pinning hopes on stimulus packages to revive demand in the replacement market.

 

During the first three quarters, ATMA--representing more than 90% of the industry- has posted a loss of Rs 29 crore. This is against a net profit of Rs 494 crore in the corresponding period in the previous fiscal.

 

When NR prices were Rs 72 per kilo in the first week of March, rubber board chairman Sajan Peter had announced that the price will remain in tune with international trends and that there will be no difference from this level till the end of the month.

 

As futures led the price rally, the local market has not been in keeping with the international trends, according to ATMA. This situation of buyers drying off in view of rise in prices, and their inevitable return early April, was sensed by the local powerful broker-dealer nexus and very easily took the futures sharply up, says Budhiraja.

NR traded volumes have suddenly spurted to cross 1,000 tonne, from average of around 400-500 tonne a day. This has resulted in physical market sentiments firming up. The volatility in prices has acutely hit the profitability of tyre firms.

 

HIGH-END MOTORBIKE FIRMS READY TO REV UP INDIA SALES

 

Biking culture is evolving in India and so is the demand for super sporty bikes (priced around Rs 10 lakh and above). Consequently, players like Suzuki Motorcycles India (SMI) and India Yamaha Motor (IYM) are getting higher volumes than earlier estimated and have set high targets for 2009.

 

While Suzuki has sold 26 and 29 units of Hayabusa and Intruder (priced at Rs 12.5 lakh each) respectively since its launch in November last year, Yamaha managed to sell 107 units of R1 and MTO1 (Rs 10.5 lakh each) in 2008 as against the target of 50-60 bikes.

 

Even Honda Motorcycle and Scooter India (HMSI) is betting big on the segment and has recently launched CB1000RR (which is priced at Rs 12.5 lakh) and CB1000R (priced at Rs 9.5 lakh). The top-end high performance bikes constitute a super niche segment that is neither dependent too much on finance and nor much impacted by the economic slowdown. Hence, the demand for such bikes is growing in India even when other two-wheeler segments are witnessing a slowdown, says Sanjay Tripathi, division head (product planning), IYM. The company is expecting 100% growth in sales of R1 and MT 01 in 2009 at 107 units. According to industry estimates, a little over 500 such super bikes are sold in India in a year, a very niche segment compared to an estimated 70 lakh two-wheelers that would be sold in the country this year, as biking culture continues to be at a very nascent stage in India even now. Indians have an aspiration and with these bikes we are trying to develop the fun culture that is prevalent in the US and Europe, says NK Rattan, vice president (sales and marketing), HMSI.

 

Though HMSI is yet to start the booking for these super bikes Rattan said there has been a good response and certain number of confirmations have come but the actual process will start only in April.

 

'NO REAL DANGER TO ULTRA LOW COST CAR PROJECT': SYLVAIN BILAINE

 

Sylvain Bilaine established Renault SA's India operations and successfully managed the company's multiple relationships here since 2004. A 25-year Renault veteran, Bilaine was instrumental in negotiating the marketing joint venture with Mahindra & Mahindra for the Logan as also theRenault-Nissan manufacturing facility at Chennai. He has also been the Renault representative in negotiating the Ultra Low Cost (ULC) car project of the Renault, Nissan and Bajaj combine. Now that he is quitting Renault to become an entrepreneur, DNA caught up with him on his experiences in India.
Excerpts:

 

On his stint in India

I started off by studying the Indian market from Paris, making frequent visits to India and negotiating the creation of Mahindra-Renault Ltd (MRL) in April 2004. The creation of Renault India Ltd as a 100% subsidiary was the next big task.

 

My India stint has been an interesting and a learning journey... I leave with a deep sense of satisfaction at having kick-started Renault's involvement with India and ensuring that our partnerships with Indian companies evolve and flourish.

 

Getting MRL up and running was easy as we had M&M with us. But our experience with setting up Renault Nissan Automotive India Ltd in Chennai was an eye opener in many ways -- we were amazed at the level of support we got. Most of the people that we had to interact with were very knowledgeable and articulate.

