20 Dec 2011;business-standard.com:Swaraj Baggonkar:Mumbai: Bus and truck makers, who defied economic slowdown in the first two quarters, worry about being hit by production drop in major sectors. The recently released Index of Industrial Production (IIP) data, showing steep fall in production in areas such as manufacturing, mining and capital goods, has sent alarm bells to truck and bus manufacturers. Commercial vehicle (CV) sales, growing at 20 per cent so far this year defied the laws of its direct correlation with growth in gross domestic product. Strong demand for light trucks, continued buoyancy in freight rates and sustained activity in certain infrastructure development projects pushed the overall demand. Sales of trucks and buses stood at 499,965 units for April-November against 416,800 units sold in the same period last year. Passenger vehicle sales (of car, sport utility vehicles and vans) during the same period remained flat. Worrying signs: Ravi Pisharody, president, CV business unit, Tata Motors, said, "Freight rates are levelling and this is worrying us. The current positive demand trend can continue only for the next two to three months." High interest rates, rise in fuel price and slowing economic activity would moderate growth in the medium and heavy CV segment. The ban on mining activity in Karnataka has already impacted the business of heavy duty trucks and tippers, stated a business review of Tata Motors, India’s biggest CV maker. Also, bus sales growth has flattened, with a lack of orders from public sector undertakings under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). Bus sales stood at 60,860 units, as against 61,323 units in the April-November period last year. R Seshasayee, executive vice-chairman, Ashok Leyland, said, "We are witnessing some sluggishness in demand, a result of accumulation of several policies in the last few months. CVs are still doing well, particularly light CVs. That is because the retail market is still doing well. The fast moving commercial goods and white goods demand is still buoyant. But I see this petering. I am beginning to see rural demand petering, too. We are certainly near a tipping point."
Buying a car? Get up to Rs 60k as sops in December
Monday, 19 December 2011
20 Dec 2011;timesofindia.indiatimes.com:Nandini Sen Gupta:CHENNAI: If you're planning to postpone buying a new car because you're convinced that a new model year vehicle will be more value for money, think again. The double whammy of a sluggish December and general sentiment downturn has increased inventory levels of petrol vehicles across car segments, prompting car companies to push sales through aggressive discounts. In other words, December may be just the time to get the best bargains in the industry. Consider some of the options on offer - discounts and/or 'benefits' on small petrol cars range from the Rs 25,000 for the WagonR to up to Rs 64,000 on the Chevy Spark (discount of Rs 53,000 plus free insurance worth Rs 11,000). The average is around Rs 30,000-35,000, available on everything from the Alto to A-Star to i10 and Beat (discount of up to Rs 21,000 plus free insurance worth Rs 12,000). General Motors India's other products, offer equally attractive schemes with the Aveo UVA attracting discounts of up to Rs 54,000, the Aveo up to Rs 62,000 and the Optra up to Rs 56,000. However, there's no discount or benefit on any of the diesel models - Beat, Cruz, Tavera and Captiva. Car marketers admit the discount levels are high this December. Says Mayank Pareek, managing executive officer-marketing and sales, Maruti Suzuki: "The discounts are quite high - our tacticals and other benefits are 22% higher than in November this year. But the discounts are only on petrol models. Our diesel vehicles are still on wait-list - the Swift diesel in fact has a 9 month waiting list." That's the overwhelming skew in the market right now - demand for diesels and a downturn for petrols. "Last year, the diesel's share in the overall passenger vehicle industry was around 34% which has now climbed to 50%," says Pareek. "In models where the diesel option is available, 80-85% sales are diesel. In November alone, diesel sales grew 64% and petrol was down 19%," he adds. Petrol's skid row performance has prompted many companies to simply continue their festival promotions. Says Neeraj Garg, member board & director, Volkswagen Passenger Cars, Volkswagen Group Sales India, "Instead of cash discounts we are continuing some of the tacticals that were on offer during the festival season." The company has decided to continue with its 'bouquet offer' which gives customers "benefits" (like free insurance) worth Rs 40,000. VW is also holding the price line of its Polo and Vento Breeze versions, launched in September as part of VW's action model strategy. Both pack in additional features - like navigation system for the Polo Breeze and touchscreen multimedia system for the Vento - at no extra cost. Car marketers say the discounts have increased footfalls but December isn't likely to be a windfall month for Motown. Says P Balendran, senior vice president, GM India: "We expect December to be similar to November - there will likely not be a huge difference in demand levels." However the prospect of price hikes in January and larger discounts in December should help clear the inventory pipeline at least. Particularly for those models which are waiting for an upgraded version in the New Year. Take Honda Siel's City sedan which will be relaunched in an upgrade avatar in January. Although the company is struggling to produce its Jazz and Brio volume models, it's dealers holding old stock of the outgoing model, are offering hefty 'benefits' of around Rs 70,000 to the City.
