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AUTO NEWS BULLETIN
Weekly News reports from March 11 – March 17, 2005
MURAD BAIG ASSOCIATES
R-8 Hauz Khas New Delhi – 110016.
SIAM report on domestic sales for the month of February 2005
Category Apr -Feb Apr – Feb % MS % Change Apr – Feb
03-04 04-05 Exports
Passenger Vehicles (PVs)
Maruti Udyog 320,414 373,359 51.2 16.5 43,873
Tata Motors 97,058 129,187 17.7 33.1 6,472
Hyundai Motor India 115,731 125,565 17.2 8.5 74,739
Honda Siel Cars India 17,576 30,831 4.2 75.4 165
Ford India 17,978 21,897 3.0 21.8 20,727
General Motors India 15,222 14,042 2.0 -7.5 0
Hindustan Motors 13,014 13,272 1.8 2.0 17
Toyota Kirloskar Motor 9,619 9,405 1.3 -2.2 0
Skoda Auto India 2,911 5,261 0.7 80.7 0
Fiat India 9,724 5,164 0.7 -47.0 0
DaimlerChrysler India 1,458 1,242 0.2 -14.8 0
Total PVs… 620,705 729,225 100.0 17.5 145,993
Utility Vehicles (UVs)
Mahindra & Mahindra 62,210 71,701 46.1 15.2 1,315
Toyota Kirloskar Motor 28,526 28,208 18.1 -1.1 8
Tata Motors 27,897 29,894 19.2 7.1 1,350
General Motor India 160 11,614 10.6 7158.7 0
Bajaj Tempo 5,867 5,765 3.7 -1.7 12
Maruti Udyog 2,648 4,286 2.7 61.8 77
Ford India 503 2,124 1.3 322.3 0
Honda Siel Cars India 874 1,326 0.8 51.7 0
Hyundai Motor India 284 266 0.1 -6.3 0
Hindustan Motors 813 296 0.2 -63.6 0
Total UVs … 129,782 155,480 100.0 19.8 2,762
Multi Purpose Vehicles (MPVs)
Maruti Udyog 53,467 59,064 99.9 10.5 1,012
Mahindra & Mahindra 15 13 0.1 -13.3 47
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Total MPVs … 53,482 59,077 100.0 10.5 1,059
Motorcycles
Hero Honda 1,845,344 2,333,557 51.5 26.4 56,250
Bajaj 884,483 1,226,433 27.1 38.6 106,605
TVS 623,417 581,458 12.8 -6.7 33,804
Yamaha 212,728 200,314 4.4 -5.8 35,036
LM L 154,710 69,832 1.5 -54.9 5,594
Kinetic 47,932 37,468 1.0 -21.8 2,051
Honda MSI 0 49,998 1.1 inf 18
Royal Enfield 24,661 25,087 0.5 1.7 1,205
Majestic 8,061 4,018 0.1 -50.1 300
Total Motorcycles… 3,801,336 4,528,165 100.0 19.1 240,863
Analysis: While the general growth rates in the auto industry are generally very encouraging there are
wide discrepancies between the vehicle makers with several winners and many losers. Utility vehicle
growth rates are faster than passenger cars despite virtually no supply in Feb.
Domestic News
March 11
Honda Siel Cars (HSCI) is set to expand production capacity this year to sustain its impressive growth in
the premium and luxury car segment. It said the capacity would be increased to 50,000 units per year
from 30,000 units currently at its Surajpur plant, to roll out more units of its three premium models – New
city, Accord and the CR-V. It has invested Rs. 5.5 billion ($126 million) in its Indian operations so far.
The production capacity is being increased to reduce the waiting period of the New City.
GM has unveiled the new look Opel Corsa and said it is working on several programmes to introduce
more special editions of its cars in 2005 to boost sales. The new Opel has been introduced across all the
Corsa variants with prices ranging from Rs 4,47,468 for Corsa Sail to Rs 5,60,924 for Corsa 1.6 GLS.
Skoda Auto has introduced automatic gear in its Skoda Octavia Rider model to push its sales. The model
comes with four speed automatic transmission with mini dot display on the instrument cluster informing
the driver about the gear status while driving. The new Rider would be available in four colours and
priced at Rs11.92 lakh.
Reva is expecting to break-even in 2005-06. It hopes to be worth Rs 150 crore by the end of the 2006-07
fiscal. It is also planning to launch Reva in more Indian cities. Reva Electric Car Company (RECC) is in
the process of test marketing Reva in the US, Japan, Sri Lanka, Cyprus, Norway and Switzerland. Exports
to these countries will start by end 2005. It also plans to produce 1,500 cars in 2005-06 and 5000 cars in
’06-07, exporting around 30-40 percent of production. RECC said it has also developed India’s first fuel
car that is expected to be commercialized by 2010.
March 12
LML has said it will raise capital from overseas by issuing Foreign Currency Convertible Bonds (FCCB)
of up to Rs 250 crore. The shareholders in an EGM have approved the issuance of FCCBs of up to Rs 250
crore and that of 45 lakh equity shares on preferential basis to the Mauritius-based Morrington
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Investments Ltd. The EGM also approved issue 20 lakh equity shares and 0.001 per cent non-cumulative,
non-convertible redeemable preference shares up to Rs 125 crore to the existing lenders. The shareholders
have approved to issue 27 lakh warrants to Mauritius-based Waterloo Investments Ltd, it said. The
company also gave its nod to the increase in authorized capital from Rs 60 crore to Rs 250 crore divided
into equity capital of Rs 100 crore and 0.001 per cent non-cumulative non-convertible redeemable
preference share capital of Rs 150 crore. The company has also agreed to increase its borrowing limit
from Rs 500 crore to Rs 750 crore and the limit to create Mortgage/Charge from Rs 500 crore to Rs 750
crore.
