Car sales highest ever in February  
MUMBAI: India's car sales hit their highest ever level in February and monthly industrial production showed surprisingly strong growth, data showed Monday.

The numbers are a positive surprise amid India's economic slide and reduce the likelihood that the central bank will cut interest rates when it meets Thursday, but analysts caution that the data may not indicate a long-term turnaround.

India's president, Pratibha Patil, sought to reassure Parliament that the economy will regain its high growth trajectory. She said that despite falling to around 7 per cent this fiscal year from 8.4 per cent last year, India's economic growth will soon return to 8 to 9 per cent levels.

``The long-term fundamentals of the Indian economy remain robust,'' she said, according to an official transcript of her remarks. ``India's growth prospects arise from factors such as high domestic savings and investment rates, favourable demographics, and a stable democratic polity. My government is confident that it will soon steer the country back to the high growth trajectory of 8 to 9 per cent.''

Car sales rose 13 per cent in February from a year earlier to 211,402 vehicles, the first time Indians have ever bought over 200,000 cars in a single month, according to the Society of Indian Automobile Manufacturers.

The flurry of buying came just before the announcement of a new national budget Friday that is widely expected to raise excise taxes on vehicles and impose an extra tax on diesel vehicles, which have been in high demand because government subsidies make diesel cheaper than petrol.

``To a large extent it is pre-budget buying,'' said SIAM senior director Sugato Sen. ``But some improvement in sentiment is also witnessed. People now feel interest rates aren't going to increase any further.''

So far during the fiscal year ending in March, car sales have crept up 0.3 per cent, against the previous year's surging growth of 29.5 per cent.

Industrial production rose 6.8 per cent in January from a year earlier, thanks to a rebound in manufacturing and a surge in consumer nondurable goods production, the notoriously volatile government data showed.

Production of consumer nondurable goods surged 42.1 per cent. Production of capital goods like factories, machines and tools which are an indicator of investment fell 1.5 per cent from a year earlier, its fifth straight monthly decline.

The longer term trend is less rosy, with April-January industrial production up 4.0 per cent, versus last year's 8.3 per cent rise.

Barclay's Capital analysts said the data are ``not a game changer.''

``The January spike very likely remains a case of data-related issues,'' they wrote in report.

Sen said the car group is sticking to its earlier projections, with car sales for the fiscal year likely to grow from 0 to 2 per cent. Passenger vehicle sales which include SUVs likely to rise 2 to 4 per cent, and commercial vehicle sales likely to grow 18 to 20 per cent.

``While interest rates are expected to moderate going forward, providing relief to automakers, the likely increase in excise duty to rein in the widening fiscal deficit presents challenges to demand growth and pricing power of automakers,'' Angel Research analysts wrote in a Monday report.

The government may also impose a tax of some 81,000 rupees ($1,620) on diesel vehicles.

Source : Economic Times (3/12/2012)

Tata Motors owned Land Rover likely to be manufactured in China  
BEIJING: Tata Motors owned Land Rover is likely to be manufactured in China, through a joint venture with Chinese automobile major Chery Automobile Co Ltd, and is awaiting final clearance, a report said here today.

"Land Rover plans to join the ranks of global automakers making vehicles in China by partnering with Chery Automobile Co Ltd in a joint venture," state run China Daily reported today.

The venture will be based in the Changshu Economic and Technological Development Area in Jiangsu province.

Both sides have reached an agreement on the new venture and are now awaiting approval from the National Development and Reform Commission (NDRC), China's top economic planner, the report quoted sources as saying.

However, Jaguar cars, made by the same UK company are not part of the current deal for local production in China, it said.

Tata's have big presence in China, especially through TCS, which has emerged as the largest Indian IT company with vast business ventures.

In addition to a plant assembling Land Rovers, the NDRC wants the joint venture to produce a new wholly owned brand, besides having an engine factory and R&D centre.

According to the agreement between Chery and Jaguar Land Rover, the joint venture will have a planned production capacity of 50,000 units at its initial stage, the report said quoting overseas media.

It quoted Ralf Speth, Jaguar Land Rover CEO as saying that Land Rover plans to invest 100 million pounds (USD 158 million) in the joint venture, which will have 5,000 employees.

The agreement requires the board chairman of the new joint venture to be appointed by Chery, while president will be selected from Jaguar Land Rover.

