Come April 1, prices of cars from Fiat, GM, Tata and Hyundai to increase

The Euro IV norms set by the government of India has hit the reversal of fortune for the car buyers that the major car makers going for the price rise. These companies claim the rise in price on the grounds of upgrading the quality. GM’s cars barring Chevrolet Beat and Spark, will see the rise to Rs6000, said its VP. He justified the rise on the basis of excise duty hike imposed in the budget. The hike, second time after the budget, is necessitated by the companies due to the emission norms.

It is to be remembered that 13 major cities in India will undergo the shift of emission norm from BS III to BS IV while the other locations will move to BSIII from BSII. Hyundai’s hike will be in the range of Rs4000-Rs5000 once the BS IV comes into effect, said its RSM. Tata and M&M too on the list of price hike but the quantum of hike is to be yet known. Fiat India, Mercedes-Benz and Toyota too have the price rise in the list but wait for the implementation of the BS IV norms. SIAM claims that 1.22 million cars have been sold in the country during the period of April-2009- January 2010. This reveals the growth of 25% than the one achieved in 2008.

Toyota afoot on its quality drive in India

The recall of some of its cars has nothing to do its business in India for Toyota, said its MD. The incident gave a good chance to revive the quality to do better, he added. The move comes in the lines of the launch of its small car Estilo, which is expected to drag more business for Toyota in the coming days. The company is eying on a decent share in the market by 2015. There will be fool proof test for the quality and nothing will be left over, he asserted.

Toyota was fortunate to gain from the recall, since India gave a red carpet to the small cars from the company. The company is on the verge of aggressive penetration in the small car industry. This is best reflected with the move of Eltios in India and the rest of the world. Toyota Q, as it is termed, is set for the potential customers, especially the youth. 60% of Toyota’s cars are on the chauffeur-driven models –Innova, Altis, Camry and Fortuner.

But the Etios is certain to make a wave among the youth, due to its much space and style. Further plans are there to pull more crowd through the small cars in the lines of Daihatsu. Etios is exclusively targeted at the Indian customers despite delayed arrival. The MD was confident of succeeding with this Etios, in the similar strategy of IMV Program in Thailand. He personally expressed that he would concentrate more on this Etios on par with IMV. The JV Toyota-Kirloskar is keen on focusing more on exporting cars made in India. Simultaneously, assembling units in overseas will also be on the process.

Hero Honda

Courtesy Karnataka Government, Hero Honda will set up its new plant in the Dharwad district in the land of 500 acres. The initial capacity of the plant will be 1 lakh units employed by 1000 persons. This is in addition to the speculation that the Korean steel maker Posco would stall its plant in the state at an investment of Rs32000 crore. TVS is also in the picture of negotiations for an engineering manufacturing unit in the state of Karnataka.

Bajaj Auto to use Pantnagar, Waluj plants for expansion

Bajaj auto has earmarked Walui and Pantnagar units for its future expansion activities. The combined capacity of these two units would be nearly 2.8 million units while the Chakan unit has the capacity of 1.2 million. The target for the company to attain in 2011-12 would be around 5 million units put together from these units at 1.2 million from Chakan unit, 2.3 million from Walui and 1.5 million from Pantnagar unit. Chakan plant is deemed to be the product laboratory for Bajaj and the unit is responsible for premium brands like KTM and Kawasaki range. Walui looks after the three wheelers and other bikes and Pantnagar is an exclusive unit for bikes.

The target for the two wheelers is set as 4 million units in 2010-11 out of which bikes will constitute 3.6 million and 400000 units of three wheelers. For 2011-12 bikes will constitute the major chunk again- close 4.5 million units and 500000 units of three wheeler units. For the next fiscal the export target will be over a million vehicles in the event of attaining the production of 4 million. The export target for the year 2011-12 will be 1.4 million units out of 5 million units. Bajaj will capitalize on the JV with KTM of Austria and Kawasaki of Japan. There will be the continuation of twin brand strategy –Pulsar and Discover- for this fiscal. Both these brands brought some good business to Bajaj and the feat is expected in the years to come too along with KTM and Kawasaki. Boxer too is doing good for Bajaj, which is made in China and exported to Africa. The increase in the three wheeler business will see the growth of RE brand.

Ford Volvo car unit sold for $1.8 bn to China Geely

In an informal decision, the Chinese Geely Holding group has accepted to take over the car unit from Volvo of Ford. Once materializes, this will be the biggest global deal in the automobile industry. The deal, almost to be certain, is the outcome of two years’ prolonged discussion with two companies. The Chinese company would make the global impact for which it has been toiling for.

Ford will sure to benefit out of this deal financially, that it can now focus more on its brands. Ford chose the core company of Geely Automobile Holdings(0175.HK) as the most reliable company to close the deal. Ford has been receiving the dead end loss out of this Swedish brand and Geely will concentrate on the brand and operations in Sweden.

In the meantime the Chairman of Geely had a plan to set up a factory to accommodate 300000 Volvo cars making or the equivalent of the Chinese market needs. In 2009 China pushed the US behind in the tussle over the top class auto making country. The net sale hiked to 13.5million units @46%. With the lack of technology the Chinese car makers are exploring the entry to the Western markets. This deal with Ford comes as a timely gesture for Geely to get recognized in the global market.