 

On Logan performance and whether Mahindra-Renault needs further investments
The Logan plant was set up with a peak capacity of 50,000 cars per year... something we expected to reach in 3-4 years. It may not have been a blockbuster, but by all accounts, did fairly well in the first 12-15 months, notching up sales of more than 33,000. Of course, what hit us most was that the economic scenario started to deteriorate in July-August 2008 and there was nothing we could have done to stop the slide. However, even during these tough times, the 'Limited Edition' Logan - Logan Edge - was a sell-out in 60 days.

 

On the slow progress of ULC project
The ULC project started a year ago as a dream in Carlos Ghosn's eyes. He was not only convinced that such a project was absolutely feasible, but was also sure that it could be conceived and realised only in a country like India, which has enormous engineering strengths and is skilled at "frugal engineering".

 

We have progressed fairly well since then and are now in a position where we can see the project taking shape in the next few months... of course, taking into account some of the re-working that is currently being undertaken by the Renault-Nissan-Bajaj teams.
Since this project is still in the late stages of evolution, it does not require any immediate cash injection (which I agree is in short supply)... hence, there seems to be no real danger of it being affected by the current economic scenario.

 

On the Chennai facility and whether a third partner is needed
We are absolutely committed to building the car manufacturing facility along with Nissan. Once M&M pulled out of Chennai, the Renault-Nissan Alliance took over the project and even increased the investment and capacity, demonstrating commitment to the Indian market.

 

Construction activity commenced in December 2008. Then, due to the severe economic crisis, Renault has now announced a temporary freeze/delay in product plans from Chennai. But that does not mean we are walking out of the project.

 

The alliance is going ahead with the construction of facilities for a 4,00,000 car plant and Nissan will roll out its first car around mid-2010. We are monitoring the economic situation on a monthly basis and the moment we see a window of opportunity, Renault will revive its product plans. Let me assure you that Renault is committed to the Indian market and we are here for the long haul.

 

GM, CHRYSLER BANKRUPTCY COULD HURT TCS THE MOST

 

The grave financial crisis at US automobile companies General Motors (GM) and Chrysler has put at risk deals worth nearly $1 billion (Rs 5000 crore) annually for Indian auto parts

 suppliers and some of the countrys top software firms.

Tata Consultancy Services (TCS), Indias largest software exporter, faces the biggest impact among IT companies, while vendors of auto components will be particularly affected if GM files for bankruptcy, analysts and executives from the two industries said.

On Sunday, the US government gave GM 60 days to come up with a new plan to cut debt and prevent bankruptcy. Chrysler has been ordered to finalise a partnership with Italian carmaker Fiat within 30 days.

A Delhi-based auto parts supplier to GM said there has already been some reduction in orders from the American firm. We are worried and closely watching the developments in the US to gauge the impact. The decline in auto sales in the US has already hit the order books of Indian suppliers, he said.

A GM bankruptcy will have a crippling effect as production lines will be reduced and a number of models scrapped. Even if the firm doesnt file for Chapter 11 (bankruptcy), its likely that payments will be delayed. We have already reduced our supplies to GM, an executive at a leading auto component company said.

GM and Chryslers woes-the two have been struggling in recent years-have also put their new IT outsourcing projects in a limbo.

 

Several new outsourcing decisions are pending at GM and Chrysler because of the uncertainty about their future and the anti-offshoring sentiment that is being voiced by many political lobbyists, said a person familiar with outsourcing decisions at these auto companies.

VOLVO INDIA EXPANSION ON EVEN IF FORD SELLS BRAND

Swedish luxury carmaker Volvo on Tuesday said its India expansion plans will continue without any rethink even if its owner Ford sells the brand in the wake of the global slump in sales.

 

Ford might (eventually) sell off Volvo, but by when and to whom, I do not know... But there will be no change in our India plan, Volvo Car India Managing Director, Mr Paul de Voijs said. The company would continue to expand its dealership network and bring in new car models to India irrespective of emergence of any new picture in its global front, he added.

