18 May 2011;business-standard.com:Sharmistha Mukherjee:New Delhi: Skoda Auto, a Volkswagen subsidiary, plans to launch a mini-sports utility vehicle (SUV) priced below Rs 10 lakh. This is the first time a global company is looking to introduce an SUV in this price segment. Big international companies such as Mitsubishi, Toyota, General Motors, Hyundai and Skoda sell SUVs in India, but at prices above Rs 15 lakh. The Skoda product will directly challenge Indian companies, which offer cheaper options. Mahindra & Mahindra’s Scorpio is priced between Rs 7.43 lakh and Rs 12.39 lakh, while Tata Motors’ Safari Dicor costs between Rs 8 lakh and Rs 13 lakh. Skoda’s new SUV could also pose a challenge in the luxury mid-sized sedan market, which includes Honda City, Volkswagen Vento and Hyundai Verna. Thomas Kuehl, a member of the board in charge of sales and marketing, Skoda Auto India, said: “The SUV segment is not growing as fast as was expected. We have to go down and are looking at a product priced below Rs 10 lakh.” Kuehl, however, did not say by when the model would be launched. “We have over 25 per cent share in the D segment with Superb and 16.5 per cent share in the segment that has Laura. We are working to increase our presence in the SUV category,” said Kuehl. SEGMENT GROWTH Abdul Majeed, leader, automotive practice, PricewaterhouseCoopers, said, “In India, original equipment manufacturers are looking to develop sub-segments and SUVs to suit more pockets. Given the large families in India and the value proposition of sports utility vehicles at the lower end, sales have been rising over the last couple of years.” Close to 324,000 SUVs were sold in India in 2010-11, a 19 per cent rise over the 272,000 units sold in 2009-10. The segment has been clocking annual growth of 15-20 per cent a year for the last four years. Nearly half the sales came from Mahindra & Mahindra, which sold 170,000 SUVs last year. Toyota came second with Fortuner, which is priced considerably higher at Rs 20 lakh and above (ex-showroom, Delhi). Skoda was targeting 20 per cent SUV market with the launch of Yeti in November last year. It was priced between Rs 15.35 lakh and Rs 16.73 lakh (ex-showroom, Delhi). Market experts say the price tag has kept away consumers. Kuehl said the company had sold 900 units of Yeti so far and was gearing up to launch a variant, with a smaller diesel engine, this year. A petrol version is also on the cards. The company is also looking to introduce an entry-level sedan by the end of the year. To be priced between Rs 6 lakh and Rs 10 lakh, it will compete with Maruti’s Swift Dzire, Mahindra Logan and Indigo Manza. Skoda is also developing a small car that will be positioned below Fabia. The company expects to double sales to over 40,000 units this year. It sold 22,969 units in 2010-11, a growth rate of 31.24 per cent over 2009-10.
