01 Sept 2010;economictimes.indiatimes.com:Rajesh Chandramouli:CHENNAI: Car loan lenders have raised the interest rates in the past couple of days by anything between 50 basis points and 100 basis points (100 bps = 1%). Notably, the rates have touched the double-digit mark after a long gap. Dealer sources said that all private lenders have effected the hike late last week. "The increase differs for every model. For instance, rack rate on loans for a B segment (compact car) will now be 12% while a C segment (sedan) would be charged 11.5% for loans ranging from three to five years. Except for PSU banks, almost all lenders, including Kotak, ICICI and HDFC Bank, have informed us about the hike," a dealer said. "We have increased loan rates for new and used cars. Our net rate to customer would range between 10.5% and 11.25% depending on the tenor and model," said Sumit Bali, CEO of Kotak Car Insurance. Though some dealers believe the increase in rate might dampen car sales, manufacturers maintain that the current hike would be absorbed by the market. "The growth momentum is strong and this hike may not impact sales. However, another hike might spook the sentiment and potentially dampen new car sales," P Balendran, vice president, General Motors said. Bali of Kotak said the industry will continue to grow as the undercurrent remains bullish and strong. "With the festive season round the corner manufacturers are looking at robust sales. We hope there aren't further interest rate shocks from lenders which could affect sales. For now, we feel sales momentum would be maintained," Arvind Saxena, director, (sales and marketing), Hyundai Motor India told TOI. The increase is also applicable to used car loans. "The new rates for used car loans, depending on the age and model of the car will now be 16% (indicative), which is a 50 basis points increase. We effected these hikes on August 23," Bali said. HDFC Bank has raised rates for new cars to 11.25-12% from 10.5-11% effective August 20, other private lenders have followed suit. "As of now, we still lend at old rates, while there are talks of a hike anytime," a Maruti dealer in Chennai said. Passenger car sales are up. The industry witnessed 37.95% growth in July.
Honda to continue as partner in Hero Honda, says Hero Group
01 Sept 2010;dailypioneer.com:New Delhi: Hero Group on Tuesday brushed aside reports that its joint venture partner, Japanese auto giant Honda, is planning to exit India's largest two-wheeler maker Hero Honda by selling its 26 per cent stake. According to media reports, while Honda is planning to sell 20 per cent stake to the other promoter, Munjal family of the Hero Group, it is looking at selling 6 per cent to private equity firm KKR. "We have already conveyed earlier that the Hero Group and Honda Motor Co, Japan, have for years enjoyed a very cordial and fruitful relation, resulting in millions of satisfied Hero Honda customers across the country and there has been no change in the relationship in any manner," Hero Group said in a statement. "The news report is incorrect and speculative," it added. When contacted, a Honda India spokesperson declined to comment saying the reports are "speculative". The Hero Honda scrip plunged to an intra-day low of Rs 1,670 a piece after opening at Rs 1,775.10 on the Bombay Stock Exchange. Later, the scrip was trading flat at Rs 1,790, compared to Monday's close. Honda and the Hero group hold 26 per cent each in Hero Honda, the world's largest two-wheeler maker. However, there has been market speculation that there is unease between the partners after the Japanese firm decided to enter the Indian two-wheeler market through its wholly-owned subsidiary Honda Motorcycle & Scooter India (HMSI). In 2004, the Hero group and Honda had extended their agreement for 10 years, under which the Japanese partner would continue to provide technology to the JV. It will come up for renewal in 2014. Last year, Asian Honda Motor President and CEO Fumihiko Ike had said that the company was committed to the JV with the Hero Group and the two have remained partners since its inception. "We are working to sustain the design of Hero Honda. With Hero Honda and HMSI we see huge potential to grow in India, there is no change in our business plan. We are working on sustaining the success of Hero Honda," Ike had said. Currently, Hero Honda is finalising plans to set up the fourth plant in the country. It already has three facilities at Dharuhera and Gurgaon in Haryana and at Haridwar in Uttarakhand with a total capacity of 50 lakh units a year.