BMW

The German automobile company BMW is on the business of sourcing the components – gears, assembly parts and castings – from India. There is a move to source the parts for its cars from India and it will materialize in two years. For this purpose, the company will unveil a purchase office in India, said the board member. But the exact volume of sourcing is not available amidst the figures dealt by Fiat, Ford, VW and GM making components sourcing for $1 billion (Rs4600 crore).

BMW made this move to reckon the finance control in the wake of cost and the dip in demand in 2009. The sale figure for BMW cars was down by 10.4% and 14.1% in motorcycles. The net profit too fell down to $210 Euro indicating 36.4% fall than 2008. Having sensed the quality of engine components in India, the member said, BMW is keen on sourcing parts for its cars and the ones for the manufacture of small car in 2014. This is in line with other giants like Fiat, GM, Toyota and VW.

The report from the Automotive Component Manufacturers Association of India indicates that the Indian component would get sourcing of nearly 50% of its business from the exports within 2016. This is possible due to the advanced R&D, and the quality components from the makers in India. The existing turnover of the component business in the country is around $20 billion which is expected to double ($40billion) in another 5 years.

Hero Honda to gear up its target to 5.6 million for 2010-11

The race among the two wheeler makers is getting hotter with Hero Honda setting the target of 5.6 million bikes for the ensuing FY. Earlier Bajaj announced its target of 3 million bikes for this fiscal. If the target is any way new, then it will be an increase of 15% in Hero Honda’s sale volume. In another 12-18 months, there will be 13 new products from Hero Honda- 4new products with 4 major variants and 5 minor variants.

The company’s focus, however, would be on the scooter segment and the premium motorcycle region. By this the company wants to regain its position as the country’s largest two wheeler company. But such information are not confirmed by the company except that the related matters would be let known at appropriate time. Hero Honda’s practice is that it launches one new product a year and the current information about 4 new products in a single stroke indicates that the company is largely concerned with the tough competition.

Bajaj too is aggressive amidst the frequent threats from Honda and Yamaha. In all these speculations, it is to be seen how Hero Honda is meaning its target and the question lies over its strategy to achieve its target. Hero Honda has to take into account the cost factors involving material, interest and above all the competitor’s pricing. The company is eyeing on the tapping of rural pockets, but the mass market is something frightening.

Nissan may set up new plant for small car

Nissan’s low cost car (Rs2.5 lakh) may roll off from the plant in India by way of a JV, said the CEO of Nissan. To counter Maruti Alto, the company intends to push up huge volumes, since the cost may attract more customers. The proposed JV may include the Hinduja group’s Ashok Leyland for such LCVs. Other possible companies for the JV are yet under consideration, he added.

Nissan is doing its business in India with more than one partners in its JVs. Its own product Micra is ready for launch in July to come off from the Chennai plant. The partner for the Chennai plant is Renault but the marketing of the cars will be through Hover Automotive India. Nissan is on the tri-JV with Renault and Bajaj for a small car project.

The proposed entry level car will lie between ULC and Micra, and will have a new manufacturing facility to meet the large demand. The plant, in all possibilities, may not be located in Chennai he affirmed. The options are varied for the company for the location. The Chennai facility has the production capacity of 4 million units per year and is shared by both Nissan and Renault for their own products, in addition to the JV.

The Chennai facility will be utilized by Nissan for its Micra, a new sedan to come off in 2011, a multi-purpose vehicle and another new one. To sustain the dealer network for marketing the cars, Hover is expanding its activity to 80 by 2013 for dealing at least 9 models, which might include 4 imported brands.

The pact will be finalized among Renault- Nissan and Bajaj for ULC

Keeping apart all debacles and delays, the trio- Nissan, Renault and Bajaj- have come to a resolve to make the JV for ULC on black and white. The ultra low cost car project gets shape after a 4 month disruptions. Under the pact, as quoted by Nissan’s CEO, Renault-Nissan will look after the sale and marketing of the car which will be designed and manufactured by Bajaj.

The car will be officially launched in 2012 and the trio JV has finalized the proposals suiting the Indian market. if comes to effect, then the proposal will be a fruit of excellence for Bajaj’s two year toil for this small car. The car would be deemed as the cheapest in terms of running cost and it was supposed to have reached the market in 2011. The delay was due to the misunderstanding among the partners regarding the allocation of project. Renault proposed the price of the car to $2500.

The MoU among these companies vindicate that Bajaj would be eligible to hold 50% in the JV for developing the car and Renault-Nissan each would share 25%. The proposed ULC will take off from the Chakan plant at the initial and annual capacity of 4 lakh units. Recently Nissan opened its tenth dealer in addition to its projection of 82 outlets by 2013 to deal its 1 lakh cars a year.

M&M may slam brakes on investments in Renault JV

The Logan issue is getting a soft pedaling with JV between Renault and M&M is forging ahead to alter the petrol engine. The move comes in the wake of availing the excise relief offered by the government of India. However, the current diesel engine would likely to be continued. If the tussle is cleared then the issues related to the design and the cost of the car would be sorted out. Sources close to M&M indicate that the company is not much bothered about the car deal but it is concerned with the 30000 owners of Logan.

The JV could sell 500 units of Logan a month against 20000 units of utility vehicles. M&M wants to boss over with issues like engineering decision which Renault is hesitant to shed off. The JV between these two companies are restricted to Logan only and the initial sale from 2007 (2000 units a month) has come down to the current 500 units. The net sales during the period of April – February 2010 was 4981 units, a dip of 60%. The dealers are in a delicate situation over the dispute with these two companies.