Auto Monitor - 1-31 January 2013 by Infomedia18

I N D I A â&#x20AC;&#x2122; S N O . 1 M A G A Z I N E F O R A U T O M O T I V E N E W S , V I E W S & A N A LY S I S

Vol. 13 No. 01

1 - 31 January 2013

ADEA Automotive Dealership Excellence Awards

Page Nos

122-123

w w w.am o n l i n e.i n

136 Pages

`50

EDITORIAL SHOW OF STRENGTH Twelve long years. 12 in 2013. Any anniversary issue of a magazine is created with plenty of apprehension. And we were no different. Especially when the magazine is published at the end or beginning of a calendar year. While it is pretty common for magazines to print industry views or outlook for the forthcoming year, we have refrained from doing so. We decided that since we have a strong team with excellent contacts in the industry, we would exploit it to the hilt. And so it was with no or little trepidation that we set out to deliver this content. At a time when few people are knowledgeable about most sectors, it makes us happy to gather content that focuses on the larger sections of the automotive industry. And we have plenty to offer in that line. And here it is. Please write in your feedback. Sparks, Sparks Having said that, we at Auto Monitor are not resting on our laurels. And even while you are reading this, we are already working on the next big project the automobile industry (for dealers, mainly) has ever seen. ADEA or Automotive Dealership Excellence Awards is round the corner. And while much of the groundwork has been done, we are keen to offer a glimpse into what’s coming your way or the dealers’ way. For beginnings, we have just ﬁnished receiving the nominations. And our team is scanning through them. The awards will seek to identify two top performing dealers in four key vehicle categories: two wheelers, three wheelers, passenger cars and commercial vehicles. There will be six additional awards for top dealers based on below mentioned parameters. Thus a total of fourteen awards will be present-

FOUNDER & EDITOR, NETWORK 18 Raghav Bahl PRESIDENT & EDITORIAL DIRECTOR, TV 18 Senthil Chengalvarayan EXECUTIVE EDITOR Jayashree Kini-Mendes EDITORIAL TEAM Abhishek Parekh, Features Editor SENIOR CORRESPONDENTS Nabeel A Khan Anand Mohan CORRESPONDENT Jagdev Kalsi Pradeb Biswas COPY DESK Geoffrey Mathews ASSISTANT ART DIRECTOR Varuna Naik SENIOR DESIGNER Mahesh Talkar CHIEF PHOTOGRAPHER Mexy Xavier PHOTOGRAPHERS Varun Anchan, Senior Photographer Joshua Navalkar BUSINESS CONTROLLERS Akshata Rane, Lovey Fernandes, Deepak Bhatia, Ashish Kukreti, Shwetha ME, Jayashree N, Shefali Mahant

PRINTING EXECUTIVE VICE PRESIDENT Ananth R. Iyer ASSISTANT GEN MANAGER-PPC Shekhar Khot

PRODUCTION TEAM Surekha Karmarkar Sanjay Shelar, Ravikumar Potdar, Ravi Salian

GROUP CEO, NETWORK 18 B. Sai Kumar CEO-NETWORK 18 PUBLISHING Sandeep Khosla EVP-HUMAN RESOURCES Sanjeev Kumar Singh ASSOCIATE VICE PRESIDENT Sudhanva Jategaonkar ADVERTISING SALES Shashin Bhagat (Ahmedabad) shashin.bhagat@network18publishing.com Mahadev B (Bengaluru) mahadev.b@network18publishing.com Hari Hara Subramaniam (Chennai) hari.s@network18publishing.com Balakrishnan.s (Coimbatore) balakrishnan.s@network18publishing.com Surendra Kumar Agrawal (Delhi) surendra.a@network18publishing.com Dominic Dsouza (Hyderabad) dominic.dsouza@network18publishing.com Ameya Gokhale (Indore) ameya.gokhale@network18publishing.com Sandeep Arora (Jaipur) sandeep.arora@network18publishing.com Abhik Ghosal (Kolkata) abhik.ghosal@network18publishing.com Inder Dhingra (Ludhiana) inder.dhingra@network18publishing.com Surajit Bhattacharjee (Ludhiana) surajit.b@network18publishing.com Olwin Dsouza (Mumbai) olwin.dsouza@network18publishing.com Rohit Dass (Pune) rohit.dass@network18publishing.com Vipul Modha (Rajkot) vipul.modha@network18publishing.com Chirag Pathak (Vadodara) chirag.pathak@network18publishing.com MARKETING TEAM Ganesh Mahale, Akshaya Jadhav

ed to dealers across vehicle categories. The jury will adjudge the winners going by strict scrutiny, validation and a one-on-one presentation. The parameters on which dealers will be rated include:a) Sales satisfaction index b) Service satisfaction index c) HR Practices & employee satisfaction index d) Corporate social responsibility index e) Green initiatives index f) Safety Initiatives index Though we have tweaked the validation process to make it more transparent, it only makes the entire process delightful. And our tie-up with FADA is on a wave. So within a matter of weeks, we would be delighted to host you (please mark the date on your calendar: March 9, 2013) at one of Mumbai’s prestigious hotels. Till then, take care. PS: Besides Facebook, you can now follow us on Twitter @automonitor18.

Do send in your feedback, views, and opinions to jayashree.mendes@network18publishing.com

Auto Monitor OVERSEAS CONTACT CHINA 1001 Tower 3, Donghai Plaza, 1486 Nanjing Road, West, Shanghai 200040, China Tel: +86-21 6289 – 5533 Ext. 368, Fax: +86-21 6247 – 4855 (Craig Shibinsky) Email: craig@ringier.com.hk Ringier Trade Media Ltd

Ringier Trade Media Ltd HONG KONG 9/F, Cheong Sun Tower, 118 Wing Lok Street, Sheung Wan, Hong Kong Tel: +852 2369 – 8788 Ext. 21, Fax: +852 2869 – 5919 (Maggie) Email: maggie@ringier.com.hk

Ringier Trade Media Ltd TAIWAN Room 3, Fl. 12, No. 303, Chung Ming S. Rd., Taichung, Taiwan Tel: +886-4 2329 – 7318 Ext. 16, Fax: +886-4 2310 – 7167 (Sydney La) Email: sydneylai@ringier.com.hk

USA Tel: (513) 527-8800 Fax: (513) 527-8801 Email: dhight@gardnerweb.com USA Alfredo Domador, 6505 Blue Lagoon Drive, Suite 430 Miami, FL. 33126, USA Tel: (305)448-6875 Fax: (305)448-9942

NEWS STAND AND SUBSCRIPTIONS DISTRIBUTION HEAD Sunil Nair SR. MANAGER-SUBSCRIPTIONS Sheetal Kotawdekar CO-ORDINATORS Rahul Mankar, Anant Shirke, Sarita Quartos’, Chaitali Parker, Kamlesh Madkar, Vaibhav Ghavwale

SERVICES CIRCULATION SERVICES Write to automonitor@infomedia18.in SUBSCRIPTION SERVICES For subscription queries, write to customercare@infomedia18.in or call +91 22 30034631-34 or toll free 1800 200 1021 PERMISSIONS For subscription to copy or reuse material from AUTO MONITOR, Write to automonitor@infomedia18.in