01 Sept 2010;timesofindia.indiatimes.com:NEW DELHI: The country's largest car maker Maruti Suzuki India on Wednesday reported its highest ever monthly sales at 1,04,791 units in August, registering 23.56 per cent jump over the year-ago period. Sales for the same month last year were at 84,808 units, Maruti Suzuki India (MSI) said in a statement. "This is the highest ever monthly sales recorded by the company," it added. It was the third time in this fiscal that the company's monthly sales figure has crossed one lakh mark. MSI had reported its highest ever monthly sales at 1,02,175 units in May, the first time when the company had crossed the one lakh units in monthly sales. The national-capital-based company also posted its best figure so far for the domestic market at 92,674 units in August, a 32.47 per cent increase from 69,961 units in August 2009. MSI's exports in last month, however, declined by 18.39 per cent to 12,117 units from 14,847 units in the year-ago period, the company added. The sales of the company's once bread-and-butter model M800 also declined 29.81 per cent to 1,919 units compared to 2,734 units in August 2009, the statement said. The A2 segment (comprising Alto, WagonR, Estilo, Swift, A-Star and Ritz) witnessed 25.69 per cent growth at 65,953 units compared to 52,473 units in the same month a year ago. A3 segment sales (consisting of SX4 and DZiRE) increased by 33.99 per cent to 10,479 units compared to 7,821 units in the corresponding period a year ago, the company said. MSI's total passenger car sales rose 32.86 per cent to 92,508 in August as against 69,629 units in the same month in 2009, it added.
31 August 2010;timesofindia.indiatimes.com:NEW DELHI: Caught completely off guard by Cairn Energy Plc's move to sell up to 51% stake in Cairn India to London Stock Exchange-listed Vedanta Resources promoted by NRI tycoon Anil Agarwal, flagship explorer ONGC has now told the Scottish explorer that the deal cannot go through without the state-run company's consent. ONGC is a 30% partner in Cairn India's Rajasthan oilfields that form the bullwark of the private explorer's Indian assets and valuation. In a letter to Cairn Energy Plc CEO Bill Gammell, ONGC company secretary N K Sinha has sought details of the deal with Vedanta, saying the UK firm needed "consent of ONGC besides other governmental approvals to consummate" the deal. Industry analysts see the ONGC letter as mere sabre-rattling, and say the company may not be able to do much unless the oil ministry wants to stall the Cairn-Vedanta deal. According to analysts, ONGC may have written the letter based on its pre-emption rights as a partner in Cairn's Rajasthan fields.
M&M terminates contract with US distributor for pick-ups
31 August 2010;business-standard.com:Swaraj Baggonkar:Mumbai: Utility vehicle maker Mahindra & Mahindra (M&M) has severed its contract with US marketing and distribution partner Global Vehicles Inc. The news comes just three days after M&M received certification from the US Environmental Protection Agency (EPA) allowing it to sell pick-up trucks in that country. Global Vehicles had filed a lawsuit against M&M in June in a US district court in Atlanta for delaying the launch of its trucks, while also accusing M&M of holding back information about the launch and keeping it in the dark. M&M said in a statement that, “Mahindra’s relationship with Global Vehicles Inc has ended, the agreement dated September 26, 2006, between Mahindra and GV having terminated.” Global Vehicles, which has so far signed up more than 350 dealers and spent more than $35 million (Rs162 crore) preparing for the launch, stated that any attempt by M&M to terminate their contract would be invalid under US law. M&M’s president for automotive and farm equipment, Pawan Goenka, remained out of reach when contacted for this story. However, a company spokesperson said, “As the matter is sub-judice, we cannot comment.” An out-of-court settlement between the two companies was seen as a viable option, since many of Global Vehicle’s outlets were ready to start selling M&M’s vehicles and that setting up an alternative dealership chain would take several months. Further, Global Vehicle had also asked the court to restrain M&M from engaging with any other dealer or distributor to retail its range of vehicles. In May, M&M reiterated its plans of launching the TR20 and TR40 pick-ups (based on the Scorpio platform) in the US market by December, with production scheduled to start next month at the Chakan, Pune, facility. M&M had first planned to launch a range of vehicles in the US in December 2008. However, due to repeated delays in procuring the required clearanhces from safety and emission authorities, the launch was postponed at least twice. In its suit, Global Vehicles also stated that dealers had spent more than $60 million (Rs278 crore) towards franchisee fees for the right to sell M&M vehicles. At the time the lawsuit was filed, a Mahindra spokesperson said, “Mahindra firmly believes these legal actions to be without merit and will vigorously contest these actions.” Less than two weeks ago, M&M had declared that it had become the first Indian automobile manufacturer to receive a Light Duty Diesel Federal Tier-2 BIN-5 and OBD-II compliance certification from the EPA. M&M planned to launching the pick-up line first, followed by a sports utility version of the Scorpio by December next year. Its new SUV, currently undergoing tests, will also be launch in the US in 2012.
