Terror-breaker for cars

Auto Cos And Real Estate Firms Are Hoping For Lower Interest Rates But Mumbai Attack Means More Trouble For Them

New Delhi: As Mumbai is the second-biggest car market in India after Delhi, the terror attacks have dampened the hope of any revival of car sales, which have been witnessing a slowdown. “There will certainly be a drop in sale in Mumbai as people will not venture out for buying cars,” Pawan Goenka, president of automotive sector at Mahindra & Mahindra, told TOI. He said companies who were relying on the Mumbai market for boosting sales in the normally-sluggish year-end period would see a significant negative impact. 
    “It will be certainly slower than what it is in November. And going forward, December is never a big month for auto sales,” he said. 
    P Balendran, V-P for General Motors, also said that sales would be impacted in Mumbai. “The sentiment was already down for car sales. Now whatever little was to happen would also be hit,” Balendran said. 
    With Diwali and other festivals falling in October, November was in any case expected to be a weak month. December is always slow for auto sales as people prefer to buy new vehicles in the new year as it slightly increases the re-sale value. 
    A senior official with Honda said the company’s sales in Mumbai would be definitely impacted. “Mumbai is a very important city for us and the sentiment has certainly run low after the terror attacks. Thus sales would be affected,” the official said. 
    For Honda, attacks mean a blow to business as company has just started deliveries of its new City model. Shekar Viswanathan, wholetime director at Toyota Kirloskar, also said that the business confidence would remain low for some time. “The sentiment has nosedived following these attacks and sale prospects remain low for the next three months, particularly in Maharashtra and Gujarat,” Viswanathan said. Low sentiment would even offset any gains that would have come when the interest rates on car financing came down, he added.

Source: The Times of India dated 28th November 2008

Fiat-Tata Motors combo gets Linea rolling

Adil Jal Darukhanawala(The author is editor-in-chief, Times ZigWheels. For more information, log on to http://www.zigwheels.com)

The new Linea will be the first all new Fiat model to be launched in India in seven years! It will come powered by either the famed 1248cc 16-valve multijet diesel (already powering the Tata Indica Vista) or the 1368cc, 16-valve FIRE petrol engine. Three trim versions would be on offer from day one and the Linea is expected to be launched nationally in mid-December.

November 21 marked a milestone in the history of Italian car maker Fiat for two very significant reasons. To most, it was the day for the new Linea to roll off the spanking new assembly line at Fiat's Ranjangaon plant near Pune. But it was the second reason which was of far greater import. The day marked probably the third start for the Italian car maker in India in the last decade-anda-half and possibly the last chance it has to carve out a foothold in this country.
Going by what it has done since 2006, with its JV partner Tata Motors, Fiat could mark out its latest attempt as third time lucky. It is a complete reversal of the way Fiat has gone into the business this time around. No half measures in any way marks out the Italian giant's commitment to India: A modern high tech green field unit capable of making 200,000 cars per annum (present installed capacity being 1,35,000 units though) along with an adjoining facility to manufacture 300,000 drivetrains (engine plus transmission) per annum. And very importantly all new models should keep the product range fresh and appealing, a very critical thing this in today's tough market scenario.
While the Ranjangaon facility has been making the Palio Stile for the last 6-7 months, plus also a few units of the first generation Tata Indica on a smaller line, the new manufacturing and assembly facility is ultra modern and highly flexible. Job 1 for this line came with Fiat's C-segment sedan the Linea being rolled out today and this would be the company's main offering till it is joined by two other models from the Fiat-Tata Motors fold in the next few months. It is expected that the Fiat Grande Punto as well as the next generation Tata Indigo would also roll off this very line shortly.
The Ranjangaon facility is equipped with a full fledged state-of-the-art body shop and a very modern assembly line with highly automated stations for ease of assembly by the line workers. This is in addition to a modern paint shop that will be commissioned soon, plus of course the adjoining drivetrain plant mentioned above. All versions of the Linea sedan and the Grande Punto large hatchback are to be made entirely in house at Ranjangaon.