Fiat India to hike car prices by 2 pc from January
Sunday, 18 December 2011
18 Dec 2011;deccanherald.com:New Delhi:Car maker Fiat India Automobiles today said it will hike prices of its sedan Linea and hatchback Punto by about two per cent from January next year due to rising input costs. "We are going to increase prices of Linea and Punto by two per cent with effect from January 1," a Fiat India Automobiles spokesperson told PTI. The company is increasing prices as rising input costs in recent months have impacted margins, he added. Besides higher raw material prices, Indian auto makers' margins are under pressure due to the sharp fall of the rupee against the US dollar in recent months. To mitigate these adverse impact, auto makers like Mahindra & Mahindra Renault, Nissan Motor, Hyundai Motor, Ford, General Motors and Toyota Kirloskar have also announced hikes in the prices of their vehicles by up to 3 per cent from January 1. Auto major Mahindra & Mahindra said it will raise the prices of its entire range of vehicles by up to 3 per cent from January 1. While Renault India will hike the price of its sports utility vehicle Koleos by Rs 1 lakh from January 1, Nissan Motor India is hiking the prices of small car Micra and the petrol version of premium sedan Sunny by up to 2 per cent. The country's second-largest car maker Hyundai Motor India will also raise prices of its vehicles by 1.5-2 per cent from January next year. Ford India said it will raise prices of its entire range of models by 2-3 per cent. In a similar fashion, General Motors India has announced that it will raise prices by 1-2 per cent from January, 2012. It will also hike the price of its Beat diesel model by Rs 15,000. Toyota Kirloskar Motor, too, had announced a price hike of 1.5-3 per cent across models manufactured in India from January 1, 2012. Other car-makers, including Maruti Suzuki India, are also mulling a price hike to offset the impact of depreciating rupee and rising input costs.
19 Dec 2011;business-standard.com:Ajay Modi:New Delhi: Unlike the rest of the world, diesel is cheaper here, so industries are finding it makes sense to shift to the fuel. The perils of subsidy take different shapes. It is not only subsidised domestic LPG or kerosene oil being diverted for commercial use. With the price of diesel being stable under government control, industrial users of furnace oil in several states are increasingly turning to diesel instead. This is one reason why the consumption of diesel is now growing at a sharper rate than petrol after several years. It is not just diesel passenger vehicle sales driving this trend. Furnace oil is largely an industrial fuel. It is a key ingredient in generation of electricity and heat in a number of production units. Being market-linked, the price of furnace oil has been moving up. R S Butola, chairman of Indian Oil Corporation, the country’s biggest oil marketer and refiner, said furnace oil is selling at $103-104 per barrel in India, compared to diesel’s price of $97 per barrel. This is due to a price cap on diesel, as a result of which the domestic oil companies are retailing it at a loss of a little over Rs 12 per litre. The pricing of diesel, kerosene and domestic LPG is regulated by the government. Due to the huge gap between the government-set price of kerosene and the market price, largescale diversion takes place and many intended beneficiaries do not benefit. The situation is identical in the case of LPG cylinders meant for domestic use. Globally, the demand for furnace oil is declining, partly aided by concerns for the environment. Since the calorific value of diesel is higher than furnace oil and it is a cleaner fuel, it makes economic sense for consumers to switch over to diesel from furnace oil whenever the price is favourable. Domestic furnace oil consumption fell by 6.5 per cent in 2010-11 and the fall so far this year is around nine per cent. The country’s annual furnace oil consumption is 10.87 million tonnes, against diesel’s 60 mt. In the global market, by contrast, the price of furnace