Most Americans not open to buying cars from India, China: Study
23 August 2011;economictimes.indiatimes.com:HOUSTON: A wave of new Indian and Chinese automobiles are poised to make their debut in the US market in coming months, but a new study has found that most Americans are not open to the idea of buying a car from companies like Tata, Mahindra and BYD. Market research firm GfK Automotive's Barometer of Automotive Awareness and Imagery Study found that Chinese and Indian auto-makers could face a similar purchase consideration curve to Korean vehicles when they launched in the US. In that case, it took more than 15 years for consumers to significantly increase their consideration to purchase Korean vehicles. The majority of American consumers are not open to buying a car from a Chinese or Indian manufacturer. Such auto-makers looking to break into the US market face challenges in brand awareness and acceptance, said the study. The Barometer of Automotive Awareness and Imagery Study found that only 38 per cent of the respondents would consider buying a Chinese car and 30 per cent an Indian vehicle. In contrast, 95 per cent are open to buying from an American company, 76 per cent from a German manufacturer, 75 per cent a Japanese vehicle and 49 per cent a Korean model. Gen Y consumers were the most open to buying Chinese or Indian vehicles, with 52 per cent saying they'd consider a car from China and 41 per cent open to a car from India. Predictably, Baby Boomers were the least interested. Supporting its report, GfK cited the challenge Hyundai initially had gaining market acceptance in America, stating that "Chinese and Indian automakers could face a similar purchase consideration curve". "However, we would add that the quality, performance, safety and reliability of the models make all the difference. And Hyundai initially trailed in all those regards. Perception took years to change, because the company itself took over 15 years to offer competitive products," it said. Companies such as BYD (China), Chery (China) and Mahindra (India) have in recent years declared their intent to launch products in the United States, only to repeatedly delay their introduction. "Clearly, the time will come when cars arrive on our shores directly from such manufacturers. For some, arguably, the time is now, as the current parent company for Land Rover and Jaguar, Tata, is an India-based corporation. And Volvo is owned by China-based Geely," GfK Automotive said in its report.
Oil prices should fall with Moammer Gaddafi's overthrow
22 August 2011;economictimes.indiatimes.com:NEW YORK: Oil prices around the world should start falling if Libyan rebels succeed in toppling Moammer Gaddafi's regime, though the full effect won't be felt for months. On Sunday night, rebel forces pushed into Tripoli without meeting much resistance, hours after they overran a major military base that defended the capital. Opposition fighters captured Gaddafi's son and one-time heir apparent, Seif al-Islam. Independent analyst Andrew Lipow said oil markets will likely respond Monday by sending prices lower in ``a sign of relief that conflict has come to the end.'' But Lipow said it will take time for the market to erase the hefty price increase that resulted from the suspension of Libyan oil exports since the rebellion began in February. When fighting broke out, oil was trading at around $84 a barrel. It quickly spiked above $93 and kept rising to a high above $110 at the end of April. Demand from emerging markets including China was also a factor in the rise. Oil has fallen recently along with stocks because of concerns about the global economy. Libya used to export about 1.5 million barrels of oil per day, almost all of which have been cut off. Although Libyan oil amounted to less than 2 percent of world demand, its loss affected prices because of its high quality and suitability for European refineries. The European refineries have struggled to make up for the production loss despite an increase from Saudi Arabia. As a result, European markets should see the first and most significant drops in oil prices, Lipow said. He added that any developments in the ongoing European financial crisis could also move stock markets around the world this week and oil prices along with them. Independent analyst Jim Ritterbusch said that even if rebels manage to push Gaddafi out soon, the near-term effects on oil prices will be limited. ``Psychologically anyway, it's going to force some additional selling,'' Ritterbusch said. ``But selling may not be pronounced because there's still a lot of question marks remaining'' on how long it would take for production to resume. Michael Lynch, president of Strategic Energy & Economic Research, said that once Gaddafi is pushed out, Libya's new government could take the path of the Iraqis after the fall of Saddam Hussein and spend years fighting over every detail. Or it could follow Kuwait's example and quickly decide to bring in an outside company to get production restarted right away He added that there's always a chance that the process could come to a halt if one of the rebel generals tries to seize power, or if different factions get caught up debating the country's new constitution and put off making decisions about oil production. ``They do have a good cadre of educated people, but they don't have a long record of competent self-government,'' Lynch said. ``It would not be a bad bet to think there might be a chaotic period for a few months till they get organized.''
22 August 2011;business-standard.com:Mumbai: With market analysts feeling that the Reserve Bank is unlikely to pause on its tight monetary policy, the auto industry sees no respite even during the forthcoming festive season and expects further slowdown in sales in the months ahead. "We don't expect any significant sales growth this festive season. The market has been dented by high fuel prices and interest rates. Any further rate hike will impact sales during the festive season," Icra Senior Analyst (Automotive Sector) Shamsher Dewan said. PwC India Head (Automotive Practice) Abdul Majeed concurred, saying, "The chances of another interest hike next month has dampened the prospects of the auto industry during the upcoming festive season. This comes at a time when the market is already reeling under pressure from high interest rates and rising fuel costs." Given the rising interest rate scenario, coupled with higher fuel and commodity prices as well as inflation, the industry expects sales to remain depressed in the coming festive season too, Majeed said, adding sales will continue to grow in single-digit. The market analysts see the Reserve Bank going in for another rate hike at its mid-quarterly policy review on September 16 to fight sticky inflation. The monetary authority has already raised interest rates 11 times since March, 2010 in its bid to battle high inflation. In July, headline inflation slipped a tad to 9.22% from 9.44% in the previous month. But food inflation has started moving up again in recent weeks due to supply disruptions, following incessant rains in some parts of the country, further escalating the chances of another rate hike by the apex bank.
