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AUTO NEWS BULLETIN
Weekly News reports from January 14 – January 20, 2005
MURAD BAIG ASSOCIATES
R-8 Hauz Khas New Delhi - 110016
SIAM report on sales of automobiles April - December 2004
Cat. Segment/ April –Dec April- Dec % Exports Export
sub segment 2003 2004 change Apr-Dec growth
04 %
1.Passenger Vehicles
(PVs)
Passenger Cars 484,019 590,610 22.0 121,478 40.0
Utility vehicles –
up to 3.5 tonnes 100,636 125,800 25.0 3,026 33.83
MPVs – up to 5 tonnes 42,687 47,638 11.6 856 29.5
Total pass vehicles 627,342 764,048 21.8 125,360 39.8
II. Commercial Vehicles
(CVs) M&HCVs
Passenger Carriers 7.5 –
16.2 tonnes 17,373 17,346 -0.2 2,970 21.2
Goods Carriers 12 – 35.2
tonnes 92,035 120,854 31.3 5,700 105.4
Total M&HCVs…….. 109,408 138,200 26.3 8,670 65.9
LCVs
Passenger Carriers – 5 –
7.5 tonnes 13,406 14,207 5.9 1,118 -7.9
Goods Carriers – 3.5 – 7.5
tonnes 55,096 70,896 28.7 10,143 105.2
Total LCVs. 68,502 85,103 24.2 11,261 82.9
Total II Commercial
Vehicles (CVs) 177,910 223,303 25.5 19,931 75.1
III. Three Wheelers
Passenger Carrier – 1 – 1.5
tonnes 127,788 127,319 -0.4 50,667 -3.8
Goods Carrier – 1 tonne 75,223 94,857 26.1 868 16.0
Total.. 203,011 222,176 9.44 51,535 -3.6
4. Two wheelers
Motor cycles/Step-Thrus 3,082,841 3,666,973 18.9 189,194 40.6
Scooter/scooterette 660,255 711,003 7.7 44,832 29.3
Mopeds 225,483 235,460 4.4 22,739 26.8
Total 2-wheelers 3,968,579 4,613,436 16.2 256,765 37.2
Total vehicles… 4,976,842 5,822,963 17.0 453,591 32.8
Analysis: The charge of India’s auto industry continues. During the nine months of the current financial
year the sales of all sectors has been impressive. Commercial vehicles led the charge with 26% growth
though it was the goods vehicles that actually drove the growth. Actually this growth rate is higher
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because India is now producing a higher ratio of multi-axle vehicles and vehicles with bigger engines.
This seems to reflect not only the health of the economy but the impact of better highways.
Passenger vehicles are also doing well and UV’s and MPV’s now account for 23% of domestic sales. At
this rate, the sales for the full year should exceed 1.1 million units. Two-wheelers seem to have recovered
their velocity and should exceed 6.25 million units during the year.
Perhaps most impressive has been the rapid growth of exports that now accounts for 16% of passenger
vehicles, 8.5% of commercial vehicles and 6% of 2-wheeler sales.
Domestic News
January 14
Maruti Udyog is exploring the possibility of setting up a gearbox plant in India. The automobile major
has already chalked out Rs 6,000-crore investments over the next two-three years in setting up a new
plant with 2.5 lakh capacity of cars per annum and a diesel engine plant producing 3 lakh units. The
company is focusing on working on the fourth plant for which the Haryana government approved 100
acres of land last week. The company is keen on expanding its presence in the diesel vehicle segment,
which is now growing at 20%. The company is planning to introduce the Swift hatchback model in the
second half of this year.
CV sales figures not in sync with tyre firm numbers. The growth in truck tyres sales has come to a
screeching halt despite a 20% plus growth in the domestic off take of new trucks. Commercial vehicle
tyres account for over 70% of the tyre industry sales revenue and an even greater proportion of industry’s
profitability. The domestic sale of medium and heavy truck declined 9% to 7.37 lakh units during
November after a flat growth in October this year. The over all sales of commercial vehicle tyres declined
5% despite a 8% jump in the sales of tyres for light commercial vehicles. The production of CV tyres
though went up marginally by over 3% during the month, thanks to 36% jump in exports. Tyre makers
attribute this to a lower off take of tyres in the aftermarket and a deliberate strategy by them to grow the
export market at the expense of domestic sales. Since price realisations are now better in exports. Total
domestic sales grew 5% to 4.6 million units while exports tyre exports jumped by 50% to cross half a
million units. In fact, exports saved blushes for almost all the segments. While sales of passenger car tyres
inched up by 3%, exports doubled during the month compared to November 2003. Scooter tyres segment
exports doubled while domestic sales grew 22%.