Chery, headquartered in Wuhu, Anhui province, already has production facilities in Changshu, a prosperous eastern city.

China became Jaguar Land Rover's third-largest market in 2011, selling more than 42,000 vehicles in the country, a 61 percent increase as compared to the previous year.

Source : Economic Times (3/12/2012)

Diesel pricing: Maruti, Hyundai, Ford, GM & Tata Motors put Rs 3,000 crore investment on hold, says SIAM  
NEW DELHI: Lack of clarity on diesel pricing policy has resulted in automobile companies, including Maruti Suzuki and Hyundai, holding up investments of more than Rs 3,000 crore in India, according to industry body SIAM.

"Many of our members are still unclear whether they should invest on diesel technology or not in India as there is no clarity on how the fuel will be priced in future. This has resulted in more than Rs 3,000 crore of investment being held back," Society of Indian Automobile Manufacturers (SIAM) Director General Vishnu Mathur said.

While he did not share the specific investments of each company, he said firms that have held back investing on diesel engine plants include Maruti Suzuki, Hyundai Motor India, Ford India, General Motors India and Tata Motors.

In November last year, Hyundai Motor India Ltd (HMIL) announced putting on hold its Rs 400-crore diesel engine plant which would have an installed capacity of 1.5 lakh units per annum.

The plant was envisaged to manufacture three different engines of 1.1 litre, 1.4 litre and 1.6 litre capacities only for the domestic market.

Maruti Suzuki India (MSI), on the other, has been maintaining that without a clear-cut policy on how the diesel fuel will be priced and how diesel vehicles will be taxed, it will be difficult to put its money on a new diesel engine plant.

MSI Chairman R C Bhargava had said that in the absence of a clear roadmap on how diesel prices would be placed in the future, the company has been unable to decide on whether to invest on increasing production capacities for diesel or petrol engines.

At present, petrol price is deregulated but diesel price is still decided by the government, which provides subsidy on the fuel.

The auto industry is also apprehending that 'diesel tax' could be levied in the upcoming Budget as is being demanded from some quarters to avoid the subsidised fuel benefiting the affluent.

Source : Economic Times (3/12/2012)

Budget 2012: Rationalization of tax structure needed for auto industry  
The Indian automobile industry's dream ride seems to have met a speed breaker as growth rate has nosedived in the fiscal year 2011-12. In the last fiscal year, while slowdown in global market had impacted the Indian automobile industry, the story of unprecedented domestic growth continued and hence the hope of continuing good luck.

Buoyed by the phenomenal domestic sales growth over the past two fiscal years, carmakers pledged substantial funds to almost double India's annual production. However, rising fuel prices, inflationary trends (in the first half of the fiscal year) and surging interest rates have applied emergency brakes to the growth story

The recently concluded India-EU summit on working out a comprehensive free trade agreement (FTA) was closely followed by the Indian automobile industry as slashing of duty on imported vehicles was one of the key discussion points.

The Government has assured that it would protect interest of Indian auto makers in EU FTA. The auto industry would be hoping for similar type of commitment from the forthcoming budget.

On a macro level it is imperative that definitive steps are taken for introduction of Goods and Service tax (GST) to replace the archaic multilevel complex indirect tax structure in India with clarity on the timelines, excluded sectors, rate structure, credit chain mechanism and methodology proposed to be adopted for transitioning from current multilayered taxes to an efficient GST regime.

It is also being speculated that key proposals in Direct Tax Code (DTC) may be introduced by way of amendments in this year budget itself. If this is so, it is hoped that the Government will consider suggestions provided by various stake holders to the latest draft of DTC.

The Indian automobile sector is graduating to next level of competition with the increased number of players. Extension of terminal date for in-house R&D weighted deduction under direct taxes and providing similar incentives even for R&D done for group companies would fuel better quality outputs with a healthy competition. Benefit of Nil rate of duty may be extended to items imported for R&D for automobile sector.

Rationalization of tax structure may be achieved by merging multiple levies under Central Excise to a single rate. Reduction in excise duty rates and abolishment of National Calamity Contingent Duty would increase the competitiveness of Indian auto manufactures.

Extended support in the form of higher depreciation rates for income tax, reduction of Minimum Alternate Tax rate, tax incentives for exports and concessional indirect tax levies would once again stimulate the growth story of the Indian auto sector.