स्त्रोत्र : दी टाईम्स ऑफ़ इंडिया, २२ नवम्बर 2008

US Big 3 auto chiefs fail to get bailout package

Washington: The chief executives of Detroit's Big Three automakers departed Washington empty-handed on Wednesday night after two days of pleading for a financial lifeline on Capitol Hill. As the public hearings and intense behind-the-scenes negotiations appeared to come to naught, the Senate majority leader, Harry Reid of Nevada, went to the floor seeking to bring up the Democrats plan to provide $25 billion in aid from the $700 billion financial bailout program. The Republicans objected, effectively killing the plan.
Senator Christopher S Bond, Republican of Missouri, then requested that the Senate consider a compromise measure that would speed access to $25 billion in federally subsidized loans that have been signed into law by President Bush. Those loans, however, were meant to help the auto companies retool their plants to make fuel-efficient vehicles, so Reid objected to that.
In an interview on Wednesday evening in his Washington office, Rick Wagoner, the chief executive of General Motors, the most imperiled of the auto companies, struggled to remain upbeat after two days of grueling testimony. Lawmakers had criticized Wagoner and the two other chief executives for failing long ago to build better cars or to revamp their operations. They were even attacked for traveling to Washington in corporate jets, which some lawmakers mocked as hardly a sign of frugality.
"This is all part of what we signed up for when we made this request," Wagoner said, seeming drained and uncertain of what would come next. "We knew we needed to testify and come down and tell our story, and we know the congress needs to decide if it's going to act and how its going to act. We don't think realistically one should have expected an answer tonight, and I still remain hopeful." But, with the House set to adjourn at the end of Thursday, the automakers were left with only the dimmest of hopes that congress would provide any assistance this year.
And though Reid did not completely close the door to a deal, House speaker Nancy Pelosi has repeatedly expressed strong opposition to the core of Bond's proposal. In a sign of the pessimism among congressional Democrats, the majority leader, Steny H Hoyer of Maryland, said to lawmakers on Wednesday evening that no House votes were expected on Thursday, meaning the Senate was not expected to send over any legislation for approval.
Wagoner met with congressional leaders late Wednesday before leaving for Detroit, and while he declined to say if he expected some lastminute aid package, he said,
Wagoner met with congressional leaders late Wednesday before leaving for Detroit, and while he declined to say if he expected some last-minute aid package, he said, "GM would welcome any form of assistance." "I think it best we leave what's the best way to do this to the congressional leaders and to the administration to sort out," he said. "We'd be happy to work under any of the scenarios Ive been told about." Wagoner testified on Wednesday that GM had not prepared a contingency plan for a bankruptcy filing if federal aid is not forthcoming. He said that GM's advisers had concluded that it could not obtain credit to operate in a bankruptcy, and instead would have to consider liquidating its assets.
The auto industry's immediate future may now lie with the Bush administration, which has staunchly opposed using the treasury department's $700 billion financial bailout program to aid Detroit. In testimony on Wednesday before the House Financial Services Committee, Wagoner and his counterpart at Chrysler, Robert L Nardelli, said it was unlikely that their companies could survive much longer without emergency assistance. The chief executive of Ford Motor, Alan R Mulally, said his company had enough cash to last through 2009 but that a failure by GM or Chrysler could have catastrophic effects on the industry.

Source: The Times of India dated 21st November 2008

Maruti woos PSU banks

Kolkata: Maruti Suzuki is changing partners. After a decade-long marriage with private finance firms when easy availability of auto finance put the sector on the fast lane, Maruti Suzuki is wooing public sector (PSU) banks in a big way with promises of longterm commitment.
The move is a bid to overcome the sales slump that hit the automobile industry after private car finance companies slammed the brakes.
Though tie-ups with private banks — HDFC Bank, ICICI Bank, Axis, Kotak Mahindra — and non-banking finance companies like Sundaram, Magma, Chola Mandalam, Mahindra, Reliance, Sriram have not been severed, Maruti Suzuki officials said the company would go the whole hog to promote finance schemes by PSU banks.
While Maruti Suzuki had entered into a tie-up with SBI and its seven associate companies a year ago, it has since joined hands with PNB, United Bank of India (UBI) and Bank of Maharashtra.
In the past couple of months, the profile of companies financing Maruti Suzuki cars has changed markedly with PSU banks now offering loans to 60% customers opting for finance against 50% a couple of months ago.
Following the liquidity crisis, private banks like ICICI Bank and HDFC Bank have reduced their exposure to car finance. The biggest player ICICI Bank that financed 13 out of every 100 Maruti Suzuki cars sold till two months ago, now finances only 5% cars. Silimarly, HDFC Bank’s exposure is down from 9% to 5%. Some NBFCs like Mahindra have stopped financing Maruti Suzuki cars altogether.

