Domestic car sales hit record high in February

Car sales in India hit a record monthly high of 1.89 lakh units in February as customers advanced purchases in anticipation the government may hike excise duty in the Budget. Sales were also driven by rising disposable income with the middle-class , easy availability of loans, and a pick up in new product launches.

Car sales rose by 23% in February compared with a year earlier, data released by industry body Society of Indian Automobile Manufacturers (SIAM) showed Wednesday. The February sales number is higher than the record 1.84 lakh cars sold in January.

The Budget for 2011-12 , however, left excise duty unchanged at 10-22 % for different segments of cars, contrary to an expectation of a 2% hike. "Car prices have not increased much despite rise in global commodities prices like steel and rubber . Also, customers are enjoying flexible financing options. In future , however, we expect higher base of 2010 to moderate growth rate," SIAM Director General Vishnu Mathur said. Maruti Suzuki, the country's largest carmaker, reported 19.8% year-on-year growth in sales in February to 101,543 units.

"There was more demand in the market than what we could supply as we faced severe scarcity for our highrunning models like Alto and WagonR," a senior official from Maruti said. Hyundai sales grew 5.3%, while Tata Motors car sales grew 14% during the month. Two-wheeler sales in February grew 22% to a record 10.22 lakh units. The growth in the segment was primarily driven by market leader Hero Honda that posted 24% increase in sales to 4.62 lakh units last month. Sales of trucks and buses grew 11% in February to 64,057 units led by Tata Motors, Ashok Leyland , and Eicher Motors.

India's total domestic vehicle sales in the current fiscal year is expected to grow 26-27 % year-onyear , higher than SIAM's earlier estimate of 18%, said Mathur. However, rising interest rates on auto loans and spiraling global commodities prices, including crude oil, are concerns for the sector going forward.

Nissan may set up new plant for small car

Japan's Nissan Motors may set up a new plant in India to manufacture an entry-level car that it plans to roll out at the Rs 2.5 lakh price point through a joint venture. 

Kiminobu Tokuyama, MD and CEO of Nissan India, said the company expected "very large" volumes from the new car that would be pitched in the Maruti Alto category. Hinduja group company Ashok Leyland, Nissan's India partner for light commercial vehicles, is one of the companies the Japanese auto major is in talks for the JV. 

Tokuyama refused to identify the other companies Nissan was talking to and said "details are being worked on." 

Nissan has multiple partnerships in India and will launch the Micra compact from its Chennai factory in July. While it has partnered group company Renault for the manufacturing set-up at Chennai, it will sell cars in a marketing and distribution tie-up with Hover Automotive India. The company has also partnered Renault and Indian two-wheeler major Bajaj Auto for a ultra-low cost (ULC) car, while tieing up with Ashok Leyland for LCVs. 

The new entry-level car, that the company will position between its ULC and the Micra, will be yet another partnership for the company. Tokuyama said since the model would be in the heart of the Indian car market that accounts for the majority of sales, targeted volumes are likely to be substantial, thus requiring a new manufacturing facility. 

"A different manufacturing base for this is one of the alternatives," he said, indicating that the car may not be manufactured at its Chennai factory. "As we finalise our strategy for the entry-level car, we will work out the best options." Nissan-Renault's Chennai factory has annual capacity of 4 lakh unit that is expected to be used by both the companies equally for their products. Nissan plans to use the location for making the Micra compact; a new sedan that it plans to roll in by 2011; a multi-purpose vehicle; LCV and one more model. 

Hover is expanding the retail network as Nissan expands its portfolio. It has ten dealerships and hopes to expand this to 80 by 2013, by when it hopes to have a 9 models, including 4 imported.

Safety features will hold key to Indian cars on European roads

Many cars, including those from Tata Motors and Mahindra, about to hit the market, are set to have more integrated safety features. With Indian companies eyeing the European market and manufacturers looking to up the ante, one company set to get the wheels rolling with Indian auto majors is MIRA Ltd, UK automotive engineering specialist, which provides expertise to three Indian vehicles awaiting launch, including a small car.