 

The struggling US auto major Ford, had reported a loss of over $14 billion in 2008. As part of its cost restructuring, it has been reported that the company may sell off Volvo, which it had bought in 1999 for over $6 billion.

 

Bullish on the Indian top-end auto market segment, Mr Voijs said: Luxury segment is not facing much of a slowdown here and it will perform better than the general car market. We are potentially looking at bringing in the sports utility vehicle - XC60 to India.  He, however, did not specify any time frame for the possible launch of the vehicle.

 

VOLKSWAGEN LOOKING TO EXPORT FROM INDIA

 

In line with other international automobile manufacturers such as Fiat and General Motors, Germany-based Volkswagen is looking at serving small markets in the Indian subcontinent from its manufacturing facility in the country.

 

Currently, Fiat and General Motors export cars to countries such as Sri Lanka, Nepal and Bangladesh, from India. Although volumes are very low, the companies see potential market opening in the neighbourhood.

 

If there are some opportunities why shouldnt we go there? Mr Joerg Mueller, President and Managing Director, Volkswagen Group India, told Business Line. Volkswagens newly inaugurated plant in Chakan, which has a capacity of 1,10,000, is meant for producing high volume cars, including Skoda Fabia, Volkswagen Polo, and upcoming small car models from the VW group companies.

 

He said that Volkswagen sedans Passat and Jetta would not be produced in the new facility at Chakan. Mr Mueller said that the immediate focus would be to serve the domestic market. The company will explore export opportunities from India at the later stage.

 

Beatle by year-end

He also reaffirmed the plan to introduce Volkswagens globally popular model Beatle in India by the end of 2009. The car will be introduced in India through the CBU (completely built unit) route.

 

The Volkswagen India-Project Head, Mr Ludwig Geerken, had announced at the Geneva Motor Show that the company would launch Beatle.

 

Mr Ulrich Hackenberg, Member of the Board of Management of Volkswagen Brand, said the company would start production at the Chakan plant with 50 per cent localisation and will increase it to 80 per cent by 2010. The company is in the process of identifying key suppliers in its effort to increase local content in its products.

VW CHAKAN PLANT INAUGURATED

 

German automaker Volkswagen will fight in the Indian car market and in the long term is looking to capture 8-10 per cent market share, Dr Jochem Heizmann, Member, Board of Management, Volkswagen A.G., has said.

 

The Maharashtra Governor, Mr S.C. Jamir, inaugurated the companys greenfield facility at Chakan.  The plant has begun trial production of group company Skodas compact car Fabia. Commercial production is to start in a months time.

 

Stating that India had a strategic position for the VW Group, Dr Heizmann declined to comment on targeted sales numbers but said, We will fight in this market. He added that VW was preparing to sell Light Commercial Vehicles as well and would start with the Multivan.

 

Polo rollout

The first VW product to roll out of the Chakan facility will be VW Polo, in early 2010. The hatchback version will be followed by a notchback (sedan) later next year.

Developed specially for the Indian market, the Polo will begin with around 50 per cent local content, and aim to achieve 80 per cent localisation in two to three years, Dr Heizmann said.

 

With an installed capacity of 110,000 units, the new VW facility is the 61st plant worldwide in the production network of the nine-brand group.  Built with an investment of 580 million, the company expects to employ 2,500 people here by the end of 2010.

To mark the opening of the new plant, Mr Jorg Muller, President and Managing Director, VW Group India, presented an ambulance to the Red Cross Hospital in Pune.

NANO TO REACH SHOWROOMS TODAY

 

Tata Motorss affordable car, Nano, will be seen throughout showrooms from April 1, 2009. The top-end Nano will be displayed at dealerships across the country and dealers expect maximum bookings for the top end variant.
 

The company has already announced booking plans for the car. Nano could be booked throughout India between April 9 and April 26. The company has said that the customers would get delivery of Nanos three months later, that is by July.
 