Source: The Times of India dated 21st November 2008

Maruti Rolls out A Star

New Delhi: Maruti Suzuki's A-Star compact hit Indian roads on Wednesday, but the export-oriented model faces daunting challenges in view of the slowdown in the European markets, the main destination for the car.
A-Star, that carries a 998-cc petrol engine, sports a price of Rs 3.46 lakh on base Lxi variant, while the middle variant (Vxi) comes for Rs 3.74 lakh and the top-end Zxi comes for Rs 4.11 lakh (all ex-showroom Delhi). "While sales start in India immediately, exports would start from January next year," Maruti chairman RC Bhargava said.
The company plans to sell 1.5 lakh units abroad while reserving 50,000 units for the Indian market. A major part of the sales overseas — initially believed to be 50000 units — will come as contract manufacturing for Nissan, though Bhargava remained elusive on the volumes of this partnership saying the company was yet to finalise a "firm order" with Nissan. He added that shipments to Nissan could start in early 2009.
Bhargava said the poor economic outlook and recession in Europe could impact the demand. Riding A-Star, Maruti hopes to increase exports to 2 lakh units by 2010-11, from 53,024 units sold abroad last fiscal.
Company officials downplayed apprehensions that the new car would lead to cannabalisation within Maruti brands in India. Maruti's model line-up in the small car segment includes Alto, WagonR, Zen Estilo, Swift and now the A-Star. Officials said there were no plans to phase out any of the existing models, even the ones that are close to AStar's pricing like the WagonR and Estilo. The 1100cc Hyundai i10 is the closest competitor to A-Star and its base variant costs Rs 3.37 lakh (ex-showroom Delhi).
(To read more on the Suzuki A-Star including an exclusive first drive, full specifications, pricing and also a comparison with rivals in class, log on to www.zigwheels.com)

Source: The Times of India dated 20th November, 2008

Slowdown forces Maruti to reduce production

TIMES NEWS NETWORK

New Delhi: Bad news continues for the auto sector. The slowdown in the car market has forced Maruti Suzuki to cut production, a senior official said on Wednesday.
Maruti, that controls around 50% of the domestic car market, said it was slowing down production at its Gurgaon factory to fall in line with the market demand. "We are not running at full capacity at Gurgaon," said Mayank Pareek, the company's executive officer in-charge of marketing. "We have made some re-adjustments in production due to the demand slowdown," he said, refusing to identify the quantum of cut.
Tight retail financing and high interest rates have dampened car sales in the country, with negative factors like inflation and stock market crash further discouraging buyers. Maruti's October sales fell 8% despite three big festivals and managed to grow only 3% in April-October 2008. The outlook remains difficult due to the low demand, Parekh said.
The company has two factories in India, the first one at Gurgaon and the new one at Manesar. Pareek said newer models —Swift hatchback, Dzire sedan and A-Star compact — are manufactured at Manesar, while others are made at Gurgaon.
Company chairman RC Bhargava said the economic downturn globally could be a dampener for car sales. "There is a great deal of unpredictability about how world economic scenario will play out. Most experts say we have not yet got to the bottom of the economic cycle," he said.
Bhargava said, "The next five months are very difficult to predict, though we do not expect sales and production this year to go below last year's figure." Maruti's stock, that have declined 48% this year, rose 0.73% to Rs 516.5 on BSE.
Maruti is not the only auto company that has cut production. Tata Motors also closed its plants to cut output in line with the slowdown.
Other companies that have reduced output include Hyundai, Mahindra and Mahindra and Ashok Leyland. Companies are asking government to facilitate cheaper and easier loans for consumers to prop up the sales.

Source: The Times of India dated 20th November, 2008

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