Reva is all set to enter the Japanese market. It will be exported to Japan as an eco-friendly product. The
Japanese government has agreed to provide a subsidy of $2,600 for each car. The three models to be sold
there will be priced between $12,000 and $13,500. Reva Electric has appointed Takeoka Autocraft as its
distributor to market the Reva in select Japanese cities. The vehicle is a two-door hatchback. It can seat
two adults in front and two children at the back. It uses 9 units of electricity for a single full charge that
gives a mileage of 80 kilometres in city driving conditions.
Volkswagen said it would see improved financial results in 2005 and then a clear rise in performance in
2006. The company said it was on track to hit all targets in its “ForMotion” efficiency drive. The
company further expects a weakness in the dollar this year but its currency-hedging programme would
remain about the same as in 2004. Volkswagen said it expected a negligible impact on VW’s financial
results from high raw materials prices in 2005. Volkswagen said its goal through cost cutting program is
to sale 3.1 billion euros in 2005.
Skoda Auto announced it would soon start exporting cars to South Asian countries. The company plans to
export Octavia model to the South Asian countries in first half of 2005. To cope with increased demands
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and future plans the company is planning to double the present capacity from 15,000 vehicles annually.
The company would be launching two new models this year. Both Fabia and Octavia II are expected to
hit the Indian roads in the second half of this year. The company targets to sell 13,200 units this year.
January 15
GM India has deferred the launch of its mini-car, the Chevy Spark, which was scheduled to be rolled out
from Daewoo’s factory at Surajpur this year. The company said there are certain other issues to be sorted
out before the unit can be put into operation. Once the Surajpur plant is in GM’s custody, it could take 12
months to get the paint shop ready. Hence, the launching of Spark is not possible this year. GM has also
taken a decision to scale down the production of the Opel Corsa to 8,000 units this year. The focus will be
more on the Chevrolet Brand of cars.
Toyota Kirloskar has launched a limited edition of the Corolla. The company plans to sell 250 units of the
limited edition. The vehicle will be available in an enigmatic dark red mica metallic colour. All the
limited vehicles would come with additional features like anti-locking braking system, hood insulator and
headlamp levelling switch.
Toyota is withdrawing its popular multi-utility vehicle Quailis from the Indian market, making way for
the new mini-van Innova. The vehicle, powered by a two-litre petrol and a 2.5 litre diesel engine is
estimated to be priced in the Rs 7-9 lakh range.
January 16
Ambassador’s reign as the predominant government car has now come under threat with the DGS&D
approving Maruti Esteem as an official staff car in the non-air-conditioned category. HM’s Ambassador
had a competitor only in the AC segment. Maruti announced it would produce the Esteem Standard
variant exclusively for the government at a negotiated ex-factory contract price of Rs 3.08 lakh.
Ford India will soon move into the third shift of production at its Chennai unit. With the addition of a new
shift, production would go up to 1,00,000 units per annum, from around 60,000, at present. The new shift
is likely to go on stream from the second half of the year, when the company would launch a new model.
Ford would launch a new variant of its sedan, Modeo, late this month or early next month, which would
be priced at Rs 12-14 lakh.
January 17
Tata Motors has bagged an US$ 18 million order to supply buses to Senegal. The export order of 350
buses has been sanctioned by the Finance Ministry through EXIM bank under New Partnership for
African Development. The first shipment of buses will take place in first week of next month. Meanwhile,
Tata Motors has also bagged an order for supply of 1,070 bus chasis from various state transport
corporations in Karnataka. The company will supply Euro-II bus chasis to government agencies in the
State, which is one of the largest consumers of its products.
