News and views about the Auto sector in India

Weekly news updates on trends and happenings in the Indian Automobile Industry

Tata Motors’ Rs1 lakh car will be delayed. Royal Enfield says Tata’s small car is not a threat for its Rs1 lakh motorbikes. In the meantime, tyre manufacturers are looking at enhancing exports, while Indian Railways is likely to provide logistics support to the booming auto industry. On the two-wheeler front, Bajaj Auto is to introduce a 125 cc bike in September. Looking at the auto components sector, Mitsubishi Heavy Industries India has set up a plant at Vellore to make gear cutting tools.

- Chillibreeze Business Research Team

Tyre makers look overseas

The leading tyre manufacturers of India are looking at foreign markets to recoil from the sluggish Indian automotive industry. The companies, which export truck and bus radials, passenger radials and two-wheeler tyres to Europe, Americas, south east Asia and Asia Pacific, are considering setting up manufacturing plants abroad besides looking out for potential acquisitions of tyre manufacturing companies. Apollo Tyres is eyeing an overseas acquisition, likely in Europe. Meanwhile, Ceat Tyres is targeting augmenting its market share in South America, Europe and North America, and JK Tyre is looking at reinforcing its position in Latin America, south east Asia and Africa. MRF Tyres of Chennai is also focusing on increasing its exports, and has set up a greenfiield facility in Tamil Nadu with an investment of Rs900 crore. At this backdrop, the Automotive Tyre Manufacturer Association has forecast that the total tyre exports from India will go up to Rs3,500 crore by March 2008 from Rs1,460 crore in March 2004.
August 12, 2007
Source: Business Standard

Magma ITL to finance Sonalika tractor
International Tractors (ITL) has formed an asset financing company called Magma ITL Finance in a joint venture with Kolkata based Magma Shrachi Finance. This initiative has been driven by ITL’s objective to exploit the potential of semi-urban and rural markets for its Sonalika brand of farm equipments. The new company, which will have its headquarters in Delhi and function through 983 ITL dealerships and 155 Magma outlets, will offer customized finance solutions on ITL’s Sonalika brand of products. While ITL will hold 26% stake in this new company, the balance of 74% will be held by Magma Shrachi.
August 11, 2007
Source: Economic Times

Rs 1 lakh car will be delayed: Tata
Tata Motors’ small car project is suffering a setback due to the political confusion over land acquisition at Singur in West Bengal. Tata Motors, which still holds confidence in the government of West Bengal, has also commented that the farmers’ agitation is politically inspired. Meanwhile, the company has stated that due to vested interests it cannot give a specific date on the small car project.
August 11, 2007
Source: Business Standard

Transport industry looks to ride auto boom
The Society of Indian Automobile Manufacturers’ (SIAM) is negotiating with the Indian Railways on a low cost transport model for the thriving automobile industry, where car production is estimated to increase to 3 million by 2010 from 1.4 million in 2006-2007. SIAM aims that atleast 15% of the total car and two wheeler production will be transported through the railways in the coming years. SIAM’s initiative comes at the back of the effort of various companies in the industry for specialized transport solutions. For instance, Hyundai Motor India has requested for a dedicated rail link from its plant in Chennai to the Chennai port. Meanwhile, General Electric is set to provide technology to Titagarh Wagons, its Kolkata-based strategic partner and Germany’s Hallman Logistics is offering end-to-end solutions to automobile companies.
August 10, 2007
Source: Economic Times

Bajaj eyes higher margins from bike unit
Bajaj Auto Limited, the top second motorbike manufacturer in India, will introduce a 125 cc bike called Exceed in September 2007. Initially the company will manufacture 20,000 units of Exceed and subsequently increase it to 50,000 units during the festival season. Bajaj will further ramp up production after it commences the manufacture of bikes at its new plant in northern Uttarakhand in December 2007 or January 2008. Bajaj, which believes that majority of the motorbike market lies in the 125 cc and above sector, aims that its new bike will widen the margins from its motorbike business.
August 10, 2007
Source: Economic Times

International Tractors to divest 5 pc stake
International Tractors Limited’s (ITL) promoters will divest 5% stake in the company for about Rs175 crore. This initiative is towards developing a war-chest for acquiring auto component companies in Europe. ITL will first make private placement for promoters’ divestment, following which it will enter the capital market in 2008-2009 to raise Rs800 crore. ITL’s move is also targeted at dismissing the private equity players.
August 10, 2007
Source: Hindustan Times

Motherson enters JV for car air-conditioning units
Motherson Sumi Systems, the automotive ancillary manufacturer, has joined hands with Calsonic Kansei to form a joint venture company called Calsonic Kansei Motherson Auto Products. The joint venture company will manufacture air-conditioning units for Japanese car manufacturers in India, with production likely to begin by 2009. The new company, where Motherson holds 49 percent stake and Calsonic holds majority 51 percent stake, will be backed by Moterson’s robust production base in India and the technology of Calsonic.
August 9, 2007
Source: Economic Times

Mitsubishi constructs new plant in Vellore
Mitsubishi Heavy Industries India has set up a new plant in Vellore, Tamil Nadu, with an investment of Rs50 crore. The new plant is intended to double the company’s production capacity in gear cutting tools. The setting up of this new plant has been driven by the increasing demand for gear cutting tools, which in turn has been driven by the growth in production in the automotive industry in the country.
August 9, 2007
Source: Economic Times

Enfield faces no threat from Tata's Rs 1 lakh car'
Royal Enfield Motors (REM) has stated that its motorcycles will face no competition from Tata Motors’ proposed Rs1 lakh car. REM’s statement is in response to speculation that the sales of its motorcycles, also priced at Rs1 lakh, could be affected by Tata Motors’ proposed low cost car. REM has stated that its motorcycles cater to a different market, which includes the younger generation. It has also stated that its motorcycles are not in the commuting but in the leisure segment.
August 9, 2007
Source: The Hindu Businessline

Ceat to move plant out of city
Ceat, the leading tyre manufacturer, will relocate its 49-year old Mumbai plant to Patalganga near Thane in Maharashtra, in phases. At Patalganga, the company intends to purchase 60 acres of land from MIDC. Ceat is also looking at shifting a part of the Mumbai plant to its Nashik facility. The Mumbai plant, which employs 3,000 workers, has a capacity of 250 tonnes per day and lies on 31 acres of land, will be sold off. For the workers who do not wish to relocate to the new plant, Ceat may offer a voluntary retirement scheme (VRS). The chief reasons that have driven Ceat to relocate its Mumbai plant are space constraint for expansion, high octroi charges paid to Mumbai Municipal Corporation, and the air pollution caused by the plant in the surrounding residential area.
August 8, 2007
Source: Economic Times