Force Motors to invest Rs 1000 crore in 3 years; mulls new plant  
NEW DELHI: Force Motors today said it will invest nearly Rs 1,000 crore for developing new products and capacity expansion in the next three years.

The company that currently rolls out light commercial vehicles, utility vehicles, tractors and diesel engines from two plants is also considering setting up of a third plant.

"We will be spending approximately Rs 1,000 crore on new product development and capacity expansion," Force Motors Chairman Abhay Firodia said.

Speaking on the sidelines of the annual convention of Society of Indian Automobile Manufacturers (SIAM), he said: "We are in the process of evaluating opening a third plant. We are looking at locations for this."

Firodia, however, did not specify by how much the company is looking to increase production capacity.

Force Motors' two plants are located at Akurdi in Maharashtra and Pithampur in Madhya Pradesh, which has an annual capacity of about one lakh units.

On new product development programme, Firodia said: "We are very focused on our van segment though we have SUV and trucks but rural utility vehicles and vans remain our main focus. In about a year from now we will launch a new van."

Later this week, the company will launch passenger carrier van, Traveller 26, he said.

The vehicle was showcased at the Auto Expo earlier this year here.

Source : Economic Times (9/6/2012)

Maruti Suzuki starts production of new Dzire at Gurgaon to clear backlog  
NEW DELHI: In order to clear pending orders of over 65,000 units of the new Dzire, Maruti Suzuki India today said it has started manufacturing the popular new compact sedan at the Gurgaon plant besides rolling it out from the troubled Manesar facility.

Still recovering from the impact of workers' violence in July at the Manesar plant, the company also said it is looking at 10 per cent increase in overall production this fiscal.

Earlier, the company was rolling out the old version of the sedan from the Gurgaon plant, while the Manesar plant was producing the new Dzire.

"Now the Gurgaon plant has also started manufacturing the new Dzire after the lockout at the Manesar plant was lifted," MSI Chief Operating Officer (Supply Chain) S Maitra told PTI on the sidelines of the annual convention of Society of Indian Automobile Manufacturers ( SIAM).

"We are doing this because we have a big backlog and a long waiting list. We want to clear it," he added.

At present, the company has over 65,000 pending orders for the new Dzire and the waiting period is about 4-5 months.

The new Dzire is one of the best selling models of the company. MSI has been unable to meet demand after production was affected by the month-long lockout at the Manesar plant following violence on July 18 in which a company official was killed and 100 others injured.

MSI Chief Operating Office (Production) M M Singh said that at present the Manesar plant and the Gurgaon plants were producing 250 units each of the car per day.

When asked about the overall production target of the company this year, Singh said: "Last year we had a total production of one million units and this year we are looking at 10 per cent more."

Yesterday, Maitra had said MSI expects to have full employee strength at the Manesar plant by the end of September with the completion of fresh recruitments.

The company had around 3,300 workers at the Manesar plant before the July 18 violence.

After a month-long lockout, which was lifted on August 21, the company had fired 500 permanent workers and said it would not take back those contract workers who have been found to be involved in the violence.

Sources had said the company may not take back nearly 500 contract workers.

Source : Economic Times (9/6/2012)

Auto component makers to scale down planned investments  
NEW DELHI: Auto component makers such as Rane Group and Lumax Auto said they will scale down planned investments in the short term due to a slowdown in the automobile market although they are bullish on the industry's future.

"We had planned for 230 crore investment for this fiscal, but I fear, we may not invest even half of that," L Ganesh, chairman of brakes and steering wheel maker Rane Group, told ET.

"We will wait till October to decide the future course of action," he said on the sidelines of the 52nd annual session of Automotive Component Manufactures Association of India (Acma). He said that apart from direct sales to the automotive companies, after-market demand has also slowed down.

The changing economic scenario has muted demand across different automobile segments from two-wheelers to heavy commercial vehicles and overall auto production growth slowed to 7 per cent in the first four months of the fiscal when 69.54 lakh vehicles were built in the country.

Lighting systems maker Lumax Industries said it is scaling down investments and may miss growth target due to workers' agitation at Maruti Suzuki India's Manesar plant.

"We are refraining from going aggressive," Anmol Jain, senior executive director at Lumax, said. The company had originally planned to invest Rs 100 crore this fiscal. Lumax is growing 14-15 per cent year-on-year against its original target of 25-30 per cent, he told reporters.

Analysts attribute the slowdown in investments to the overall economic environment and the capacities created over the last few years when the auto industry was growing at a fast clip.

"There will be deferrals and people will be careful about investing for the future...everyone will be conservative and cautious in investing," Rakesh Batra, partner at international consultancy firm Ernst & Young, said.

"But I still believe the medium-term growth estimates are still intact," Batra said. That's one thought most stakeholders, including companies and the government, share.

Praful Patel, Union minister of heavy industries & public enterprises, on Wednesday said the automobile and auto component industry will account for more than 10 per cent of the country's GDP by 2016. "The output of the automobile and auto component industry would reach $145 billion by 2016, accounting for more than 10 per cent of the country's GDP and generating employment for more than a million people," he told the annual convention of Acma.