“Many Indian companies, including Tata Motors, Mahindra and Ashok Leyland, are associated with us. People in Europe are more aware about safety mechanism for automobiles. European customers attach more importance to star ratings given by The European New Car Assessment Programme (Euro NCAP),” said Jim Hopton of MIRA, UK, talking to The Express. Hopton, in Pune to attend a symposium on international automotive technology held by the Automotive Research Association of India (ARAI), said future niche areas included advanced driver assistance, warning assistance and collision avoidance and intervention systems.

Addressing the gathering, chief guest at the symposium, Lord Peter Mandelson, Secretary of State for business, Enterprise and Regulatory Reform, UK stressed the need for partnership between auto majors of Indian and UK origin. “We are setting up a business office in Banglore to support and encourage Indian companies entering joint ventures with UK counterparts. UK companies are well positioned to help Indian firms realise development plans,” he said.

“In Europe, the Euro NCAP publishes safety reports on new cars, and awards 'star ratings' (1 to 5) based on performance in a variety of crash tests, including front, side and pole impacts, and impacts with pedestrians. In 1997, 80 per cent of the cars could attain only two stars but starting 2005, 95 per cent cars got 4-5 stars. Now, the Indian auto companies are keen on matching European safety standards and our Indian clients are aiming for four stars,” Hopton said.

Terry Spell, vice president of MIRA, Shanghai, said more sophisticated technologies are coming up in the industry in safety engineering and that Indian companies could soon adapt to the change. “Active braking system, adaptive cruise control and other technologies are now in the offing. Most of the cars in Europe comes with anti-submerging seats, dual stage, sophisticated airbags among others,” he said.

MIRA, which has 400 niche engineers, was started 60 years ago as Motor Industry Research Association and was then funded by the UK government. It later became a company. In India, it has a business office in Chennai.

Ford sets early 2010 target to launch small car in India

Armed with a $500-mn investment outlay, Ford Motors has set early 2010 as the target to launch a small car in India, start its new engine-making unit and double the assembly line capacity, a top official said here.

The US-based giant will also unveil its refurbished Ikon by next month to expand its range of offerings in the country that includes Fusion, Endeavour and Fiesta, said Michael Boneham, managing director and president of Ford India.

"Ford now has a presence in only 30 percent of India's automobile market segments. We are entering other segments too. These are exciting times," Boneham told IANS at the company's factory at Maramalai Nagar on the outskirts of the Tamil Nadu capital.

"We are also commissioning a new engine manufacturing unit. It will serve both the domestic and global markets. It will have the flexibility to produce diesel and petrol engines. The idea is to go for higher localisation in the months to come."

Speaking about the small car project, the Ford official said it was being designed and developed specifically for India by a global team. "It will meet the needs of Indian conditions - like water wading, air-conditioning and emission standards."



While declining to divulge any further information on the project, Boneham said it will have a sub-1.2-litre engine with a length of no more than four metres to avoid higher taxes. "It will be very, very competitive in that segment."

Ford's first offering here was the "Josh machine" Ikon that rolled out in 1999 from this city, often called the Detroit of India for hosting auto companies like Hyundai, BMW, Mitsubishi, Ashok Leyland, Caterpillar, TVS, Tafe and Same.

Nissan and Daimler are among some global players that have definite plans to set up their units in this city.

Boneham said the company's integrated engine plant for 250,000 units per annum will be its first outside Europe and will make low-displacement engines for cars to be rolled out of its Indian plant for both domestic market and exports.

He said the existing $26-mn diesel engine assembly plant, with a capacity for 50,000 diesel and 10,000 petrol engines for Fiesta and Fusion, would be eventually integrated with the new plant.

The company has the capacity to assemble some 100,000 cars per year at its facility here, which will be doubled to 200,000.

Queried about the future of its tie up with the Indore-based Avtec that supplies 1.6 litre petrol engines, Boneham said: "We will continue to work with them. We will look at sourcing components from Avtec."

He also sought to dispel the perception that the cost of ownership of Ford cars was high compared with those offered by Japanese and South Korean companies, as several factors like fuel efficiency and servicing were also involved.

"As per our study, in some parts we are costlier and in some others we are cheaper. Overall, we are very competitive in this area. We are working to lower component costs further. Our diesel engine is more fuel efficient than many others," he said.

"High localisation is intended to achieve that. We are extremely quality conscious. Today, we can say we are far more satisfied and comfortable with our vendors."