A Clarion

The office premises of Toyota Kirloskar in Bangalore is gallantly geared up for the formal launch of Etios [image]. There has been a hectic series of activity in the Bidadi plant located adjacent to the first factory of Toyota which is created at an investment of Rs3200 crore. The beeline workers engaged in various activities indicate that the company is all set to clear the December deadline. Already 70 technicians from the company’s apex in Japan have flown in Bangalore to train the floor employees in the production sector. Training for employing the equipments too is undergoing from these engineers.

Toyota has hired 350 employees to take up the job in the new plant and once the plant gets its final shape additional 1650 employees would be absorbed. If it happens, then it would be the largest manpower plant for Toyota in India. The current manpower strength of Toyota is 3700 with an annual addition of 200-250. According to the Deputy MD of the company, there will be 75% of domestic sourcing for Etios and the net output of 70000 units in 2011 is marked for the domestic market alone. Only in 2012, the product will be exported to markets like Nepal, Bangladesh and Sri Lanka, and other right-hand drive markets. When the volume reaches 200000 there will be localization of engine and transmission.

The company is keen on providing high quality and resale value as vital features for Etios, he added.

To reach the mass quickly, the company is giving a strong base for its dealer network by increasing the number (from 99 to 150) and linking them direct to the company headquarters. There will be a pool of information about the customer registration and the feedback.

In the meantime there is an allocation of Rs500 crore as the buyer’s credit for supplies regarding the expansion. This factory is an exclusive unit for manufacturing the sensational product Etios as the first factory is looking after making Innova [images] (MUV) and Corolla Altis [images] (sedan). These two, along with Qualis, are the hallmarks of Toyota in India and the company is shrewd enough to be devoid of any chances going against it.

It is quite apparent that the domestic market has unleashed a red carpet to the small cars that almost all domestic as well as global companies have staked their claims. VW(Polo [images]), Chevrolet(Beat [images]) and Ford (Figo [images]) are a few to quote. Additions may come from Nissan (Micra [images]) and the proposed small car from Honda. However, the industry analysts like the Vice-President of IDFC-SSKI Securities ( a brokerage firm) feel that the success of Toyota lies heavily on the pricing. This, he said, despite the recall made by Toyota for its 8.4million cars in Europe. He quoted the imminent success of Figo, which carried the competitive price tag- the lowest range is Rs3.5 lakhs.

Bikes at the cost of pro-Nano

The Indian motorcycle premier company Bajaj is reviving its staunch presence in the market with an ensuing launch of high-performance bike. The bike will be a product with the association from KTM and may be sold at the price range of Rs1 lakh it is known. The JV is chalking out many models in the 125cc sector for the European market, to be followed by the Indian market. The Chairman of Bajaj, Rajiv Bajaj is categorical to mention that the prime products would be priced equally at the premium price like Pulsar [images]. If 125cc Bajaj-KTM comes to the market at the price of Rs1lakh +, then it will mean a lot that it doubles the cost of normal 125cc bikes- Rs43000 – Rs46000.

However, the project between these companies for 125cc would go on with Bajaj sparing its Chakan plant for manufacturing. Bajaj’s costliest product as of now is Pulsar 220cc [images] range at Rs70000. Yet, it can not match the costliest bike in the country from Royal Enfield Classic 500 [images] sold at Rs1.47 lakh, coming next is Classic 350 and Yamaha R15 [images].

Bajaj is already steeping its stake in the low budget bikes and the move to join hands with KTM of Australia is to get hold of the expertise of the latter. Bajaj intends to penetrate its presence in the European market through the tie-up with KTM. The Indian two wheeler market focuses on the mileage and power, but Bajaj diverts the attention to the sporty ride. The company seeks to have an edge over others – like Honda Shine [images] and Hero Honda Glamour [images] -by presenting this sporty nature.

Bajaj likes to inject style and sport together targeting the youth. Once the high performance bikes start rolling out in Europe, may be @RS2.3-2.4 lakhs, it may sound whooping cost in the Indian market. However, it is no denying that it is not new for Bajaj to fix such an exorbitant price. Already it is marketing its Kawasaki Ninja 250R [images] in India at Rs2.7 lakhs. The cost is such high because it is derived as a kit to be assembled at Chakkan plant. Bajaj is in the process of manufacturing the KTM developed bikes in India. This is not an end of the journey, but is a part that the JV is looking for the expanded range of engine than 250cc. Such products may roll out during 2014.