Patel said the growth of the industry has led the government to review targets set for the industry under the automotive mission plan 2006-16. The auto component industry in India has grown at 15 per cent CAGR over the last five years. And it is on this faith on the future that some companies such as Varroc Group and Rico Auto Industries are going ahead with their planned investments. "We are not holding back on our investments," Tarang Jain, MD of Varroc Group, said. "In fact, instead of our earlier plan of investing 160 crore, we will now be investing 200 crore. We can't stop, if our OEM partners are investing, we have to follow them," he said.

Source : Economic Times (9/6/2012)

Ford to export Indian-built engines to Europe  
NEW DELHI: Ford Motor Co plans to export Indian-built engines to Europe as it ramps up capacity in India, Gary Johnson, vice-president, manufacturing, Asia Pacific and Africa said on Thursday.

It would be the first time the firm has shipped Indian-built engines to Europe.

"From an engine perspective, we'll be exporting not just to Europe but also to Thailand," said Johnson, without providing details.

Ford will have capacity to build 450,000 cars and 600,000 engines in India by 2015, after investing over $2 billion in two plants in the country.

Source : Economic Times (9/6/2012)

Volkswagen to invest over Rs 700 crore in India in 2 years on product, facilities' upgradation  
NEW DELHI: German automotive giant Volkswagen Group today said it will invest 100 million euros (over Rs 700 crore) in India in the next two years for upgrading products and facilities.

However, the group, which had earlier planned to invest Rs 2,000 crore for expanding operations, is still putting that on hold as the VAT refund issue with the Maharashtra government remains unresolved.

"We need investments in improving our facilities, doing minor model changes for our exports and other areas. We are investing about 100 million euros for the entire group in the next two years in India," Volkswagen Group Chief Representative, India, John Chacko told reporters here.

Speaking on the sidelines of the annual convention of Society of Indian Automobile Manufacturers ( SIAM), he reiterated that the group is not going ahead with its other big investment plans in India.

"As a group we had planned to invest Rs 2,000 crore, that is on hold since lots of policy decisions are confusing. We are however still putting pressure on Maharashtra government on various policy issues," Chacko said.

To woo investors, the state government earlier used to refund VAT paid on all vehicles sold by companies, which have factories in the state.

It was modified last year with the state government saying it would refund VAT only on vehicles sold within the state.

The VW group is present in India through Volkswagen, Audi and Skoda. It has two manufacturing facilities at Chakan and Aurangabad in Maharashtra.

Commenting on the sales performance of the group, Chacko said VW is expecting 10-12 per cent increase in 2012 from 1.11 lakh units sold last year.

He further said because of various efficiency measures, the group's production level would go up by 10-15 per cent.

On exports from India, he said VW group is exporting mid- sized sedanVento to South Africa, Malaysia and the Middle East and the export market is still expanding.

Source : Economic Times (9/6/2012)

Two-wheeler industry faces first sales fall in 42 months  
NEW DELHI: Sales of two-wheelers fell for the first time in 42 months in August as a combination of surging petrol prices and high interest costs forced customers to cut back on purchases. Two-wheeler companies such as Hero MotoCorp and Bajaj Auto posted a sharp drop in sales while overall industry numbers declined 5 per cent for the first time since January 2009 to 1.07 million units.

Only Honda Motorcycle & Scooter (HMSI) and Suzuki bucked the trend with a robust rise in numbers. The decline, coming weeks ahead of the festive season, is a rude jolt for the industry, indicating flagging demand just when the economy needed a booster shot with higher consumption.

"The future depends on the coming months and we expect retail sales to rise during the upcoming festive season. The past two months have been really tough. We have seen a drop in retail sales and our stocks are rising. We are betting on the festive season to revive the market," said Hero MotoCorp MD & CEO Pawan Munjal.

Industry executives blame the fall on petrol prices that have risen sharply in recent months, and high interest rates, which are at 24 per cent compared with 10-12 per cent for cars. Unlike cars, twowheelers don't have the cheaper fuel option of diesel.

Buyers are also delaying purchases due to an uncertain economic environment and the spectre of drought in many rural areas.

"The market may not imitate previous years, when the festive season led to high demand," said Sageraj Bariya, managing partner at Mumbai-based research firm Equitorials.

"The scene is different this year with weak consumer sentiment trickling down to all markets, including the rural areas that are lying low due to delayed monsoon. We may be heading towards a Black Diwali and auto companies may face even tougher times ahead," said Sageraj Bariya of Equitorials.

Rural areas are the primary market for two-wheelers and the deficient monsoon in many parts of the country may have contributed to the slump in sales. Mahantesh Sabarad, senior vice-president of equity research at Fortune Financial Services, estimates two-wheeler sales growth at 6 per cent for the full year, down from his earlier estimates of 10 per cent, as people put off discretionary spends.

But, strangely, finance companies don't seem to have been affected. "We don't see any impact in tier-II and tier-III cities.

There is some slowdown in metros," said Sundar Rajan, director, Shriram City Union Finance.

Most bikes and scooters are sold on finance, especially in rural areas. Financing costs remain high for this category and even a slight dip in consumer sentiment and souring of economic climate could force people to pull the plug on purchases.

"There have been some challenging times, and this has taken the sheen off the two-wheeler market. And with customers delaying purchases, even the demand for scooters is sluggish," said Atul Gupta, vice-president (marketing), Suzuki Motorcycle India.

Source : Economic Times (9/6/2012)