Weekly Issue Price: `50 Annual Subscription: `799

Views and opinions expressed in this magazine are not necessarily those of Network18 Media & Investments Ltd (Network18)*, its publisher and/or editors. We at Network18 do our best to verify the information published but do not take any responsibility for the absolute accuracy of the information. Network18 does not accept the responsibility for any investment or other decision taken by readers on the basis of information provided herein. Network18 does not take responsibility for returning unsolicited material sent without due postal stamps for return postage. No part of this magazine can be reproduced without the prior written permission of the publisher. Network18 reserves the right to use the information published herein in any manner whatsoever. Printed by Mohan Gajria and published & edited by Lakshmi Narasimhan on behalf of Network18 Printed at Infomedia 18 Ltd, Plot no.3, Sector 7, off Sion-Panvel Road, Nerul, Navi Mumbai 400 706, and published at Network18, ‘A’ Wing, Ruby House, J. K. Sawant Marg, Dadar (W), Mumbai - 400 028. AUTO MONITOR is registered with the Registrar of Newspapers of India under No. 67827/98. Views and opinions expressed in this publication are not necessarily those of Network18. Network18 reserves the right to use the information published herein in any manner whatsoever. While every effort has been made to ensure accuracy of the information published in this edition, neither Network18 nor any of its employees accept any responsibility for any errors or omission. Further, Network18 does not take any responsibility for loss or damage incurred or suffered by any subscriber of this magazine as a result of his/her accepting any invitation/offer published in this edition. No part of this publication may be reproduced in any form without the written permission of the publisher. All rights reserved. *Ownership of this magazine stands transferred from Infomedia18 Ltd (Infomedia18) to Network18 Media & Investments Ltd (Network18) in pursuance of the scheme of arrangement between Network18 and Infomedia18 and their respective shareholders and creditors, as approved by the Hon’ble High Court of Delhi and the necessary approval of Ministry of Information and Broadcasting is being obtained.

CONTENTS

1 - 31 JANUARY 2013

Cashing In

Wheels Of Mixed Fortune

Time To Engage

Ramesh Iyer, MD, Mahindra & Mahindra Financial Services, has reasons to understand the changing landscape in rural auto ﬁnance.

Banks/ﬁnance companies catering to CVs are worried. The low sales in CVs is reﬂecting on sagging lending.

Sudhir Khanna, Head – CVs and Tractor Division, Kotak Mahindra Bank, explains the sagging scenario in the CV ﬁnancing business.

HYBRID VEHICLES

N E W S

SMG Zeroes In On Two European Cos Audi Q5 Tiptronic Lurching Into The Fast Lane Shripad Ranade of TSMG says that small scale auto components manufacturers have many challenges staring them in the face.

National Mission Is Welcome

An Electric Future

Going Electric

Sandeep Singh, Dy. MD (Marketing), Toyota Kirloskar Motor, sees a solid future for hybrid/electric vehicles.

BMW is innovating ﬁercely to make electric cars a viable reality, from reducing body weight to a dual accelerator/decelerator pedal.

Even the PM of India is exuberant at the NEMMP-20 Plan and is hoping for the best.

GLOBAL MARKETS

Buying Out!

Tariff Troubles

Manufacturing Gets A Boost

The Last Course

High import duties are straining Indian manufacturing, and FTAs seem to only put the foreign partner at an advantage.

Shashank Srivastava of Maruti Suzuki says that developments have allowed India to emerge as an auto manufacturing hub.

India’s achievements needs to be spruced further with local product development and R&D, says Rakesh Batra of Ernst & Young.

INFRASTRUCTURE 10 10 14 18

A Big Mismatch?

For A Rainy Day

Sound Unsound

Dr. Subhamay Gangopadhyay, Director of CRRI reasons the steps that could be taken to save our automobiles from bad roads.

Disasters are everywhere. Sudam Maitra of Maruti Suzuki reveals the SRM initiatives undertaken by his company.

Vehicular vibrations are not an enjoyable experience. Akhtar Nasim of CRRI explains how they can be curtailed.

Cover Illustration: Chaitanya Surpur

Cover Design: Varuna Naik

CONTENTS

1 - 31 JANUARY 2013

R&D 80

Leather Matters

The Better Option

Start The Engines

Automotive leathers are now being processed in India, and with wide acceptance by OEMs.

The technology of producing bioethanol, biodiesel, is pursued in India. However its economic viability has to be gathered, says Prof. L M Das.

ARAI has undertaken newer projects. It wants to enhance its capabilities and work jointly with partners says Shrikant Marathe, Director, ARAI.

TRACTORS 90

A Gradual Process

With A Stronger Will

Tractoring On

The Pain Of Suspension

Despite the uncertainty for tractor demand, the industry is hopeful, avers Bishwambhar Mishra, CEO, Farm Equipment Sector, M&M.

100

Not only slowdown but bad policies too. BCS Iyengar, ED, VST Tractors & Tillers is hopeful of a consistent policy for subsidy disbursal mechanism.

107

The southern region may outpace the overall tractor market growth in coming months.

Tiller manufacturers have made a representation to the Central government for streamlining subsidies.

TWO-WHEELERS 100

Return With A Whole New Approach

101

Piece By Piece

103 108

Viren Popli, EVP - Strategy and Market Development, Mahindra 2 Wheelers, is back with a roar with two considerably better products.

Unlike carmakers, motorcycle mfrs are hesitant to assemble larger capacity bikes in India. But there's a big market waiting.

Korean Invasion DSK Hyosung’s Shirish Kulkarni has great plans for India.

Back To Basics Mahindra 2 Wheelers gets back to what Mahindra does well: Building homegrown vehicles for the masses.

MANUFACTURING 107

Exhaust Effect

110

Millions For New Technologies

113

Turning The Page

114

Driving Cost Efﬁciency

Borg Warner India’s emission systems division is looking forward to stringent norms, says Sudhir Kumar Chawla.

No manufacturing policy for the auto industry can operate effectively in the absence of a national initiative for technology development.

After seeing the highs and lows of the auto industry, the company is going through a lull before a new-gen of Tata vehicles hit the market.

Inﬂation and a stagnant market has sent mfrs on a cost cutting drive. Rajiv Singh of PwC offers solutions for improving the bottom line.

134 The Other Side SK Krishnan, Vice-President (Demand Chain Management), Mahindra & Mahindra (Automotive Division).

POWERED WITH ELECTRICITY, GAS, AND AUTOMATICALLY-GENERATED CODE.

THAT’S MODEL-BASED DESIGN. To create a two-mode hybrid powertrain, engineers at GM used models to continuously verify their design, test prototypes, and automatically generate the embedded code. The result: a breakthrough HEV, delivered on time. To learn more, visit www.mathworks.in/mbd

MathWorks INDIA

REGISTER NOW TO ATTEND FREE MATHWORKS AUTOMOTIVE EVENTS Automotive Webinar - February 21, 2012 To register, visit www.mathworks.in/event_autowebinar Automotive Seminar Series - April 2012 To register, visit www.mathworks.in/event_autoseminars

Auto Monitor

NEWS

Buying Out! M&M is taking a 100 pc stake in its JV, Mahindra Navistar

SMG Zeroes In On Two European Cos Nabeel A Khan New Delhi

Nabeel A Khan New Delhi

ndia automobile major Mahindra & Mahindra is readying to acquire a 100 percent stake in its joint ventures (JV) with US-based Navistar Group: Mahindra Navistar Automotives Limited (MNAL) and Mahindra Navistar Engines Private Limited (MNEPL). The Indian vehicle maker has cited financial issues as the reason for the acquisition. According to company sources, the JV has already been suffering significant losses, requiring crucial investments which Navistar was unable to support, Navistar’s priority being its own domestic market in the US. The acquisition will help Mahindra make independent strategic decisions and product plans, and help position the company better. The deal is expected to be signed on January 31, 2013. The company took the decision at a time when the commercial vehicle (CV) segment is going through its toughest time. In this fiscal, the segment shrunk by 20 percent compared to the previous fiscal, and situation is expected to prevail till the last quarter of FY13. “The problem is really only with the medium and heav y vehicle segment. The light commercial vehicle segment is sustaining the market. Obviously, there is an opportunity in the market and this acquisition will help Mahindra establish itself in the commercial vehicle segment,” says Abdul

1 - 31 JANUARY 2013

The acquisition will help Mahindra make independent strategic decisions and product plans, and help position the company better.

