Industry monitoring EU FTA for import duty

The auto industry is closely following the negotiations between India and the EU on the proposed free trade agreement (FTA). As per one of the EU demands, import duty on new cars should be lowered as part of the comprehensive trade pact. The move has caused some consternation among domestic companies. A senior official from a leading passenger car maker said that this was an attempt on the part of the developed world to flood the Indian market with their products. He reasoned that since the demand in the West is contracting, companies are being forced to explore newer market to ship their cars. ?The government must ensure that it does not give in to demands of the EU countries,? he said. The move comes close on the heels of developed countries led by the US demanding that re-manufacturing be brought under the ambit of WTO negations. Under the proposal, a re-manufactured or refurbished car will be treated as a brand new car and thereby get the same tariff treatment.

SsangYong buy to fuel M&M?s SUV ambitions

Homegrown auto major Mahindra & Mahindra?s acquisition of Ssangyong is set to give the company ready access into parts of Southeast Asia and Europe including Russia. The SsangYong acquisition has to be seen in the context of M&M?s growing ambitions to become a truly global SUV player. In fact, it was precisely with this objective in mind the company had also bid for Jaguar Land Rover in 2008 but backed out towards the end. While the South Korean buy will open up new markets, it is not expected to add to the company?s bottom line. M&M?s president (automotive and farm equipment sector) Pawan Goenka had recently said that the company does not expect SsangYong to break even in 2011 despite expected sales growth of more than 50%. The company is meanwhile working on a global SUV that is expected to be the most expensive offering from M&M in the SUV segment. Besides, the company is also understood to have started work on rolling out a compact SUV, though the company is yet to issue a formal statement.

Rising costs may dent sales this fiscal, cautions Siam

Rising raw material costs and interest rates could pose a serious challenge to domestic auto sales in 2011-12. In the last fiscal, auto sales grew over 26% to 1,55,13,156 units against 1,22,95,397 units in the previous financial year. However, auto apex body Society of Indian Automobile Manufacturers was quick to caution against a similar boom in the current fiscal. Siam president Pawan Goenka said total auto sales growth in the year would be around 12-15% primarily due to higher input costs and higher interest rates. However, he added that India would emerge as the sixth largest auto market in the world.

Japan crisis: Toyota, Honda to cut production in India

The devastating earthquake and tsunami in Japan is having a severe impact on the operations of several auto makers. Over the last week, at least two major OEMs have announced significant production cuts in India that could possibly impact their overall sales in the months ahead. The Indian subsidiary of the world?s largest carmaker, Toyota Motor Corporation, said it would be cutting production in India by a whopping 70%. This will result in a production loss of 7,000 units monthly, apart from reducing the company?s revenue by up to R490 crore. The company will operate at 30% capacity between April 25 and June 4. Another global giant, Honda Motor, announced on Monday that the company is going to cut production by half. The company would be moving towards a single shift from May. While there have been no major announcements from the leading OEMs yet, the situation is being clearly assessed. Maruti Suzuki, for instance, said the company?s production would not be changed. However it did not give any estimates on long-term impact, saying it gets data on supplies from Japan on a weekly basis.

Most auto makers looking at flat bottom line growth

Rising input costs and volatility in currency rates could give OEMs a real headache in the months ahead. Analysts said that while companies are trying their best to hedge against such developments, it could still have a big impact on profits. On Monday, Maruti Suzuki released its Q4 results, with the company?s net profit rising a mere 0.5% to R659.8 crore. Though analysts said the results were above expectations, they were candid that the road ahead could be tough, with most auto makers reporting at best a flat growth in bottom lines.

Maruti recalls 13,000 units of diesel Ritz, Swift & Dzire

The country?s largest car maker recalled over 13,000 units of its diesel cars covering the Ritz, Swift DZire and Swift models.

Maruti Suzuki, which accounts for about half of all cars sold in India, said that the connecting rod bolt was being looked into and replacements would be completely free of cost. The company?s managing executive officer (production) IV Rao told FE that the decision was taken following customer complaints and there was nothing to worry about. This is the second recall in just over a year by Maruti. In February 2010 the company had recalled close to 1 lakh units of its hatchback A-Star. Out of the total, 40,000 units of the recalled car were in India and the remaining 60,000 units abroad. Before that, in 2001, the company had announced the recall of 76,000 units of the Omni. Earlier this year, Japanese major Honda had recalled close to 58,000 units of its highest-selling sedan, the Honda City.