Source : Economic Times (3/12/2012)

Mitsubishi mulls entering Indian small car market  
NEW DELHI: Japan's Mitsubishi Motors Corporation today said it is exploring various options to enter the Indian small car market and may even consider going solo without the current partner Hindustan Motors for it.

"We know that India is a small car market and we would also like to join that segment at some point of time in future," Mitsubishi Motors Corporation Japan Executive Officer and Corporate General Manager of Asia and ASEAN Masahiko Ueki told reporters here.

The company may consider its new global hatchback, which is powered by a 1.2-litre petrol engine and will be first launched in Thailand this year, for the Indian market, but it will have to first establish its sales and service network apart from building up volumes, he added.

"For these mass products, we need certain volumes and sales and service network. However, our sales volume and in India is very low at the moment and we would like to increase those first through the existing products," Ueki said.

He was speaking at the launch of Mitsubishi's new sports utility vehicle Pajero Sport priced at Rs 23.53 lakh (ex showroom Delhi) which will be open for booking from March 13.

Asked about the timeline for entering the Indian small car market, he said: "Not in the near future, at least in the next two to three years as we would need to build up our volumes and network here."

On whether the company will go solo or with the existing partner Hindustan Motors (HM) on the small car fornt, he said: "Going on our own is also an option...we have many options and we are exploring all of them at the moment...

"We do not know if our operations with Hindustan Motors is good or not for future. So we are looking at all options."

Ueki, however, hastened to add that "using HM's Chennai plant for manufacturing the small car is also an option".

In India, HM manufactures and markets Mitsubishi's products through a licensing agreement signed in 1998. At present, models such as sedans Lancer, Cedia along with SUVs Montero and Outlander from the stable of Mitsubishi are sold in India.

Commenting on the sales expectations of the new Mitsubishi Pajero Sport, HM Director A Sankara Narayanan said: "In the first 12 months, we are looking for up to 5,000 units."

Source : Economic Times (3/12/2012)

Jaguar Land Rover mulls crossover under Jaguar brand  
GENEVA: Tatas-owned JLR is exploring to push its Jaguar brand beyond the realms of luxury cars and is actively considering to introduce a crossover vehicle under the marquee in future.

Buoyed by the response to the new station wagon Jaguar Sportbrake XF that is distinctly different from the lineage of sedans, Jaguar Land Rover is toying with the idea of a Jaguar model which is a mix between a sedan and a sports utility vehicle (SUV) in the future.

"A crossover may be relative possibility. There is also certain DNA in Jaguar, which now channelises a kind of crossover vehicle in terms of drivability, agility and that would not be a disharmony to the overall brand," Jaguar Land Rover (JLR) Chief Executive Officer Ralf Speth told a group of visiting Indian journalists at the Geneva Motor Show here.

He, however, categorically said the company will not deliver an SUV from Jaguar.

"We have lot of opportunities with Jaguar. If you see our product portfolio right now, it is very limited. So we have opportunity to grow...We are very ambitious and we invest a lot," he added.

He said the company will announce anything about any such plans when the project reaches a certain level of maturity.

"We want to talk upon vehicles only when they reach a certain development stage, because then that make sense," Speth said.

The company had unveiled the Jaguar Sportbrake XF at the auto show here. It is powered by a 2.2 litre engine with 8- speed automatic transmission.

Reports of the luxury saloon maker Jaguar planning to venture into the SUV or crossover space have been received with mixed reactions by auto enthusiasts. While some appreciated the move, others remained cautious on the possible competition between the two brands -- Jaguar and Land Rover.

Commenting on the global SUV market, Jaguar Global Brand Director Adrian Hallmark said although the SUV space is not a very volume-driven category, but it is an important segment that is rapidly growing.

"Nothing is planned, but there are many interesting things that we do consider. We are surely considering it right now... This could be one of the 40 new products that are planned for the next five years," he added.

Meanwhile, JLR is planning to strengthen its global distribution network by 20 per cent in the next five years.

"We are planning to aggressively expand our network. Our strategy is to add 450 new dealers across the world in the next five years," Jaguar Land Rover Director (Group Sales Operations) Phil Popham said.

Source : Economic Times (3/12/2012)