oil has remained below that of crude oil and much below that of diesel. “This phenomenon is causing distortion. Instead of burning furnace oil, consumers are burning diesel, which is not an efficient usage of diesel,” Butola said, adding there is an urgent need for policy makers to look at the pricing policy of petroleum products. The gap between diesel and furnace oil is different across states, due to taxation. The gap is sharpest in Delhi, where furnace oil sells at Rs 55,828 per tonne against Rs 49,501 for diesel. “If one adjusts the diesel price for its higher calorific value, its price becomes even cheaper, at Rs 46,725 per tonne,” said an industry official. In Uttar Pradesh, furnace oil sells at Rs 53,663 per tonne while the diesel price after adjusting for its higher calorific value is Rs 49,359 per tonne. “This trend started in August and it continues to widen, as the diesel price has remained unchanged,” the official said.
Post-Iran deal fiasco, India gets Israel’s gas offer
Sunday, 18 December 2011
19 Dec 2011;timesofindia.indiatimes.com:Indrani Bagchi:NEW DELHI: Israel, which suddenly finds itself flush with natural gas, has offered to export it to India. The offer was made by Israeli finance minister Yuval Steinitz to the Indian government during his visit here last week. In his conversations with finance minister Pranab Mukherjee and National Security Adviser Shivshankar Menon, Steinitz is believed to have said that Israel was looking to export gas to India. According to sources, the two countries will be setting up committees to do a feasibility survey of the offer. The discussions are expected to intensify during a rare visit by foreign minister SM Krishna to Israel in early January. India sources most of its natural gas from Qatar and Oman. Iran, which could have been a major supplier of LNG, cancelled a huge deal to India after it had been signed, following India's vote against its nuclear programme in the IAEA. A gas pipeline from Iran to India via Pakistan too has run aground on security considerations. Within the country, India's much hyped Krishna-Godavari gas basin has run into trouble after disagreement over pricing resulted in a drop in production. So India is in the market for big gas flows. Israel, which had been energy deficient for decades and locked in potentially unstable energy relationships with Arab countries that have been bitterly opposed to it, stumbled on a bonanza when huge quantities of natural gas were discovered off its northern coast. Gas is expected to start flowing from the Tamar field in 2013 and from the Leviathan in 2016. Varying estimates give Israel control over some 400 bcm of gas. It promises to reduce Israel's dependence on Arab states like Egypt and Jordan and offers the prospects of billions of dollars in revenue. Israel has already started the process of picking out export routes to Europe, through Greece and Cyprus. In the east, energy-hungry India offers the best market that is also free from political troubles for both countries. Israel and India have grown closer in the past decade through a strategic partnership that includes defence, count-terrorism and intelligence. It has also flourished despite the fact that India has strong traditional relations with the Arab world. In the early part of this decade, there was talk of a Medstream pipeline carrying gas and oil from Turkey though Israel which would be bound for India. But with Israel-Turkey relationship deteriorating significantly in the past couple of years, that pipeline has been shelved for the present. India is not only energy-deficient, it is overly dependent for oil from West Asia, many countries of which are in the midst of unprecedented political ferment. The Indian growth story would be severely impacted in the event of higher energy prices, or a shortage brought about by external factors. For the past decade, Indian governments have been engaged in diversifying energy sources -- from nuclear to renewable, gas to wind, India wants it all.
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