As for the routine products, Bajaj targets to sell 100000- 200000 units belonging to the smaller version of engine in India and sub-continent. Bajaj has a high profile distribution network in Asia. The JV between Bajaj and KTM ensured 35.67% stake for Bajaj in KTM Power Sports AG from the subsidiary available in Netherlands(Bajaj Auto International Holding BV). In addition, there will be import of KTM stable ranges sooner.(Bajaj-KTM here by year end)

Diesel engines may come off from Honda and Toyota

The outburst of diesel variants in cars from Maruti and Hyundai has made Honda and Toyota to develop engines. Normally the installation of diesel engine plants involve lot of money but these two companies are in the process. Honda has no diesel variant to any of its line up in India and hence the move is to develop a small engine. Toyota is offering diesel version of its Corolla Altis, to be the first diesel variant from Toyota in India. There is a huge market for diesel version in Europe and there is always a promising scope for diesel cars. Honda is to finalize its position in this regard – time and the model. Toyota gains a lot-90%- from diesel vehicles of SUVs like Innova and Fortuner. The company gives due weightage to gasoline too.

Nissan to offer its Leaf electric for below 30000 euros

Nissan’s initiative in the hybrid car segment has made it to offer the Leaf electric car at a price below 30000 Euros. The car will procure many incentives from the government it is said. LEAF represents Leading, Environmentally Friendly, Affordable is a family car. And this will be Nissan’s present as the world’s first mass-produced electric vehicle bearing zero emission. Nissan will market this car in Portugal and Denmark during December 2010 to be followed in Britain and Ireland in February 2011. The bookings start from July but Nissan will roll out the car in Europe during the end of 2011.

The Blood rivalry in the offing

Not withstanding the ever increasing sale by Hero Honda, the sibling Honda Motor is pinning hope on the launch of 200cc bike. After the launch of Unicorn CB Dazzler, the company is eyeing on the increase of its market share. The company’s better performance in the entry-level segment is a poser to Hero Honda’s domination(64%). Hero Honda increased its share with the launch of CB Twister. HMSI is to counter the likes of Karizma and Karizma ZMR by launching a 200cc bike.

The officials from the Indian camp and the apex body are in the lurch of continuous talks for improving the product line up in India. The CEO of HMSI is quite calculative to mention that opportunities are there to prevail in all segments of motorcycles and scooters, the company may look for particular range. The cost of Hero Honda’s Hunk is Rs57775 and CBZ Xtreme is Rs58550. But Honda’s CB Unicorn is Rs59285 and CB Unicorn Dazzler is Rs62900. Despite the packed range of products from HMSI, Hero Honda is the market leader as HMSI has its extended presence up to 150cc alone. HMSI is assessing a possible a la Karizma and another model during this year. Karizma, 225cc costs Rs78900 and Karizma ZMR coming with fuel injection tech costs Rs98200.

Hero Honda is on the last lap of its presence in Tamil nadu

The country’s top most two wheeler maker, Hero Honda is securing a final lap in the race of erecting a plant in Tamilnadu. The company is now fully geared to take up the challenge from TVS, if the fourth plant materializes. The setting up of this plant may involve Rs1500 crore at a landscape of 100-200 acres. The company is making all out effort to arrive at a complete picture. The move is almost confirmed by the officials of the Tamilnadu government that delegates from Hero Honda visited the state for locating the land. The delegates were offered more than five locations in the SIPCOT belt so that a final deed would materialize in a month.

Tamilnadu has housed the auto MNCs and domestic companies around Sirperumpudur and Oragadam, but Hero Honda is shown other areas like Tuticorin, Tirunelveli and Gummidipoondi it is learnt. Any decision will be taken by Hero Honda and the Tamilnadu government will certainly be courteous in this regard. The government likes to incur a heavy revenue through such plants and always apportion the lands of SIPCOT in districts. Hero Honda is in search of prime lands for expanding its facilities to meet the market demand. The company has a strong base of dealer network- 3500 across the nation- which takes care of sales and service.