Majeed, Partner Automotive, PricewaterhouseCoopers. In November 2012, MNAL had only a two percent market share in the segments where its products were available. It reported a cumulative loss of `690 crore in 2011-12, net revenue for the period being `1,350 crore. Between April and December of this ﬁnancial year, MNAL sold 8,535 units, which is a decline of 10.2 percent over sales in the corresponding period in FY12. The JV accumulated an outstanding loan of `450 crore, and Navistar was not keen on pumping in more money into its nascent Indian business. MNAL made some decisions in terms of product positioning and pricing which were not suitable for a market like India, the pricing being higher than prevailing market rates. And contrary to current trends, the company offered built-in cabins for its trucks, something which

leading players like Tata Motors and Ashok Leyland do not provide. In some cases, the engines have also reported issues. Along with the purchase, the company has also discussed plans for new product launches. It will invest around `250 crore over the next three years to maintain and upgrade the products it developed with its erstwhile partner. It will also launch a new brand identity with a new company name once the deal is completed. “With 100 percent acquisition, we will launch a new product strategy and branding for the commercial vehicle segment and for our business, in the next three months. The truck industry has periodic downturns, and we are hoping that it will bounce back”, says Pawan Goenka, President, Mahindra & Mahindra, Automotive & Farm Business.

Contd. on Pg 12

ustomer references seem to work very well for the Samvardhana Mot herson Group (SMG). And these references are pretty unusual. The customer references which come to SMG are requests for acquisitions! And so, India’s leading auto ancillary manufacturer is now in talks with two European companies for a takeover. “We have undertaken due diligence for two companies. We are hopeful of the prospects. T he requests ca me f r om carmaker companies who are also our customers,” says V C Sehgal, Chairman of the SMG group. The size of the acquisitions on the radar are between 250 and 300 million Euros. SMG has appointed two teams to work on the acquisition process, and an announcement to the effect can be expected in February. However, Mr Sehgal is wary of revealing the names of the companies, and will only say that they have operations at multiple locations, including the US, Germany, and China. The components manufacturer, who earned 80 percent of their business from India in 1999-2000, earned only 23 percent of its revenues from India in 2011-12. The rest came from abroad. This is in tune with their

vision to be a “preferred global solution provider”. “I think a particular point to be noted here is that everyone looks at percentages, but no one looks at the size of the pie. In 1999-2000, we were a `100 crore company, and at that time about 80 percent of our business came from India. So people now ask me the reason for dropping the business from India. I keep saying that they are missing the larger picture. The picture is that in 2011-12 we were $4.14 billion and 22 percent of that was in India, which is around `5,500 crore,” Sehgal added. In terms of acquisitions, this would be t he g roup’s t hird on e . The company acquired crisis-ridden UK-based Visiocorp Group in 2009, which was as big as the group itself in terms of revenues. However, in the last three years the turnover of the new subsidiary formed after the acquisition - Samvardhana Motherson Visicorp Solutions Ltd (SMVSL), has almost doubled. With this, the group became the largest rear-view mirror systems provider globally. However, its return on capital employed (ROCE) went down to 22 percent post acquisition, but rebounding 27 percent in FY11. Then in 2011 the group made another acquisition: Germany’s Peguform. Established in 1959, Peguform has more than 7,000 employees at its 17 factories and ﬁve module centres.

Read Interview on Pg 11

1 - 31 JANUARY 2013

Auto Monitor

INTERVIEW

Onwards And Upwards V C Sehgal, Chairman, SMG, is the man who dreamed big and made it big. Under his leadership, Samvardhana Motherson Group (SMG), which had a humble turnover of `100 crore in 1999-2000, has grown phenomenally and realized a turnover of $4.14 billion (over `22,000 crore) in 2011-12. He talks to Nabeel A. Khan about the growth of the acquisitions made in the past few years and the group’s future plans. You have emerged a winner at a time when the industry is facing a slowdown. You acquired Visiocorp in 2008-9, and in 2011 bought over Peguform. What strategy do you follow? The Motherson Group doesn’t wake up all of a sudden and say that the bad time faced by the industry is a good time for us to take over a company. One must understand that it is not an easy task taking over a company. It’s a double-edged sword and can cut both ways. It is important for us to gain the confidence of the customer. The reason why our acquisitions are pretty stable is because we assured our customers that the company would continue to function well. This makes a big difference. During troubled times, everyone tries to operate more efficiently and stay in control of our companies. During tough times, when a customer asks you to take over a company, it does make you glad that the customer has confidence in you. You are simultaneously talking about the people in the system who are hit by the slowdown. You are thinking of ways to bring them around, find out a strategy, and ways to make it happen. We are always looking at opportunities which customers ask us to take. Believe me, on our own we have never taken over a company, but it has always been at the behest of the customer. Will you call this a bad time

for the automotive industry? One reason why we don’t believe this is a bad time is because the automotive industry doesn’t work on a month-to-month result. I don’t know why it has been made to appear like that. If you consider a little history, say around 2008, everyone said cash for clunkers [informal name for the program in the U.S. is the Car Allowance Rebate System (CARS)] have come to pass and since these benefits have come from the European Union it is the reason why the cars are selling. The next year was a record year and then people began saying that since car sales in Europe are doing well… How can one generalize? It’s not cement, or a commodity. Automobiles have an aspirational value, and people always aspire to buy bigger and better cars. I say look at the high-end cars, medium range, and low-end cars and they are all doing well. Of course, this depends on the stage they are in. If the life cycle of a car is five years, in the fourth or fifth year sales of that model will be definitely low as new models are constantly being introduced. So we cannot say that a particular car is not doing well, and so Europe is not doing well. If you consider all points, you will find it’s doing pretty well. Porsche is up 30 percent YoY, BMW and Audi are also up. The American market is the best performing market

this year. So we should not be bothered if one or two months are down or up, that’s part of life. So, you are saying there is no impact on the market currently? No, there is an impact. I am not trying to tell you there is no problem. There are problems in the world and they are trying to solve them and this is a regular process. One cannot associate global problems with the entire automotive industry. For example, one doesn’t walk to one’s office, either one takes a taxi or drives down. Nowadays it is the children who decide the model of car that the parents ought to buy; it’s not the parents deciding. This has an aspirational value and is a desire. If you notice, there’s a shift towards bigger cars, so probably the smaller cars are suffering but they will catch up. It’s just a matter of time if you consider figures of the last five years. Number of cars sold is going up. The value content per car is going up and the components industry is not having too bad a time. You are a global company. How do compare the Indian market with other emerging and developed markets? I think India is the market to watch out for. We don’t have the numbers just now, but within the next 5-7 years you will see the numbers coming in and it’s going to be one of the world’s biggest car

markets. Indians, by nature, like to live better. They will always appreciate good products. As long as there are good products coming, I don’t see a problem. Your major revenue comes from Germany… Currently, India contributes around 18-20 percent of our global sales and I foresee it grow ing to 35-40 percent in 7-8 years. Germany contributes over 52 percent. The biggest share comes from the three largest carmakers – Volkswagen, Daimler, and BMW. Visiocorp, which is now Sa mva rd ha na Mot herson Reﬂectec (SMR), was almost a sick company when you took over. Can you tell us how you turned the company around?

We acquired this company four years ago. When we took over, its balance sheet said 520 million Euros. It is now expected to cross a billion Euros. And this when everyone is saying Europe is in trouble. You know, we have more than doubled our revenues in 3-4 years time. If you look at the trajectory of sales, we are doing very well. It also depends on the capability of the people at SMR. We spend good money on R&D, new ideas, and new concepts that are close to our customer’s hearts. The designers love that. Last October, we announced 1.32 billion Euros new orders for which we will start supply in 2014-15. There are other orders in the pipeline too. We believe our ﬁve-year plan for SMR is robust.