18 May 2011;business-standard.com:Ishita Ayan Dutt:Kolkata: Tata Motors has five months to work out a solution to the Singur imbroglio, to save the lease agreement from being terminated. According to the lease agreement between Tata Motors and the West Bengal Industrial Development Corporation (WBIDC), the lessor will have the option to terminate the lease if the land has not been used for three years or more, which will kick-in from October 2011. Tata Motors had pulled out of the Nano project in October 2008. Though Tata is yet to communicate its plan for Singur, it has paid the rent for the year. When asked whether it would come up with a project by October, a company spokesperson said there was nothing to say at this stage. With the group keeping a communication channel open to the Trinamool Congress by informing it about its cancer hospital launch, the ice that had settled in after Mamata Banerjee spearheaded the agitation against the Nano project at Singur, is likely to be thawed. The Tata Group chairman inaugurated the hospital yesterday, and also became the first major investor to step into the city after the elections. Tata Sons on Tuesday said letters about the intended commencement of the hospital were sent to a group that included the Prime Minister, other Union cabinet ministers, the chief minister of West Bengal (Buddhadeb Bhattacharjee) and state ministers and the leader of the Opposition (Partha Chatterjee of Trinamool Congress), and the chief ministers of the North-Eastern states, and senior bureaucrats. The letters were signed by R K Krishna Kumar in his capacity as a trustee of the Tata Medical Centre Trust. As far as a settlement over Singur is concerned, Trinamool is tightlipped, ahead of the swearing-in ceremony on Friday. Repeated calls to Trinamool deputy leader, Partha Chatterjee, proved futile. “We have not had any discussions with Ratan Tata on Singur and it’s too sensitive a subject to talk about before anything has happened,” Trinamool leader, Saugata Ray, said. The onus to settle the Singur land issue is not just with the Tata Group. Banerjee, too, has a promise to keep, as the people at Singur are becoming restive, having waited for more than two years. The day election results were announced, the unwilling farmers had performed puja, hoping they would get their land back. Under the Land Acquisition Act, 1894, land once acquired for a public purpose cannot be returned. A new legislation, though, could be passed, if Banerjee sticks to her demand of returning ‘400 acres’, which the erstwhile government pegged at 181 acres. Banerjee wanted the vendor park spread over 290 acres to be shifted to a different location, which would be an onerous task, as WBIDC had entered into separate lease agreements with each vendors. If Banerjee climbs down from the earlier demand of returning the land, the option of increasing compensation would prove to be expensive. As the earlier government had pointed out, unwilling farmers were just 2,000 in number. If the compensation was increased, it would have to include the balance 11,000 willing farmers, as well. Options are few and the clock is ticking.
17 May 2011;deccanherald.com:Bangalore: Tata Motors on Tuesday, flagged off the Nano Superdrive 2 from Concorde Motors India Ltd, Opp Christ College. Tata Nano Superdrive 2 will be an enchanting 28 day voyage, where in 12 Tata Nanos will circumambulate India. Tata Motors set on a 26 day long Nano Superdrive in June 2010, which covered 36 cities, and an incredible distance of 15,000 km. The Nano Superdrive 2 is a testament to the Nano’s robustness and reliability and the company will create a new record of 18,000 km with a country wide drive – the Nano Superdrive 2, which will witness 12 Tata Nanos travelling across 6 routes, covering 62 cities.
Ford to invest Rs 325 cr to hike engine production
Wednesday, 18 May 2011
18 May 2011;dailypioneer.com:New Delhi: US carmaker, which is witnessing great growth in India, will invest $72 million (nearly `325 crore) to expand its diesel engine production capacity by over 30 per cent in the country within next one year to further support its sales and export growth plans in India. “Ford Motor Company will invest $72 million to expand its powertrain facility in Chennai to further support its sales and export growth plans in India,” the company said in a statement. Post the completion of expansion programme in mid-2012, the engine plant’s production capacity will increase from 2.5 lakh units to 3.3 lakh units per year, it added. Commenting on the development, Ford India President and MD Michael Boneham said: “This investment reinforces the importance of our Chennai plant and Ford’s continued expansion in India”. This expansion will allow the company to provide more technologically advanced and fuel-efficient engines to the customers in India and in markets around the world where the company exports Chennai-built vehicles, he added. “When the expansion is finished, a third production shift will be added at the engine assembly plant, creating more than 300 new direct jobs,” Boneham said.