In addition there are stockists and exclusive service points. The all perfect manufacturing units are in Haryana and Haridwar. March 2010 saw an increase of 17.35% in sales by selling 414638 units, the best ever in terms of March. The corresponding month of 2009 saw a sale of 353342 units and the cumulative sale of bikes for 2009-10 was 46 lakh units. The sale during the previous fiscal was 37.2 lakhs.

Maruti to announce fresh capacity increase

Maruti Suzuki has found its moment to visualize its facilities delivering more capacities. This is the second such announcement from Maruti within two months. The new expansion will materialize anytime within the year end, said its Chairman. The company’s standard line is 250000 units at an investment of Rs1400-Rs1500crore. The proposed expansion will take place in the company’s Manesar plant at an additional investment of Rs1700crore. Given this move to get shape by 2012, the company believes, the capacity might increase to 550000 units from the existing 300000 units.

Alas, the analysts foresee that this taken into account, the company would face constraints in delivery. The company is facing the difficulty of waiting period for its some vehicles- Swift, Swift Dzire and Eeco having more than 3months. Maruti’s Gurgaon facility is fit for making one million units per year and it might be possible to increase it to 1.20 to release the bottleneck of operations in the shifts. The company is very careful not to repeat the flaw of delaying the delivery, as happened in the case of Tata Nano.

Normally the time required for an expansion of facility is 18-24 months, but Maruti has no deadline for this expansion spree. The expansion will take place till the backlog orders are cleared and after that there will be a new line outside Manesar, he added. Not alone Maruti, but so many car makers are facing this production constraint due to new launches, consumer choices and increase in car sale. The sale in last month was an increased 40% (143976 units) to that of the last month. Maruti is facing two fold problems – completion from other car makers and long waiting period for its vehicles.

Maruti is freed of financial constraints, as its cash reserves is Rs6000 crore. Hence the expansion will be a part of its activities from its own resources, except the initial 100000 units, the Chairman said. Meanwhile there is a talk among the officials of Maruti and Volkswagen(selling Polo and Beetle in India) for an amicable synergies. VW has got stake of 19.9% from Suzuki Motor at Rs11425 crore. However, Maruti has ruled out its sharing of VW facility at Chakan. Hyundai, a silent killer of the car market, is increasing its capacity to meet the demand. Its installed capacity is 600000 units but in 2009-10 it delivered 600639 units from its Chennai plant. From this year the plant will be free from making i20 numbering about 40000 units.

Tata

Tata Motors is swiftly sharpening its wings to cross over the sea to safely land at Mexico and North America. This, the company hopes, will enrich its coffers and consequently there is a dialogue with Mexico based Metalsa SA de CV to avail a contract for manufacturing. If anything desirable materialized, then Tata Motors will ignite its presence with the making of Indica Vista [images], Indigo Manza [images] and Nano. The move follows a visit by the team of officials from Tata to Mexico recently. Tata’s strategy of entering into manufacturing arrangement replicates its entry into the small car segment.

In 2008 the company could secure its entry into South Africa after getting due share from Nissan Motor for an assembly unit there. Mexico’s Metalsa is a subsidiary of Grupo Proeza which manufactures passenger cars and commercial cars. The group is a private corporate involved in the activities of automotive, foundry, juices and fruits, information technology and healthcare. In India, it is Metalsa India Pvt Ltd, doing business of chassis and oil pump with Tata Motors’ trucks of heavy and medium range.

Tata has been waiting for a right occasion to enter into the Latin American region and the move with Metalsa is a fresh lease of hope. Metalsa is present in the regions of Argentina, Australia, Brazil, Canada, Japan, Mexico, the US and the UK. Hence Tata foresees a great penetration into these areas through the rapport with Metalsa. Meanwhile, Tata has asked its vendors and suppliers to explore the creation of bases in Mexico and certain other markets. Tata’s priority is to seek an ideal market for ideal product, and there is nothing new in its approach in this regard, said its spokesman. However, Tata has not fixed any time frame for finalizing this arrangement.

Analysts see the move of Tata as a direction to land on the US market, by taking advantage of North American Free Trade Agreement. This agreement envisages flexible restrictions in terms of tax and duties among the US, Canada, and Mexico. Tata sees the potential of the US as the world’s largest pick-up market and is in the process of launching its Xenon [images] coming on Tata Safari [images] platform along with LCVs like Ace. Tata has been now and then referring to its logical move towards entry into newer geographical areas, of select geographics.