Contd. on Pg 12

Auto Monitor

INTERVIEW

Onwards And... Contd. from Pg 11 Whom do you credit for the success of the crisis-ridden company you acquired? I would love to take credit for it, but I think more than me it is the team that deserves credit. First of all, with any company you are taking over or running, it is necessary that the company perform well, or customers will not stay. Our focus was on ways to ensure that our customers appreciate us. Since the acquisition came at a tough time, during the Lehman Bros crisis, there was a customers’ team of risk managers who were monitoring us on a quarterly basis. It was a three year monitoring programme, and they themselves quit within a year-and-a-half. They said this company is doing well, and gave it a quality ranking for delivery and R&D designing. They worked closely with the customers and made sure that performance of every unit improved. At the end of the day, it’s only performance that matters. How good you are in terms of delivery, quality, and

1 - 31 JANUARY 2013

cost, these are the parameters which matter. Did your knowledge of the company help you in the acquisition process? We have had a joint venture with Visiocorp since 1996. We know our business. Our joint venture with them was one of the best performing joint ventures of the whole group. Hence the carmakers asked us to take over. Did the size of the company not deter you? Yes, we were aware of the Lehman crisis and the company was as big as our group. We understand that size has a meaning and if it can work for you, then it can also work the other way round. On the whole, it delivers a tremendous amount. So we decided not to be scared by the size, and that we should go ahead with the whole thing because we know the business well. We realized that we have known the people there for last 14 years. All

we did was eliminate unnecessary people, retained the right people, and saw phenomenal growth. I would like to add that the entire business across the 17 locations where it functions was run only by the locals. It’s not a question of culture. People make lots of noise, but we don’t. That’s speciﬁcally why we did not bring in Indians; the ones who manage it look at it from the macro level. I think they are as good if not better than Indians. So we have no issues. What expectations do you have from the upcoming Budget? My only expectation from the government is to create a system similar to those run by governments of other countries. It will help India’s case as an investment destination. I think the government’s biggest challenge is to make rules for everyone, and so I don’t grudge them for the sort of rules they are coming up with. We understand that it is important to respect the law of the land, and we have to work with the law of the land irrespective of the geography we operate in. Basically we at Motherson don’t have this kind of a thought process where we wait for the

government to give us something before we start manufacturing. How do you see the difference in regulations in India and other countries where you have plants? Whenever we go to any part of the world like Mexico, Brazil, or the US, we don’t wait for the government to announce that if we execute this, they will offer us something. Since there’s automotive production happening in that particular country, we have decided to set up shop. For example, when we went to Brazil to set up a new plant, we didn’t have ready orders. It was only after setting up the plant that customers began calling us up and placing orders. We make it a point to follow the rules of the country and of the particular government. If the rules offer beneﬁts in terms of return on investment, we will of course take it. If the country has carmakers, we will want to be present. Your share of business in India has been decreasing consistently in the last few years. How do you view India as country for your business? Very important. Everyone

looks at percentages but no one looks at the size of the pie. In 1999-2000, we were a `100 crore company and at that time 80 percent of our business was from India. Now people ask me why our business in India has dropped to 20 percent from 80 percent. I keep telling them that they are missing the big picture. The picture is that in 2011-12 we were $4.14 billion and of that 22 percent was from India, which is around `5,500 crore. When 80 percent of the business came from India, the overall company was `80 crore. I don’t know why percentage is so important. For me the size of the pie matters. Your vision is to be a $10 billion group by 2015. What is the progress? We have a vision that by 2015, Motherson will be a $5 billion company and the group will be $10 billion. Currently, we are at `40,000 crore in 2015 (because of the exchange rate) and the bottom line, which is ROCE, will be in excess of 40 percent. Currently we achieve 37, 39, then 22 percent of ROCE when we had taken over Visiocorp that year. The current would be 18 or 19 because we have taken over Peguform.

Buying Out! Contd. from Pg 10 Mahindra has obtained licensing to continue producing engines and trucks using technology gained from Navistar, which will help in continuation of the business, and ensure that the exit does not hamper business. The license for manufacturing of engines given to the JV will be continued to produce trucks under the Mahindra brand, or the new company to be formed after acquisition, or it can be used for any other opportunity that the company sees. All the Navistar IPRs which had been licensed to the JV will be available to the new company. Navistar has not laid down any constraints on this, and these will prove useful when Mahindra devises a turnaround strategy for the CV business. The other important thing for Mahindra is that Navistar is still interested in exporting these trucks from India. These trucks will be sold abroad using Navistar branding in some markets, and under the Mahindra brand in other markets. As Mahindra strategizes new products and business plans, it should look at ﬁlling product gaps and offering new products as it moves ahead. In line with this, the company is planning to invest around `250 crore in maintenance and upgradation of existing trucks in the next 2-3 years. Investments will also be made to introduce new products where they don’t yet have any. Currently they only have a 5-tonne, 40-seater bus. There are plans to introduce a full size bus. It will also look at intermediate 9 to 16 tonne vehicles. Currently it has only one six cylinder, 7.2 litre engine, with different variants in terms of power - 260, 207, and 170 horse power. Now a 4.8 litre, four cylinder engine is under development. M&M’s two JVs with Navistar Intl Corp, marked its entry into the HCV segment, was considered an aggressive deal. It provided the Indian manufacturer much-needed technological know-how in commercial vehicle production. With an established presence in the four-wheeler and tractor business, the acquisition helped Mahindra become a full-ﬂedged automobile manufacturer and a global player. The JV also enabled Mahindra to bid for commercial and military truck contracts when the sector opened to private players. The JV has not yielded much returns thus far, and Mahindra will now restructure its board to include only Mahindra members. The JV had an investment of `1,080 crore, of which `520 crore was contributed by Mahindra & Mahindra, and the rest by Navistar. They began production two years ago with the launch of 25-tonne trucks and later widened the product offering with medium and heavy commercial vehicles in the 16 to 40 tonne range.

Auto Monitor

1 - 31 JANUARY 2013

NEWS

Audi Q5 Tiptronic Our Bureau New Delhi

erman luxur y carma ker Aud i has launched the 2013 version of its Q5 SUV in India. The Q5 features the manumatic 8-speed Tiptronic transmission, and comes with a Dynamic Shift Program (DSP), and a sport program with lower

gear ratios than the previous S-tronic transmission. W hile the S-tronic was a 7-speed model with electrohydraulic controls, the Tiptronic transmission has a hydraulic torque converter with a lock-up clutch, and eight driving ratios. Audi’s technical team conﬁrmed that the transmission is not used for space or weight saving, but for efﬁciency improvement with

more linear power at its disposal. Audi has managed to improve the fuel economy by 15 percent in the 2013 Audi Q5 despite the hike in engine power. The DSP is particularly useful in stopand-go traffic. DSP selects the optimum driving range by recognizing driving characteristics and shifting according to the conditions. Furthermore, transmissions with DSP technology are easier to maintain as well. Another significant change in the 2013 Q5 is electromechanical power steering, which is also partly responsible for the increase in fuel efficiency. It now doesn’t require any energy in straight line driving due to the Electronic Stabilization Control (ESC), which detects the composition of the road and adjusts its interventions accordingly. The 2013 Q5 also has restyled headlights with a homogenous strip of LED lights and revised rear lights. The 2013 Q5 starts at an exshowroom price of `43.16 lakhs (ex-showroom Delhi), and has three engine options, a 2.0 TSFI petrol engine, a 2.0 TDI and a 3.0 TDI diesel engine. In all its variants, the Q5 will be powered by Audi’s Quattro four-wheel drive technology, and the engines get direct fuel injection with turbo charging. The 2013 Q5 is available in two interior trims. 2012 was a good year, with Audi India posting a record 63 percent growth over the previous year, having sold 9,003 units. A diverse portfolio, network expansion, marketing activities, and after-sales service are seen as the prime drivers of growth. Looking forward to a similarly successful 2013, Michael Perschke says, “We look forward to strengthening our growth pillars in 2013, and have plans to open new showrooms in Lucknow, Noida, Mumbai South, and Vadodara, among others.”