It is believed that all 1 lakh lucky customers would be able to get their Nanos by around June 2010. The company would be selecting 1 lakh customers through a random selection process who would get the car at the presently announced price.
 

At the launch of the Nano, Ratan Tata, chairman of the company had said that the Pantnagar has a capacity to manufacture 50,000 cars per annum. The capacity would go up to 2.5 lakh units once the Sanand plant starts, which would be by December.

AUTO IGNORES OFFICIAL HINT

 

Car makers are unlikely to cut prices despite nudges from the government but will seek reduction in interest rates to pep up demand. Prices (of automobile) are fixed based on input cost and market competitiveness. There is not much scope for price reduction now. Last year, when input cost went up, we did not increase price, said Venu Srinivasan, the new president of the Confederation of Indian Industry and the chairman and managing director of TVS Motors.

 

Recently, there have been reports of the government asking auto firms that they run the risk of missing out on further stimulus packages if they dont cut prices.

 

Reeling under the economic downturn, input cost pressure and high interest rates, Maruti Suzuki, General Motors, Hyundai, Honda and Ford have increased prices. This happened despite two stimulus packages of the government for the industry.

 

The CII, however, sought a reduction in the interest rates and asked banks to be more open on lending. Its true that the government has infused a lot of liquidity into the system, but interest rates are still very high and banks are reluctant to lend.

In a meeting with corporate leaders last week, Prime Minister Manmohan Singh had hinted that the RBI might further cut key interest rates.

 

With ample liquidity and low inflation, there is scope perhaps for a further moderation in interest rates, Singh had said, adding that the availability of credit for productive needs should be maintained at reasonable costs.

India Yamaha Motor's March sales up by 45.26 per cent

 Two-wheeler maker India Yamaha Motor on Wednesday reported a 45.26 per cent increase in its sales during March at 14,558 units as against 10,022 units sold in the same month last year.

"It's wonderful to note that sales figures of motorcycles have started growing after the recent slump. A careful analysis shows that Yamaha is growing at the fastest pace amongst all players," India Yamaha Motor Managing Director and CEO Yukimine Tsuji said in a statement.

Two wheelers sales up in March

 Two wheeler companies continued to post impressive sales for the month of March. Hero Honda, world's largest two-wheeler manufacturer posted a double digit growth of 10% to 3,53,342 units for March 2009 compared to 3,20,594 units in March 2008. On the annual basis the company also posted a 12% growth to 37.22 lakh two-wheelers in FY '09 against 33.37 lakh units in FY '08.

Hero Honda MD & CEO Pawan Munjal attributed the increase in sales to strong demand in semi-urban and rural markets. "We have achieved a market share of 57% in the domestic motorcycle market, despite the industry witnessing significant drop in sales on the back of slowing economy and prevailing high interest rates in the country.

The various measure to expand our product portfolio as well increase in the our network contributed to sales growth in the past fiscal year," Mr Munjal said.

The Chennai-based TVS Motor Company also reported a 4% growth to 1,21,988 units in March this year against 1,17,045 units in the same month last year.

Its growth in sales came from the rising demand for scooters, which recorded a robust 44% increase to 22,975 units in March as against 15,942 units in the same month a year ago. Its motorcycles dropped 8.46% to 55,754 units in March 2008 against 60,908 units in March last year.

TVS Motor March two-wheeler sales up 4.2 pct

TVS Motor Co, India's third-largest two wheeler maker, on Wednesday reported a 4.2 percent rise in March sales, helped by robust demand for its scooters and increased exports.

The company's total two-wheeler sales in March stood at 121,988 units, compared with 117,045 units in the same period last year, it said in a statement.

Scooters sales increased 44 percent to 22,975 units in March, led mainly by the recently launched TVS Scooty Streak, the company said in a statement.

The firm exported 16,340 units of two-wheelers in March against 13,070 units in the corresponding period of the previous year, a growth of 25 percent.