March 13
Automobile sales are expected to touch 83.1 lakh units in FY06, as rising incomes put spending power in
the hands of a whole new band of potential owners. The passenger vehicle segment is expected to grow at
16% to 10.4 lakh units in FY05, while commercial vehicle sales are likely to grow by 6-8% to 2.8 lakh
units. Two-wheeler sales may slow down marginally and grow by 10% to 59 lakh units, while three-
wheeler sales may reach 2.9 lakh units. Manufacturers are responding with an even wider range of models
and variants, and have lifted their marketing efforts. The market size is growing at about 15% a year.
Despite strong topline growth, automobile majors, especially two-wheelers, witnessed steep pressure on
operating margins.
March 14
Ford’s Premier Automotive Group (PAG) has decided to drive the Jaguar brand in India. The vehicle will
cost over Rs 1 crore in the domestic market. Ford is in the process of identifying the select dealers for the
Jaguar. The car is expected to be commercially available by the second half of this year.
March 15
M&M is to launch its Scorpio SUV in Oman through Towell Auto Centre, it said. The Scorpio model in
Muscat would be equipped with a Renault gasoline engine. The Scorpio fitted with a diesel engine would
also be available for the first time in Oman. Initially, the SUV would be available at three major outlets
and would gradually be on sale across all 12 outlets in the country.
The Firodias-run Bajaj Tempo said it would go ahead with steps to rechristen itself as 'Force Motors'
making it clear that it was not contemplating offloading its holding in the two-wheeler major. It also made
clear that it has no plans to invite its German technical collaborator MAN Nutzfahrzeuge as an equity
partner. Bajaj Auto CMD Rahul Bajaj has openly hit out at the Firodias for proposing Force Motors as the
new name, emphasizing that the word 'Bajaj' cannot be dropped and would be opposed. The Firodias also
made clear that they are in no mood to offload their equity.
March 16
Bajaj Auto’s demerger plans to spin off investment arm Bajaj Finance from its surplus funds, may alter
the nature of its stake holding in the insurance businesses as well. The idea is to make the investment
company a financial powerhouse and that will involve taking a call on whether Bajaj Auto or the new
company will own the insurance business. The basic demerger plan is to transfer a substantial amount
(around Rs 2,000 crore) to the finance company. The finance company is also likely to combine the Rs
200-crore surplus funds of Maharashtra Scooters. It also said that it would raise prices of all its vehicles
by 1-2 per cent on account of higher steel costs and new emission norms.
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Maruti Udyog is planning an increase in car prices from April 1 on the back of hike in steel prices
following this year's budget proposals. The proposed raise would be in addition to new pricing announced
by the company for switching its cars to Euro III emission norms in 11 cities and to Euro II in other parts
of the country as per the new auto fuel policy. It said that there has been a sharp increase in steel prices
and the company needs to cover additional costs through higher prices and the quantum of increase would
be decided soon.
March 17
M&M said it would raise prices of some of its models from April because of new emission norms and
high steel prices. Prices of auto grade cold rolled coils is expected to see a Rs 4,000 to Rs 4,500 per tonne
price hike, taking prices of this grade of steel to around Rs 43,000 per tonne. This is due to the rise in hot
rolled coil prices, which is expected to increase by around Rs 3,000 to Rs 3,500 per tonne. International
benchmark prices of iron ore have been hiked by 72% after Brazilian iron ore major CVRD negotiated
iron ore prices with Japanese steel companies at a rate 72% higher than previous years’ prices. Steel
manufacturers had last raised prices of their products in the first week of January, in the range of Rs 500
to Rs 700 per tonne on hot rolled coils. However, the hike expected in steel the first week of April will be
the highest ever.
International News
March 11
Nissan Motor has announced that it is almost tripling planned investments in its Thai subsidiary over the
next three years to 29 billion baht (USD752 million) from THB10 billion. The additional cash will be
used to lift production capacity and strengthen its presence in Thailand.
Volkswagen AG will assemble the new Passat in Malaysia with Proton starting at the end of this year.
The forthcoming subcompact Fox model will follow in 2006.
March 13
The rising US gasoline prices are hurting sales of large SUVs and pick-up trucks. The full-sized SUV
segment lost 1.2 percentage points of US market share over the last two months and large pickups were
down about 2 percentage points. Large SUVs and full-sized pick-up trucks account for close to 80% of
North American automotive profits for Ford Motor and General Motors. The average price American
drivers pay for a gallon of regular gasoline is currently just over $2 (equivalent to Rs. 23 per liter),
according to the AAA motor club. The price may shoot to $2.15 a gallon this spring, according to the US
Energy Information Administration. The higher prices have already hit GM’s mix of vehicles in the
market, punishing it by $1 per share due to fewer sales of large trucks and SUVs. Ford is also being
penalized 15 cents per share due to a similar decline in the segment. Hurt by weaker sales, both Ford and
GM had raised cash rebates this month on slow-selling models to cut inventories of unsold vehicles.
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