Audi Q5: First Drive The 2013 Audi Q5 gets three engine options, a 2.0l TFSI petrol engine, and two diesel engines (2.0L TDI and 3.0L TDI). The 2.0l TFSI petrol engine is mated to an 8-speed Tiptronic transmission, while the diesel versions are mated to a 7-speed S-tronic transmission. Driven one after the other, the petrol powered Q5 not only feels lighter to drive, but also more reﬁned and eager, thanks to its the maximum torque of 350Nm at just 1500 rpm, against the 2.0l diesel’s 380Nm which maxes out at 1750 rpm, and also the DSP feature of the 8-speed Tiptronic transmission. Off the road, the Q5 feels at home wading through water and climbing uphill with features like hill descent control, and the famous Quattro (four-wheel drive) technology. On concrete, the SUV handles like a car with precise steering response and satisfactory feedback from the wheel. The SUV’s braking feels sure thanks to a dual circuit brake system with diagonal split that gets ABS/EBD, Electronic Stabilization Control (ESC) and tandem brake booster as assistance. All the variants of the Q5 meet EU5 emission norms, while the 2.0l TFSI also gets the Automatic Start/Stop feature as standard. While the Q5 feels good to drive both on and off road, the SUV is more driver-oriented and loses out on comfort when it comes to the rear seats. The back of the rear seat is a little too upright for comfort, and the bench could do with more under thigh support. And while the large side mirrors are a boon for watching the rear, they can get in the way when turning. The SUV also lacks electronic adjustment of the steering wheel, which its counterparts have. On the bright side, the Q5 has a distinct face with a homogenous strip of daytime running LEDs and a sharp sporty proﬁle. Audi is also targeting the youth in India, and has got the ingredients right by focusing on a driver oriented cabin, drive, and the exterior looks of the SUV.

Auto Monitor

1 - 31 JANUARY 2013

NEWS

M&M Unveils New Brand Identity JLR Launches LocallyBuilt Jaguar XF In India

nd ia’s $15.9 bi l l ion Mahindra Group has welcomed the arrival of the New Year with a new brand identity which will be reflected across all its businesses globally. “The Mahindra Group has grown exponentially over the past decade, with businesses covering a wide range of industries. Hence, we felt the need to refresh our visual identity to better reflect a Mahindra that has evolved over the years and is ready to take on future challenges. Continuity and change have both been integral parts of Mahindra’s growth story. Continuity has given us strength, stability and roots, while our desire for change has driven our growth and enabled us to thrive. Our new word mark clearly reflects both these attributes and is in sync with our Group aspirations, which is to become one of the top 50 most admired global brands within a decade,” said Anand Mahindra, Chairman, Mahindra Group, while commenting on the new brand identity. “The new word mark and other elements of our refreshed visual identity have been adopted after

To commence local production of 2.2 diesel engine. Takes the ﬁght to 5 series, E-class and A6.

Anand Mahindra, Chairman, Mahindra Group and S.P. Shukla, President – Group Strategy and Chief Brand Officer, Mahindra Group, unveiled the new brand identity of the Mahindra Group.

extensive research and feedback. We wanted a word mark which would reﬂect the evolving nature of our organisation, our global outlook and progressive management style. In short, it should reﬂect the ‘core’ of Mahindra. We also had to ensure that it would have universal appeal across consumer and business segments in

urban and rural areas, as well as overseas. We have tried to create a modern futuristic feel, while retaining the dependability, reliability, and warmth associated with the Mahindra brand,” said S.P. Shukla, President – Group Strategy and Chief Brand Ofﬁcer, Mahindra Group, and Member of the Group Executive Board.

aguar Land Rover is commencing production of the Jaguar XF saloon at its facility in Pune, India. The initial Pune-built Jaguar XF models will feature the company’s acclaimed 2.2-litre diesel engine, which is coming to the Indian market for the ﬁrst time. The Jaguars will be built alongside the Land Rover Freelander 2 vehicles, which have been produced in Pune since May 2011. Rohit Suri, Vice President, Jaguar Land Rover India said, “Our best-selling models in India are the Land Rover Freelander 2 and the Jaguar XF, and this has driven the move to build these products locally. The Jaguar XF has become very popular with our customers due to its sports car performance, outstanding luxury saloon elegance, and contemporary individual styling. Its

inspired engineering and technological innovation have helped it to win more than 100 awards internationally. So we are now delighted to offer this car as a locally built product with a new engine for this market, which will enable us to provide our customers with a wider choice of competitively priced models.” The locally built Jaguar XF 2.2-litre diesel car comes with an array of standard features such as rear view camera, TV Tuner, navigation system, front passenger seat away, touch screen, gear shifting paddles, full size spare wheel, electric sunroof, rear screen electric blind, and eightspeed automatic transmission. Jaguar Land Rover India recently announced a 32% growth in sales in 2012, at 2393 cars compared with 1813 cars in the previous year.

ARAI Seeks Lighter Bus Technology Abhishek Parekh Mumbai

he Automotive Research Association of India (ARAI) has undertaken a project for designing the superstructure for a lighter weight bus. The project entails analysis of behaviour and use of aluminiumbased structures to understand resistance to constraints, and arrive at solutions which might lead to production versions.

“The behaviour of aluminium-based structures when pressure is applied to their joints, extreme temperature conditions, corrosion, and other qualities is different from that observed in a conventional steel-based structure. We are assessing the practical feasibility of such structures,” said Shrikant Marathe, Director, ARAI. They is also in the process of simulating design and development of electric and hybrid powertrains, and are hoping to apply the learnings gained to the development of vehicle architecture. Additionally, it is in the process of collating data on road conditions around the country, which can help OEMs and tyre makers in assessing the stress and pressure on the wheels. “Detailed data on road conditions and the kind of stresses a vehicle goes through on the road are not readily available to designers. Such data will aid in creating safer vehicles,” said Marathe. ARAI is gearing up to tackle challenges in electric mobility, safety, and NVH reduction to meet the expectations of the automotive industry. ARAI is gearing up to cater to solutions for areas like crash testing, safety, light-weighting, and NVH reduction related systems and solutions. OEMs are also looking for solutions to enhance fuel efﬁciency, with most of them being in the areas of electric and hybrid vehicles. It is in the process of enhancing its tie-ups with academic institutions and research bodies to share resources on self-funded and sponsored projects.

Auto Monitor

1 - 31 JANUARY 2013

COLUMN

Lurching Into The Fast Lane Shripad Ranade of Tata Strategic Management Group says that small scale auto components manufacturers have many challenges staring them in the face.

he Indian auto components manufacturing sector is grappling with multiple challenges. The cyclical nature of vehicle demand and slowdown in vehicle sales, coupled with changing customer requirements and tough competition are straining margins and cash ﬂow, and restrain suppliers from scaling up. For SMEs supplying to the Indian 4-wheeler industry, the situation is compounded by fast-changing industry dynamics and people issues. The long term prospects are bright, though, and the key is to deploy appropriate strategic options and align the organization to achieve sustainable growth.

Effect of the Slowdown The global economic outlook, including hitherto fast-growing economies, has deteriorated in the last year. China’s growth has slipped to single digit, while the latest estimates peg India’s GDP at not more than 6 percent in FY13. Western Europe continues to falter and the US is showing only a slight improvement. This economic slump has impacted India’s automotive and auto component sector severely. While commercial vehicle production is more than 7 percent lower in Apr - Dec 2012 compared the corresponding period in 2011, passenger vehicle production has been ﬂat, except for increase in utility vehicles. This has led to widespread shrinkage of order positions for component manufacturers, and resulted in underutilised capacities, margin pressures and locked-in working capital. Small and medium enterprises (SMEs) have been impacted further, due to some additional factors.