However, motorcycle sales fell 8.5 percent in March to 55,754 units, it added.

"Cumulative growth in sales for the financial year April 2008 to March 2009 stood at 3 percent," TVS said.

At 10:53 a.m., shares of TVS Motor were up 1.1 percent at 22.9 rupees. It rose as much as 6.62 percent after the news.

3-WHEELER BUYERS MAY BENEFIT FROM NANO ENTRY

 

Bajaj Auto, the countrys largest three-wheeler passenger vehicles manufacturer, said it had enough leeway to reduce the price of its popular autorickshaws to counter any shift by its consumers to Tata Motors Nano.

 

While the Nano is priced at Rs 1.12 lakh (ex-showroom Pantnagar), Bajaj Autos RE petrol variant costs about Rs 90,000, while its diesel variant is pegged at Rs 1.2 lakh (ex-showroom). Theres enough room in our profit margins to lower the prices of our three-wheelers in the future., said Sanjiv Bajaj, executive director of Bajaj Auto, on the sidelines of the CII National Conference last week. He was responding to a question on the Nano entry impact on the autorickshaw market.

 

The Nanos base price tag of Rs 1 lakh for the basic model is, says Tata Motors, applicable for only the first 100,000 units. Industry experts, including Maruti Suzuki chairman R C Bhargava, have said three-wheeler customers will increasingly shift to the Nano, as an alternative mode of transport which is safer and more comfortable than autorickshaws. Bhargava has said that is primarily because the Nano is priced at about the same level of a three-wheeler.

 

Analysts also say Bajaj can drop prices without any problem. Bajaj Auto has been in the three-wheeler segment for 60 years. Which means their plants are fully depreciated and they can afford to lower the prices, which other manufacturers cant do, says a top executive from a competing three-wheeler brand. The highest margins derived by Bajaj Auto comes from its three wheeler segment, says Vaishali Jajoo, auto analyst at Angel Broking.

 

In the three-wheeler segment, comprising both passenger and goods vehicles, the former is 76 per cent. Of this, Bajaj Auto enjoys a 46 per cent market share, Piaggio Vehicles has 38 per cent and Mahindra, 10 per cent.

 

Broadly, the passenger vehicle segment is divided into two categories, three-seaters and six-seaters. Three-wheeler executives say the introduction of multi-purpose vehicles (MPVs) like Tata Motors Ace Magic has already dented sales of autorickshaws at the top end, of six-seaters used in suburban areas and priced around Rs 1.8 lakh each.

The segment is currently dominated by Piaggio, Bajaj and Mahindra. The same, they think, could happen to the popular three-seaters that constitute the bulk of sales in this segment.

 

However, Bajaj says there wont be a major shift to the Nano from autorickshaw owners. If you take issues like operating cost and mileage per km, a three-wheeler wins. Operating costs matter to the owner in this segment, says Bajaj.

 

A large number of the three-wheelers are used in rural areas. Much cant be said about the Nanos performance on rugged roads at this stage.

 

Further, theres the issue of obtaining a travel permit to run the Nano as a public carrier, said another executive.

TATA MOTORS PLANS TRUCK UNIT IN MYANMAR

 

After launching the Nano early this week, the countrys leading truck and bus maker, Tata Motors, is now looking to set up a truck manufacturing plant in Myanmar with support from the Indian government in the form of financial participation.

 

This will be the first foray by an Indian automobile company in the military-controlled country. Tata Motors has a plant in Thailand which produces pick-up trucks.

 

According to the state-run newspaper, New Light of Myanmar, officials from Tata Motors met the minister of energy, Vice-Admiral Soe Thein, on Thursday in Myanmar to discuss the feasibility of setting up a heavy truck assembly plant there.

 

The truck project is a part of Indias more-than-a-decade old Look East policy wherein it is striving to improve economic cooperation with ASEAN countries, which includes setting up several developmental projects. For the project, the Indian government will sanction a line of credit of $20 million (Rs 100 crore) which would be used in putting up a heavy turbo truck assembly plant in addition to a component parts production factory by Tata Motors.