January 19
Bajaj Auto reported weaker-than-expected quarterly profits as higher raw material prices offset better
sales in the world's largest market after China. Bajaj said its net profit rose to Rs 182 crore in its third
quarter at end December from Rs 180 crore a year earlier. Bajaj increased motorbike sales by 63.5 per
cent in Oct-Dec to 441,355 units, but sales of motorised rickshaws fell 22.1 per cent and scooter sales
dropped 43.2 per cent. Total vehicle sales rose 32.8 per cent to 526,983 units. Bajaj shares were trading
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down 3.8 per cent at Rs 1,043.10 in a firm Bombay market. The stock has gained 5.4 per cent since
October, under-performing the benchmark index's 11.2 per cent rise.
The recently launched 'TVS Star' motorcycle is expected to bring in high volumes and the company will
be targeting 30-35 per cent market share in the economy segment in Tamil Nadu. Mainly targetted at rural
population and positioned against Honda CD-Dawn and Bajaj Boxer, this new motorcycle is expected to
bring in high volumes in the economy segment. The economy segment, which was not growing in the
past, recorded a growth of 30 per cent last year, with the launch of Bajaj Boxer. TVS Star is expected to
propel more growth in this segment this year.
Hero Honda is likely to sell around 230,000 motorcycles in January, the company said, a growth of 17.35
percent year on year. The company’s executive director said it would be selling 220,000 units in February
and is unable to sell due to capacity constraints. The company would soon announce its decision on the
location of the third manufacturing plant to meet the surge in volumes.
January 20
TVS Motor is setting up a plant in the North. It is in talks with the Uttaranchal government to set up a
plant in the state. This will be TVS Motor’s third plant. Its two existing production facilities are located at
Mysore and Hosur in Karnataka. The company’s chairman said that the discussions were at an inchoate
stage and it was too early to talk of the capacity planned and the investments involved.
Maruti Udyog has become the first automobile company in India to acquire a mega-risk policy that
enables corporates to access international market through domestic insurers. Corporates can save on
insurance costs by taking advantage of the international markets when rates are soft through this policy.
The premium on the risk is around Rs 5.5 crore. IFFCO Tokio General is the lead insurer along with New
India Assurance, National Insurance & Bajaj Allianz General. The IRDA had allowed only large risks
where the sum insured was over Rs 10,000 crore to buy insurance on terms granted by international
reinsurers. Corporates with a maximum probable loss of Rs 1,084 crore were also allowed to go to the
international market. Maruti has qualified under the maximum probable loss since most of the production
facilities were concentrated in one area.
International News
January 14
Volvo said it has shipped 150 heavy duty trucks, built at its India plant, to Korea in the last six months.
This is the unit's first major export outside the south Asian region. The Volvo plant at Hoskote, about 45
km from here, has a capacity to produce 1,200 vehicles adding the vehicles have 40 per cent local
components while the rest is sourced from Volvo's European plants. "We are delivering the trucks from
India to our customers who will get the same global product at a competitive price. Our sales have grown
nearly 80 per cent over 2003 when we registered a revenue of Rs 356 crore," Volvo India Managing
Director Ulf Nordqvist said.
GM said it expects earnings this year to fall due to lower profits at its financial services unit and a $1
billion rise in health-care costs. The company, with finance and lending operations that will take a hit
from higher US interest rates, also pushed back a longer-term profit target. GM, also hurt by high US
sales incentives and an aging lineup of pickups and sport utility vehicles, said it expects 2005 earnings to
drop to between $4 and $5 a share, excluding any one-time items. Meanwhile, earnings from GM's core
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North American automotive operations are targeted at $500 million this year, less than what GM expects
to earn from the Asia Pacific region which includes its fast-growing operations in China.
January 20
GM has reported a 37 percent drop in fourth-quarter earnings, including $220m pre-tax write-off of the
remaining value of its 10 percent stake in Fiat Auto. The company’s fourth-quarter earnings fell to $630m
or $1.11 a share, from $1bn, or $2.13 a share, a year earlier. Revenues rose by 4.7 percent to $51.2bn. For
2004 as a whole, earnings dipped to $3.7bn from $3.8bn in 2003.besides the Fiat write-off, equal to
$136m after tax, GM also took a $383m after-tax asset impairment charge and a $78m charge relating to
the closure of two US assembly plants. These charges were offset by favourable tax adjustments totalling
%540m, as well as a $118m again from the sale of shares.
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