Concentration Risk Many SMEs are exposed to high concentration risk, being overly dependent on a single key 4-wheeler OEM or Tier-1 supplier as customer, or a single product line or sales channel. In such cases, declining market share

of that OEM has a direct, severe impact on the SME. The solution lies in selecting viable new business opportunities which can be addressed immediately, and with minimal additional investments. Options for immediate growth are: s 4APPING NEW SALES CHANnels such as aftermarket and retail sales, to compensate for declining OE sales (e.g. radiator parts, electrical ﬁttings). s %XPORTS TO ADDITIONAL FAST growing and sizeable export markets, for components amenable to such a channel (e.g. small forged components). s #ATERING TO NEW APPLICATIONS outside the automotive sector, with minor tweaks in product design and functionality (e.g. sheet metal for off-road equipment).

Changing Priorities Of OEMs Several SMEs have succeeded and grown in the past due to one or more privileged OEM relationship, with a high degree of assurance on orders from the anchor OEM. With increasing competition, established OEMs are willing to consider alternative suppliers to reduce cost, while OEMs entering India are willing to bring in suppliers capable of meeting their requirements. SMEs face roadblocks in adapting to these changes, in terms of scale, cost structure and product range. To align with changing procurement priorities, two speciﬁc actions can be useful: s /PERATIONAL EXCELLENCE LEADing to higher reliability and a lower effective cost structure and improved chances of being selected as a long-term, cost-competitive supplier going forward. s /%-S ARE OPEN TO DIVERSIFYing sourcing away from China for cost, quality, and localisation. To partake of this, SMEs need to diversify into multiple product lines, either greenfield, leveraging current manufacturing competence, or through acquisitions to quickly build scale.

Consumer Trends Consumer preferences are changing rapidly across both passenger and commercial vehicles in India. This is creating demand for new subsystems and components. In passenger cars, the trend towards increased information intensity will drive demand for dashboard telematics. Similarly, heightened safety awareness necessitates intelligent braking systems, improved crash performance is making the case for tailor-welded blanks, and lighter cars will require increased substitution of metals by plastics and composites. At the same time these trends threaten to depress demand for some older technologies and related assemblies. Addressing this rapidly shifting opportunity and guarding against product substitution risk requires access to relevant technology or process IP, which cannot easily be developed inhouse, except where existing competencies can be leveraged (e.g. transfer skills in plastic moulding to composite moulding). Beyond investing in product design and prototype development, suppliers have to actively seek collaborations (e.g. for infotainment and safety component design).

Competitive Intensity India’s auto component sector has high competitive intensity, with a large number of SME suppliers competing for similar requirements and responding to cost reduction initiatives by OEMs. Overall revenue for a sample of SME suppliers studied grew at 18 percent annually for four years to FY12; while EBITDA grew at only 16 percent annually. SMEs need to consider multiple strategic options and operational initiatives to maintain proﬁtability. Some of the strategic levers mentioned earlier such as aftermarket sales, product diversiﬁcation, development of process knowledge, and inorganic growth, will help in gaining such an edge. In addition, excel-

The large scale incidence of temporary and contractual employment in the automotive and component sector creates high employee turnover and has recently led to deterioration in the industrial relations climate.

Cost of capital is an on-going challenge for Indian industry, when it seeks to compete with manufacturers in economies with negligible lending rates.

lence in manufacturing and logistics and participating in strategic sourcing of key inputs such as steel can provide gains.

People Challenges While there are fairly common people issues faced by the entire auto component sector, small and medium enterprises in particular have several challenges to address. The well recognised problem of low availability of skilled technical personnel, partly stemming from a disconnect between the skills imparted by ITIs and the education sector vis-à-vis those required in this sector, requires investment in further training. SMEs have a higher challenge in retention of trainees after such investment. The large scale incidence of temporary and contractual employment in the automotive and component sector creates high employee turnover and has recently led to deterioration in the industrial relations climate. More proactive employee engagement and management of grievances is necessary. It is however difﬁcult for companies to invest in training and employee engagement, and to reap returns by doing so, when only a fraction of the workforce is permanent. Going forward, OEMs might re-assess their approach to contractual employment and related issues such as wage disparity. SMEs can look for these shifts and re-align their own practices where possible. The other signiﬁcant challenge for smaller enterprises is the shortage of managerial talent. Several of these organizations hinge on a small number of management personnel for both strategic thinking and operational excellence. With thin managerial talent beyond the promoter and CEO, it becomes impossible to scale up to multiple manufacturing locations, to address demanding and sophisticated customers, or to develop additional product lines. The solution lies in deploying a more structured approach to managing human resources, with focus on actions such as creating the right structure, assessing, preparing, and aug-

menting the leadership team, investing in workforce skilling, and nurturing a talent pipeline to create readiness to handle growth in the business.

Capital And Infrastructure Challenges Cost of capital is an on-going challenge for Indian industry, when it seeks to compete with manufacturers in economies with negligible lending rates. For SME auto suppliers, access to capital is even more of an issue due to the current slowdown which has impacted their cash ﬂow and valuations. Alternatives such as private equity and consolidation are being explored by various players. The cost of doing business, as well as delivery performance, is also impacted by inadequate infrastructure (e.g. low availability of power) and high logistics costs. However, interest rates seem to be headed downwards going forward, and the recent renewal in government focus on infrastructure will lead to improvement in the situation.

Conclusion The long term growth prospects for the Indian auto component sector are bright, with ACMA expecting turnover to grow annually at 11 percent to 2020, fuelled by growth of the Indian automotive industry as well as exports of auto components. The current slowdown and on-going changes in the automotive industry have created challenges for all suppliers. Smaller suppliers face additional challenges due to concentration risk, lack of scale, and lack of access to talent, capital and technology. However, a combination of carefully planned actions can help to position a small or medium sized supplier to the complex and evolving Indian 4 wheeler industry, to participate in the long term success of the industry. Shripad Ranade is the Senior Principal of the Auto & Engineering Practice at Tata Strategic Management Group. He has 14 years of experience in industry and consulting. His key areas of interest are business planning, competitive strategy, and international business development.

1 - 31 JANUARY 2013

Auto Monitor

INTERVIEW

Cashing In Mahindra Finance has been looking to reduce its dependence on Mahindra Group and emerge as an independent auto finance company. Ramesh Iyer, Managing Director, Mahindra & Mahindra Financial Services Ltd tells Abhishek Parekh about the changing landscape in the rural auto finance segment and the way forward for his company.

What are the trends in the tractors and car segment in your operational markets? Normally, a tractor or a car customer would opt to buy a vehicle in January or February rather than in November or December to beneﬁt from the younger age of the vehicle. But what with the lacklustre sales in Q2 and Q3 this ﬁscal, tractor and car manufacturers are looking at enticing customers through discounts, incentives and other sales promotional measures.

These measures should ensure that dealers be able to sell off inventories. We are also moving away from a tendency of availing of loans for around 90 percent of the vehicle price and a repayment cycle extending to almost 60 months to a more manageable 75 percent of asset value and 24 to 36 month of repayment cycle. The higher quantum of loan amount and longer tenure makes it more suitable for banks to ﬁnance the asset.