 

Although the details regarding the capacity of the plant were not divulged, the facility is scheduled to become operational by December this year. An e-mail enquiry sent to Tata Motors asking for details went unanswered. This new plant will be the latest to be operated by Tata Motors in the Asian region after it signed a joint venture with Thonburi Automobiles to set up a pick-up manufacturing plant in Thailand in December 2007. The company also manufactures and sells the Daewoo brand of trucks in South Korea. It also exports trucks from South Korea.

 

Analysts believe that the project will provide a fillip to the ailing commercial vehicle business of Tata Motors, which accounts for almost half of the companys revenues.

The domestic demand for commercial vehicles as well as the demand from major international markets will be substantially less than projected earlier. In such a case, only increased government spending for purchase of vehicles will fuel sales, said an analyst.

Commercial vehicle demand from the domestic market is expected to remain flat or even shrink in the coming quarters primarily due to an expected contraction in Indias economic growth.

 

Tata Motors posted its biggest loss in seven years at Rs 263 crore for the quarter third ended December 31 as against a profit of Rs 499 crore posted in the corresponding quarter of the previous year.

 

The company was even forced to shut a few of its manufacturing plants a couple of months ago so as to get rid of its excess inventory and align production with demand.

 

MAHINDRA DEVELOPING CARGO VERSION OF XYLO

Utility vehicle major Mahindra & Mahindra is working on the cargo version of its recently launched multi-purpose vehicle Mahindra Xylo.

 

According to sources close to the development, single cab and double cab prototypes of the vehicle have already been developed at M&Ms Nashik plant and testing is under way. The cargo variant, which is yet to be named, primarily targets the export markets like South Africa.

 

Mahindra officials did not comment on the development of the cargo variant of Xylo.

Following the launch of Xylo in South Africa last week, M&M launched the vehicle in Bhutan on Thursday. The company had said during the domestic launch of Xylo in mid-January that it would eventually launch the MPV in the overseas markets. Xylos domestic sales crossed 4,000 units in the first couple of months. A pick-up version of Xylo is expected to be launched in South Africa soon as the country is known for its sizable customer base for such vehicles. South Africa was the first venue of Mahindras Scorpio pick-up range of products in 2004.

 

The company sells its lifestyle pick-up Scorpio Getaway in India since 2007. The vehicle has good demand in Punjab, Haryana and some parts of Rajasthan. Scorpio Getaway is priced in the range of Rs 7.78-7.90 lakh.

 

Incidentally, Tata Motors entered the segment with its lifestyle four-door five-seater pick-up Xenon XT in February last week. The vehicle is priced in the range of Rs 7.62-8.58 lakh.

 

The lifestyle pick-up is a segment which is yet to develop in India, said Mr Rajiv Dube, President, Passenger Car Business Unit, Tata Motors.

INDUSTRY URGES PM TO ENSURE RETAIL FINANCE IN AUTO SECTOR

Industry has urged Prime Minister Manmohan Singh to bring about some fundamental changes in the process of repossession of vehicles from loan defaulters to make the exercise easier, so as to encourage banks and other lenders to extend retail finance in the automotive sector.

 

Unless there is a structural change, which allows banks to repossess vehicles on which outstanding are there, banks would not be willing to come forward and lend. And that (point) was made very strongly (to the PM), CII President Venu Srinivasan said, who met the prime minister on Saturday.

 

Srinivasan, who is also the chairman of two-wheeler major TVS Motor Co, said as court strictures regarding repossession of vehicles have already been passed, structural changes allowing banks to repossess vehicles is needed.

 

Auto industry has been asking for clearcut guidelines on who and how a vehicle could be repossessed. Under the current system, non-banking financial institutions are not covered under the current RBIs guidelines. Many banks had either scaled down or withdrawn from vehicle financing as recovery and repossession from defaulters became a problem. Lack of retail financing had hurt the Indian auto industry. Sales had fallen in the second half of the last year, only to slowly pick up in the beginning of this year after announcement the two stimulus packages in December and January.