16 May 2011;deccanherald.com:Shamsheer Yousaf:Bangalore: The recent hike of Rs 5, announced by the oil marketing companies, has increased the share of taxes to around 47 per cent of the total price. Petrol prices in Bangalore have gone up to Rs 71.09 per litre. Of this, Rs 17.06 goes to the Central government in the form of excise and customs levies. Another Rs 16.63 goes into levies charged by the State government such as sales tax and entry tax. Put together, Rs 33.69 goes into just taxes every time you buy a litre of petrol. In contrast, the cost of crude petroleum, including the cost of transportation, comes to around Rs 36.18 per litre. Prime source of revenue: The reason for high taxes is simple: excise tax and sales tax are prime sources of revenue for both the Centre and the State government, respectively. Petrol is subjected to four levies: Central excise duty, customs duty, entry tax, and sales tax. An employee from an oil marketing firm said: “We can reduce the burden on the customers if both the Central and State governments reduce these levies. However, governments have their compulsions in spending, and they cannot but charge the levies to meet the expenditure on the spending." The Centre charges a fixed excise tax of Rs 14.35 per litre, and customs duty of 7.5 per cent on crude oil. Further, the State government charges 25 per cent sales tax on petrol. Besides, it also charges a five per cent entry tax that is levied on every litre of petrol and diesel that enters the State. The State government does not follow VAT for petrol, and instead follows an ad valorem system. This means that a rise in crude prices automatically increases the tax levied, furthering the burden on consumers. While the Union government has recently shifted from an ad valorem system to a fixed-rate system for excise tax, the State government is yet to adopt the same.
17 May 2011;dailypioneer.com:New Delhi: Auto and consumer goods companies are apprehending a dip in demand due to petrol price hike and an imminent increase in diesel prices that are adding pressure to customers, who are already reeling under the recent spike in interest rates. The firms, which are already facing thin margins are also likely to face increased operational costs, analysts said. “Consumer sentiment will definitely take a hit for the next 4-6 months as buyers are likely to postpone their purchases due to inflationary pressures. There will be surely a drop in demand,” Godrej Appliances Vice-President Marketing and Sales Kamal Nandi told the news agency. He said, as expected, if any hike in diesel prices is announced in immediate future, it will increase operational costs for companies, hence impact prices of goods for consumers. “Any increase in distribution cost will lead to increase in product prices,” Nandi said. Industry players also feel that till diesel prices are de-regulated and a significant difference of prices between the two fuels exists, demand for diesel-driven cars will rise. “We have already seen reduction in passenger car growth last month due to higher interest rates and hike in commodity prices. With petrol prices going up, demand will further be impacted, mainly on short-term,” Society of Indian Automobile Manufacturers (SIAM) Director General Vishnu Mathur told the news agency. Car sales in India posted the slowest growth rate in 22 months in April this year at 13.18 per cent, mainly due to rising interest rates and declining consumer confidence. The country’s largest carmaker Maruti Suzuki India (MSI) said if the fuel prices increase at this rate, the industry will suffer severely. “At some point of time, there will be a big negative impact on petrol cars as well as the overall industry, because diesel prices are also rising,” MSI Chief General Manager (Marketing) Shashank Srivastava said. Marico Group CFO and Chief HR officer Milind Sarwate said: “The immediate impact would be on consumer sentiment and will be more psychological than actual as consumers will anticipate an inflationary situation going ahead. This anticipation will make people cut down on spending to certain extent.” He, however, said there will be no slowdown in demand for essential items though discretionary products segments will get affected. Analysts pointed out that fuel price hikes will add further burden to the consumer goods companies as their distribution costs will increase further. “After the steep hike in petrol prices, the bigger worry is that increase in diesel prices is yet to be announced. Once that happens, distribution cost for most of the consumer goods companies will go up, thus putting a pressure on margins,” Anand Rathi Financial Services Analyst Shirish Pardeshi said. He said because of rising crude oil rate, packaging material that accounts for about 8-10 per cent of the total cost production for FMCG companies has also already become costlier. On May 14, state-run oil companies had hiked petrol prices by Rs 5 a litre. The government is also considering price hike of diesel, LPG and kerosene, which will be decided at the meeting of the Empowered Group of Ministers to be held this week. Earlier this month, the Reserve Bank of India had announced an increase in its short-term lending and bank savings rates. Consequently, leading banks have increased their interest rates by half a percentage points, making loans costlier. However, some industry experts are seeing the positive side of the developments stating that spending on consumable items such as food items, clothes and electronics might increase as consumers cut down spending on houses and cars.
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