We are also moving away from a tendency of availing of loans for around 90 percent of the vehicle price and a repayment cycle extending to almost 60 months to a more manageable 75 percent of asset value and 24 to 36 month of repayment cycle. How is the rural economy doing? What is your outlook? The overall scenario in the rural economy appears positive. There is some strain in terms of delay in payments from cotton sales and the sheer lack of ongoing major large scale infrastructure project. But, on the other hand, there is lot of local economic activity that is likely to be positive. We might see a pick-

up in rural welfare spending in states like Gujarat, Tamil Nadu and Uttar Pradesh. Tractors are nowadays not only used for just farming but also for haulage and other applications. This is leading to demand for high HP and low HP or micro tractors. This trend is likely to accentuate. Moreover, in most states or markets, farmers typically focus on a single crop and the second crop is a cash crop. Hence tractors will continue to be in demand for haulage related applications. It also implies that the average life of a tractor, which is around seven to ten years, comes down to ﬁve to seven years. This could also lead to much higher demand for replacement of existing tractors in the coming months. This is good for manufacturers and ﬁnanciers as the demand for tractors would get increasingly delinked from monsoons and loan repayment schedules of customers is likely to get better under this scenario. What is your view on the interest rate scenario going

forward? I feel that we have already seen the uptrend as far as macro outlook of interest rates is concerned. We are more likely to see a 100 to 150 basis point reduction going forward. This may lead to improvement in the profit margins for most MBFCs as the current scenario allows most players to retain the margin and not pass it on to customers in urgency. How is your strategy for deeper penetration shaping up going forward? It makes sense for us to coexist with other financial entities like banks and financial institutions. We have a huge customer base of around two million customers and have been leveraging this base to generate enquiries for various financial services. The share of tractors in our asset portfolio has come down from around 24-26 percent three years ago to around 16 percent now. Thirty percent of our balance sheet comprises Mahindra manufactured vehicles while remaining is largely new and used cars from Maruti and other automobile companies and personal loans. We have grown our portfolio on the back of financing new and used cars, agricultural equipment and other implements as well as distribution of insurance and mutual funds in the rural market. We are in the pro-

Auto Monitor

INTERVIEW

22 cess of an on-going evaluation of additional financial products or services, created by us or other players like banks, insurance or mutual funds that can be sold or distributed to our existing customer base. We bring our robust credit evaluation process and understanding of the rural market to the table and can partner with any other institution or originator. Having said that we are not facing any issues with our own resource gathering process and can thus comfortably expand our asset base at the same or faster pace than what we have already done. Our asset base has grown by around 35 to 40 percent over the last five years to around `24,000 crore and we are already among the top four auto finance entities in the country. We are looking to maintain this growth momentum. We have also created a robust repossession and recover y mechanism akin to asset reconstruction cell. This has helped us in the repossession of vehicles that have become vulnerable to default by the owner and can be sold off and allows us to play a role even in financing the next buyer. The success of such an initiative comes from keeping

1 - 31 JANUARY 2013

the number of such repossessed vehicles at a low level. Where do you see balance sheet growth coming from? We expect rural housing to be a major driver of our growth in the coming months. We are present in the segment though our subsidiary and its current book size is around `1,000 crore and we expect the entity to grow its balance sheet size to around `4,000 to 5,000 crore by 2015. What are the challenges to maintaining this growth rate? There are three factors that have contributed to our size and growth. Firstly, we have expanded our reach by adding around 150 or so branches over the last two years. This has helped us to bring down our overhead costs and increase efficiency. We have maintained our market share with our parent M&M’s products even as M&M has grown in size over the last five years. We have evolved into a full-fledged auto finance company from a largely captive finance company helping M&M’s tractor and utility vehicle customers. We have brought down our NPA

The challenge would be greater as we are now working with or servicing a diverse customer profile comprising farmers, small traders, professionals, and key decision makers in semi urban and rural areas as opposed to mainly farmers a few years back. level to around three percent of total loan book at gross level and around one percent at net level. It would be a major challenge to maintain this discipline on a larger balance sheet. We are also handling an increasing quantum of repayment through post dated cheques as opposed to more than 90 percent of repayment handled by cash payments three to four years back. We have to streamline processes and ensure a responsive backend to maintain our edge as we handle around 65 to 70 percent of our

Taking Deeper Roots Mahindra Finance wants to expand its branch network deeper into the semi-urban and rural areas of the country. The finance arm of the Mahindra Group has a branch network of around 650 and it has diligently been adding 50 odd branches every year for the past 3-4 years. While it is looking to maintain or enhance this pace, it is keen that it continues to accrue higher market share in each location where it is present in rather than relying on branch expansions. “We are targeting a higher market share among the key brands that we finance like Maruti, Hyundai and tractors brands (other than Mahindra) present in rural areas rather than rely on branch expansion. We have acquired a large, unmatched presence in the rural markets through an extensive network and expertise in credit evaluation. We would now like to reap the benefits of this reach and expertise and potentially enter new areas,” said Ramesh Iyer, Managing Director, Mahindra Finance. He added that a largely untapped area with huge potential in the coming months is likely to be rural housing finance. The company is looking to leverage its existing resources in terms of manpower, branch presence and technology backbone to gain an advantage in this segment. monthly recollection of around `1,200 -1300 crore through cash. The challenge would be greater as we are now working with or servicing a diverse customer profile comprising farmers, small traders, professionals, and other key decision makers in semi urban and rural areas as opposed to mainly farmers a few years back. Today all the large volume car manufactur-

ers are looking to rural market for sustained growth and larger volumes and we are already an entrenched player in these markets. Our growth will come from penetration and growth of our customers (car and commercial vehicle manufacturers). The growth will also come from raising our market share in brands and vehicle segments where we have a lower share.

Auto Sector Woes Pile Up Inventory At Tyre Makers

ith the Indian auto market in the grip of a severe slowdown, the tyre industry is witnessing an inventory pile up of around 40 per cent over normal levels. The production has far outpaced demand from automotive OEMs and consumers who are reluctant to go in for new purchases at a time of soft market conditions. “There is pile up of inventory in tyre segment due to subdued demand from carmakers, while export markets are also not encouraging as globally markets are down. In the last six months cheap Chinese imports is entering the Indian market, which is creating difficulty for manufacturers here,” Rajiv Budhraja, director general, Automotive Tyre Manufacturers’ Association (ATMA) told Financial Chronicle. As a result the sector’s forecast growth rate has been cut to 2-3 percent for 2012-2013 period. Budhraja said Chinese tyres are 15-25 percent cheaper compared with Indian tyres. Further the replacement demand has slowed down as consumers are hit by high retail inflation and slow wage hikes. Siam has third time lowered auto sector’s growth forecast to 0-2 percent this financial year. The original forecast for passenger cars growth was 10-12 percent. Demand in two-wheelers too has been soft with sales of motorbikes skidding while sales of scooters, which are a smaller component of the industry sale, have held up better. Sudhir Rao, managing director at Skoda Auto India, said, “Demand in India dampened for several reasons like fuel price hike, which led to slowdown in the economy.” He said that replacement demand has also reduced. Sales of bread and butter medium and heavy commercial vehicles too have been falling due to a slowing economy. Rabindra Mukhopadhyay, head research and development centre of JK Tyre Industries said that the tyre sector is hoping the government will take steps to boost growth. “Although growth has slowed down in Europe and the US, there are other markets export markets, which companies should focus on like exporting to Africa, West Asia among others as demand continues in these markets,” he added. ATMA wants banks to cut interest rates on auto loans cuts to around 0.75-1 per cent and reduce excise duty in the budget. This along with increased focus on building out roads and highways could help boost demand. Budhraja said that it is difficult to predict growth of the sector in 2013-2014 but if the rate cut happens definitely demand will revive.