30 August 2010;economictimes.indiatimes.com:Nandini Sen Gupta:NEW DELHI: Tata Motors is looking to seek help from British subsidiary Jaguar Land Rover’s engineers to build more refined passenger cars. According to a top Tata Motors official, the mother company will use expertise in design, noise and vibration and other aspects to build a portfolio of cars that are more sophisticated than its current range of Indica hatchback, Indigo sedan and the Nano ultra low-cost car. Speaking to ET, PM Telang, MD of Tata Motors India operations said: “We know we need to improve our car operations in terms of fits, finishes, noise, vibration and design elements. That’s where Jaguar Land Rover can help us.” Indeed, JLR engineers were invited to take a look at the Nano following complaints of the car catching fire. “We invited a group of engineers from JLR to join 20 engineers from Tata Motors and forensic experts and examine the Nano closely. They did a thorough job and came to the conclusion that there's no design problems or faulty components with the Nano and that the instances of the car catching fire are stray instances.” The search for synergies between Tata Motors and JLR comes on the heels of the British subsidiary turning in positive results in the first quarter, greatly boosting the parent company’s bottomline. “There are a lot of synergies with JLR — we can add value to their operations and they can add value to ours,” Mr Telang said. With Tata Motors looking to boost its passenger car portfolio, both for the domestic as well as international markets, JLR’s contribution to future Tata products could be crucial. The car drive is also crucial for Tata Motors’ plans for the Asean market although it has, for now, pulled out of the Thai eco car project for which it was selected. “The Thai project had certain pre-conditions which didn't work for us,” Mr Telang said. “But Asean will be a large and important market for Tata Motors, and cars will be an important part of that.” Although he refused to talk about future models and platforms under development except to say “Tata Motors will examine each market segment and see if it has products to cater to them”, people close to the company say Tata Motors is already building another small car to be positioned between the Nano and the Indica to take on the Suzuki Alto's 2.5 lakh units a year market. The company has already indicated JLR will use some of Tata Motors' famed frugal engineering skills to build lighter and smaller engines for the future. Mr Telang said the emission norms in Europe will pressurise JLR to look at smaller engines which will throw up opportunities for synergy and the two companies would look at options of joint engine development which could meet both JLR's needs as well as its parent's. JLR currently sources its engines from Ford, a throwback to its days as a Ford subsidiary. Tata Motors is also looking to assemble Land Rovers in India in an effort to push up volumes from the brand. Tata Motors has earlier explored product development synergies with its overseas subsidiaries like Tata Daewoo or Hispano Carrocera. “The Prima range of trucks is a joint development between Tata Daewoo and Tata Motors. Similarly, there are joint development projects and synergies being worked out at Hispano Carrocera. So, JLR will follow suit,” said Mr Telang. If JLR can pitch in to make Tata cars more refined, Tata Motors will help JLR cut costs and get more sourcing benefits, he added.
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