Also in the talks is the presence in the Association of Southeast Asian Nations markets. Already Tata has an arrangement contract with Thornburi Automotive Assembly of Thailand for making pick-ups and vehicles coming under Ace platform. Nano will follow the suit there and in South Africa soon, it is learnt. In addition, Tata will make its presence through Nano in Brazil, Romania, Turkey and certain regions of Eastern Europe. There will be, according to the company, more Nanos in the world market surpassing the domestic market. For this Tata has allocated the facility of Sanand for export market and Pantnagar unit for domestic market.

Tata is doing overseas business in the countries of Europe, Africa, West Asia, South-East Asia, South Asia and South America. Further it is present in the UK, South Korea and Spain under subsidiaries and associate companies.

Hyundai

The clash is vital and crucial for the auto industry after a reverberating recession world wide. This time the clash is between the South Korean car maker Hyundai and the American car giant Ford. Hyundai has seen the nuance to counter Ford’s Figo by devising the diesel variant of i10. Now only Hyundai acknowledges its clash against Ford Figo [images]and Nissan Micra [images], said the company’s MD for India. Of these two, he said, the company is more concerned with the rise of Figo and in addition, it is Maruti’s WagonR [images]. He said it is certain that the diesel variant of i10 will be pitted against these vehicles, but with no time bound process.

Hyundai’s Chennai facility has the capacity of 6 lakh cars per year and from these, the petrol version of i10 is exported to major countries. The company offers Atos, i10 [images], i20 [images], Getz [images](click), Verna(Accent) and Sonata(NF) to the sub-continents. There will be a launch of Santa Fe [images], the mid-size SUV as a CBU, during the last quarter of this year, he added. Apart from these, the company is planning to launch at least one model a year as news about the Sonata YF(sedan), refined i10 and i20 for the Indian market is already in the air. He denied the phasing out of Santro [images], which is doing business of 8000 units a month and there will be an expansion of the current line of models during the early 2011-12, he mentioned.

To meet the potential small car segment, the company is devising a sub-Santro model and the R&D for this is on at Namyang. The company has witnessed the growth of its market share from 20.7% to 20.6% with the export market spread over 120 countries. The sale in the last year was 289863 units and the company is planning to increase the dealer network to 320 from the existing 290. The company is fully aware of the growing rural market- 31% currently with the rate of 5%- for which there will be hub-and-spoke model. Hyundai is making the strategy on the lines of Maruti which has a stronghold in these rural pockets. This year’s target, he said, is to retain or surpass the 10% industry growth. There will be a move to retain 50:50 status of domestic and export market akin to last year, though there will be a stress on domestic market to make the ratio to 57:43. The company likes to play within the capacity and is to wait the increase before going for an expansion, he concluded.

Sanand plant likely to commence production from June

The production of Nano from Sanand facility is getting facelift and by next month the unit may be able to shape the car, said officials from Tata Motors. The formal launch of the production would be made by the company’s chairman Ratan Tata in the presence of the Chief Minister of Gujarat Narendra Modi. It is to be recollected that the Sanand facility is on the trial production from December 2009 with the number of units to be increased from the current 100-120 to 200. Already the plant has finished designing 4000 cars and they are ready for roll out, said an unofficial vendor to Tata Motors.

Sanand was the replacement for Tata Motors after it had to migrate from Singur due to opposition from the local people. Tata Motors is on the process of delivering Nano to the first 1 lakh bookings of which 30000 units have been delivered so far. Remaining bookings, it is hoped by the company, would be cleared by this year end. Tata’s Pantnagar plant is making around 200 Nanos a day and there has been a pressure to expedite the delivery on the reason of several bookings are being cancelled because of long wait.

However, Tata’s performance in passenger car is excellent with the growth of 70% in April 2010(sale of 24902 units). The split up figure of cars is – 23102 units of Tata of which 3525 are Nano [images], 9036 are Indica [images], 7201 are Indigo [images] and 3340 are Sumo [images]/ Safari [images]. In all means, Nano has made an opening to the cheapest car concept to the other companies- Hyundai to come out with a compact car at Rs2lakhs, while Bajaj is in the small car process in a tie-up with Nissan and Renault.