GOVT TELLS CAR COMPANIES TO CUT PRICES

 Carmakers are under pressure to roll back all price hikes announced over the last couple of months, after the recent 4% excise duty cut on all types of vehicles. The government has warned auto companies that it will not consider any stimulus package for the industry in the future unless they reduced the prices of popular brands, an official in the ministry of heavy industry said on condition of anonymity.

Over the last 2-3 months, market leader Maruti Suzuki India (MSI), Hyundai Motor India (HMI), General Motors and Toyota Kirloskar Motors have increased the prices of top brands like Swift, A-Star, Swift Dzire, Santro, i10, Accent, Spark, Optra and Carolla by anywhere between Rs 3,000 and Rs 50,000.

The hike in rates went against the spirit of the stimulus package announced in December last to bail out the automobile industry, which was forced to halt production as inventories piled up on a sudden fall in demand since July 2008, the official said.

The finance ministry has written to the ministry of heavy industry and auto manufacturers association Society of Indian Automobile Makers (Siam), asking them to justify the price increases.

Carmakers justified the price hikes, saying they had absorbed higher input costs when the demand was low. Now that the demand has stabilised, we are passing on some of the high input costs to consumers, Siam director general Dilip Chenoy said in a reply to the ministry.

A Maruti spokesman said prices had to be increased marginally as commodity prices increased and the companys profits slipped 32% in the first nine months. The weakening rupee too pushed up input costs, he said, adding, We have increased prices of select models only.

But the government refuses to buy this argument. The contention of high input prices is not valid as it would have impacted all vehicles, and not just the bestsellers. Increasing prices just a month after duty cuts is not justified, a finance ministry official said on condition of anonymity. The input costs have impacted two-wheelers, commercial vehicles and three wheelers and their prices have not increased, the official added.

 

The Indian car industry was on a cruise mode for three years, growing at an annual rate of 12%, before it hit a snag in July 2008 when demand started dwindling as auto loan interest rates hit new highs. In the following five months, with the global economic crisis spreading its wing into India, auto sales went from bad to worse, forcing companies to halt production on a huge pile of inventories. During July-December 2008, the industry saw its sales slip 7% compared to the year-earlier period.

This was when that the government announced a stimulus package that included a 4% excise cut on all kinds of vehicles small cars, sedans, SUV, buses, trucks, three wheelers and two wheelers. This led to steep price-cuts across segments. Prices of small cars like Alto and Santo fell by up to Rs 12,000, while mid-segment cars like Honda City, Maruti Sx4 and Toyota Corolla became cheaper by Rs 25,000. The price-cut was more than a lakh for top-end vehicles like BMW 3Series, Toyota Prado and Mitsubishi Montero.

All this led to a revival in the market and demand stabilised by January. This was when companies started increasing prices of their top-selling vehicles. After cutting prices in December, Maruti increased prices of the A-Star by Rs 10,000, Swift Petrol by Rs 5,000 and its diesel model by Rs 6,000. The price of Swift Dzire was hiked by Rs 7,000. The company kept prices of its lesser selling cars M800, Omni, WagonR, Zen Estilo, Gypsy, Versa and Grand Vitara unchanged.

Hyundai increased prices of its flagship car Santro by Rs 3,601-5,163, i10 hatchback by Rs 3,974-7,637 and the Accent sedan by Rs 14,636. Toyota increased the prices of Corolla sedan by Rs 50,000, while GM raised prices of Spark and Optra by Rs 3,000 and Rs 10,000, respectively.

Premium car makers Honda Siel Cars, BMW India and Mercedes Benz India have all announced plans to increase prices in April. The companies refused to comment on any possible roll back in prices. The Maruti spokesperson said the company did not receive any communication from the government, while an email inquiry to Hyundai went unanswered.