Maruti, Honda, Toyota, Hyundai, Nissan, Volkswagen go all out to woo customers with attractive price
22 August 2011;economictimes.indiatimes.com:Chanchal Pal Chauhan: The rising interest rates and fuel prices may have forced you to postpone your dream of buying a car, but if you are straining to glean a silver lining, look no further than the prices of the newly launched cars. Gone are the days when a new paint job or nips and tucks were rechristened as 'new models' and used as an excuse to raise prices. Maruti, the leading automaker, has launched its bestseller, the new Swift, with 140 changes, at Rs 4.22 lakh, just Rs 13,000 higher than the old car. Honda responded almost immediately, cutting the price of its globally acclaimed premium hatchback, Jazz, by up to Rs 1.62 lakh. Toyota, had fuelled the recent price cut by launching its much anticipated small car, Liva, at Rs 3.99 lakh in June this year, thereby qualifying as one of the cheapest premium hatchbacks in the local market. The Indian small car market has seen the maximum activity in the past two years with intense price wars and a flurry of launches: Hyundai i20, Nissan Micra, Volkswagen Polo, Maruti Swift, Fiat Punto, Toyota Liva, Ford Figo, Honda Jazz and Skoda Fabia. Last month, Honda Siel slashed the price of its flagship sedan, City, by up to Rs 66,000, and has now launched Jazz with a starting price of Rs 5.5 lakh in tune with other competing cars. Jazz was long considered overpriced at Rs 7 lakh, so customers went for cheaper options like the Hyundai i20 and Volkswagen Polo. "The prices of Honda Jazz and Maruti Swift could lead to a virtual price war, forcing other manufacturers to raise discounts. Customers can look forward to some of the best prices of the decade for hatchbacks in the coming months," says IHS Automotive India's managing director Deepesh Rathore.
Maruti Suzuki plans to roll out a global car by 2017
21 August 2011;dailypioneer.com:New Delhi: As it strengthens the R&D activities, the country’s largest carmaker Maruti Suzuki India is aiming higher with plans to roll out a global car by 2017. “Our ultimate aim is to develop a car for the global market. With our new R&D centre at Rohtak getting ready, we will start working on a global car,” Maruti Suzuki India (MSI) Managing Executive Officer (R&D) I V Rao told the news agency. The company will develop the car, with some assistance from parent Suzuki Motor Corp (SMC), targeting the European and Japanese markets, he added. When asked about any timeline to introduce the car that will be developed mainly by Indian engineers, Rao said: “It is difficult to share any specific time, but we are keeping a target of 2017.” In the past, MSI engineers had participated in the development of global models, which have been introduced in India, such as Swift and Ritz. MSI is at present working on an indigenously developed small car for the Indian market that is likely to be launched next year. Without sharing any detail, Rao said: “It is a totally new model, but will be developed on an existing platform.” However, sources close to the development said the car will be powered by a 800cc engine and will be positioned along with the company’s current best seller ‘Alto’. MSI is spending up to Rs 1,500 crore to set up a R&D centre at Rohtak, which will be SMC’s only such significant centre outside Japan, to scale up its vehicle development programme and become self-reliant. The firm currently depends on SMC for its model design and development programme. Its existing models are developed by SMC with inputs from Indian engineers. MSI is at present strengthening its R&D division by enhancing its capability to develop a full model on its own to become the hub of research activities for the SMC.
20 August 2011;business-standard.com:Mumbai: Sport utility vehicle major Mahindra & Mahindra on Friday surpassed Tata Motors’ market capitalisation to become India's most valued auto company. Mahindra shares increased 0.27 per cent to close at Rs 719.10 on Friday, compared to the previous day’s close, while Tata Motors shares fell 5.28 per cent to Rs 713.40, on the Bombay Stock Exchange (BSE). While M&M's market cap stood at Rs 44,150 crore, Tata Motors market cap eroded to Rs 38,402 crore, pushing it to the fourth spot among the auto pack after Bajaj Auto and Hero MotoCorp. Concerns over Jaguar’s and Land Rover's performance in America and Europe, its two biggest markets, in the wake of continued recessionary trends and a slowdown in demand in the Indian market, spooked investors who dumped the company's stock. Tata Motors, which continues to be India's biggest company by revenue, saw an erosion of 15.63 per cent in its stock value over the last one week or six trading sessions. M&M stock, during the same period, saw a fall of 1.1 per cent. India's second-largest two-wheeler maker Bajaj Auto's market cap stood at Rs 41,414 crore, the second biggest in the auto pack, while two-wheeler market leader Hero MotoCorp's market valuation stood at Rs 39,810 crore. Ajay Parmar, head research, institutional equities, Emkay, said: “While M&M has stitched a success story with their tractors and other vehicles, Tata Motors is largely dependent on JLR. All companies with exposure to Europe will suffer because the situation is not expected to improve at least for the next six months.” About 60 per cent of Tata Motors' consolidated revenue is generated by its premium brands Jaguar and Land Rover. With nearly 52 per cent of JLR's volume being sold in the US, the UK and Europe (excluding Russia), the two brands have very high exposure to these economically-troubled markets. Tata Motors net profit for the June quarter was flat at Rs 1,999.62 crore, against Rs 1,988.73 crore in first quarter of financial year 2011. Profit from JLR dipped to £219 million (Rs 1,600 crore) during the quarter, against £226 million (Rs 1,700 crore) earlier. Tata Motors outlook does not look encouraging with external pressures, such as high inflation in India and China and weak demand across key global markets, said analysts tracking the company. Its group sales fell six per cent last month to 85,392 units, against the year-ago period. Jaguar sales fell 23 per cent to 4,372 units, while Land Rover witnessed an eight per cent decline in sales at 14,747 units.
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