Auto Monitor

1 - 31 JANUARY 2013

F E AT U R E

Wheels Of Mixed Fortune Banks and finance companies catering to the commercial vehicles are a worried lot. The low sales in CVs is reflecting on sagging lending, finds out Abhishek Parekh.

he current slowdown in car and CV sales has not only been a cause of concern for the vehicle manufacturers but also ﬁnanciers. At a time when most CV manufacturers are eager to revive sales and boost sentiments, banks and auto ﬁnance companies are biding their time to catch early signs of uptick before taking proactive measures to revive lending. “Given the low Index of Industrial Production (IIP) numbers witnessed in the recent months, there is lack of demand for freight capacity and that in turn is affecting sales of M&HCVs,” says Sudhir Khanna, Head- Tractors & Agri Financing, Kotak Mahindra Bank. Khanna is concerned that commercial vehicle sales are seeing a downturn and chances of a revival are unlikely in the near future as freight availabil-

ity, infrastructure projects, and mining activities are not witnessing a major momentum. Sales, especially in the M&HCVs, are likely to be affected in the coming months. Though manufacturers have been making an effort to revive sales by passing on higher discounts and other incentives, there does not appear to be any perceptible recovery or revival in sales. Sales of small and light commercial vehicle have been buoyant over the past few months as the ‘hub and spoke’ models of good transportation has been playing out. In developed markets, typically three to four small (less than 1.5 tonnes) and LCVs are sold for every heavy duty truck whereas the ratio is around one to one in India indicating huge growth potential for this segment. “Tapering GDP growth is negatively impacting the medium

and heavy duty truck segment. Truck operators are not looking to expand their fleet or even changing their older vehicles as falling availability of freight is not inspiring confidence among truck operators,” says Nalin Mehta, Managing Director, Mahindra Navistar Automotives Ltd in an earlier interaction with Auto Monitor. A source in the banking sector pointed out that around 25 to 30 percent growth of small and light commercial vehicles segment in last two to three fiscals has already tapered down to less than 15 percent. The current fiscal forecast is not more than 15 to 16 percent growth. The overall sentiment is negative and this has impacted sales across all categories of commercial vehicles. Most large sized fleet operators are not expanding their fleet or contracting out excess freight or load transportation capacity to

smaller fleet or single fleet operators. This has led to absence of newer truck operators entering the market or any expansion of fleet by single vehicle operators.

Reaching With Focus Most banks and ﬁnance companies are looking to focus on

lending and nurturing other financing relationships with large truck operators and existing customers in the current uncertain times. Few players are looking to focus on other segments to grow their loan book rather than depend on car or CV ﬁnancing. Industry is looking to

A slowing market has also meant that banks and finance players are already staring at lower margins with little respite from any quarters in the coming months. a slowing market has also meant that banks and finance players are already st aring at lower margins with little respite from any quarters in the coming months. take a cue from IIP numbers and most players including vehicle manufacturers and financiers have adopted a ‘wait-and-watch’ policy. Kotak Mahindra Bank, for instance, has increased focus on growing its lending to existing transporter customers to cater to other business requirements, grow its construction equipment financing business and it is also in the process of identifying other untapped areas. It had gradually shifted its focus to financing LCVs from M&HCV over the last couple of years and is evaluating expanding its product portfolio as well as brands in order to achieve deeper penetration in the segment. “We are in a position to offer many customised solutions and tap a wider customer base as we have the edge of having existing banking relationships that could be leveraged for mutual benefit,” said Khanna. But a slowing market has also meant that banks and finance players are already staring at lower margins with little respite from any quarters in the coming months. “We have been bracing up for the slowdown in CV sales for quite a few months now but it is difficult to say whether we are in midst of a cyclical downturn or short term slowdown. There would be a significant margin pressure for players who do not have a diversified customer or product base,” said Umesh Revankar, Managing Director, Shriram Transport Finance Ltd, a leading used truck finance company. “We are looking to increase our touch points across cities and towns through a combination of auto dealership presence as well as other means so as to tap the demand in tier II and tier III towns. This would help us mitigate the car sales slowdown to some extent but we cannot entire escape it,” said Sumit Bali, Director, Kotak Mahindra Prima, a subsidiary of Kotak Mahindra Holding Company engaged in financing new and used cars. It is one of the leading car finance companies in the country with an asset base of around Rs 13,000 crore. Other leading players in the auto finance segment include State Bank of India, HDFC Bank and Mahindra Finance.

Auto Monitor

1 - 31 JANUARY 2013

INTERVIEW

Time To Engage The slowdown in sales of cars and commercial vehicle is having a major negative impact on asset size and loan quality of banks and finance players. Sudhir Khanna, Head – Commercial Vehicles and Tractor Division, Kotak Mahindra Bank, tells Abhishek Parekh about the current scenario in the CV financing business and the measures that could be taken to revive sales in the CV segment. What is the outlook for sales in the CV segment? We could divide CV segment into heavy trucks and small/ light truck segments. The sales in the heavy duty segment have got severely impacted due to slowing GDP growth and lack of major new infrastructure projects. Haulage and tipper segment have both been impacted by the slowdown. The sentiments have been negatively impacted in the recent

months. We are just evaluating and keeping track of market developments and are not looking at greater momentum in the coming months. Our estimate is that CV segment could grow by around ﬁve to six percent in the next ﬁscal. Do you feel manufacturers or the government need to take measures for facilitating revival? Manufacturers are already

putting in effort in the form of discounts and incentives and other company or model speciﬁc measures. There is a limit to how much a manufacturer can try to push sales in the face of negative sentiments. We do feel that any initiative from any stake holders like manufacturers or government authority is desirable at this stage. What is the prevalent outlook among truck operators?

Though we witnessed around 25 to 30 percent growth of small and light commercial vehicles segment in last two to three ﬁscals it has tapered down to less than 15 percent. We are unlikely to see more than 15 to 16 percent growth in the current ﬁscal. The

We do feel that any initiative from any stake holders like manufacturers or government authority is desirable at this stage. overall sentiment is negative and this has impacted sales across all categories of commercial vehicles. The many large sized fleet operators are not expanding their fleet or contracting out excess freight or load transportation capacity to smaller operators. This has led to absence of newer truck operators entering the market and expansion of fleet by single vehicle operators. What is your strategy to counter the downturn in auto

financing business? We have been working towards increasing our focus on growing our asset book by lending more to existing transporter customers as well as cater to their other business requirements, and expand product and brand portfolio. We are also in the process of identifying other untapped areas. We had proactively shifted focus to financing Small and Light Commercial Vehicles (LCVs and SCVs) from Medium & Heavy Commercial Vehicles (M&HCV) over the last couple of years and are evaluating other channels to reach out to customers in this segment. We are in a position to offer many customised solutions and tap a wider customer base as we have the edge of having existing banking relationships that could be leveraged for mutual benefit. All said and done, no player can be insulated from a market downturn. It is difficult to outperform and grow in such a market without taking undue risk in terms of asset quality. We are one of the oldest auto finance players and have a healthy asset quality and would like to maintain our quality focussed growth.

Auto Monitor

1 - 31 JANUARY 2013

REPORT

ICRA Outlook on the Indian Passenger Vehicle Industry Jitin Makkar Shamsher Dewan Subrata Ray Volume Growth Trends and Market Share Movement Having recorded sales volumes of 2.6 million units in 2011-12, at a moderate growth of 4.7%, the domestic PV industry continued to stumble upon unremitting challenges of slow demand recovery and supply shocks in H1, 2012-13. While these challenges have been a constant feature for the industry over the last six quarters,

volume growth on the contrary hasn’t been consistently low. Rather, it has been fickle: volume growth was upright at ~10% YoY in Q1, 2011-12 and Q1, 2012-13 and 17% in Q4, 2011-12, but has been negative/ or in low single digits otherwise. For an industry that had chronicled a scorching 25%+ volume growth in 200910 and 2010-11, this unevenness in growth in recent periods has borne uncertainty for industry participants and investors alike. On the demand front, the extended bout of high inflation, rising fuel prices and firm interest rates has been resulting in deferment of purchase decision – as reflected in steady

customer enquiry ﬂow at dealers’ end but slow rate of sales conversion. On the supply side, production disruption at the manufacturing facilities of the largest PV Original Equipment Manufacturer (OEM) in India viz., Maruti Suzuki (labour issues in June-October 2011 period and July-August 2012 period), besides force majeure events (supply chain disruptions due to natural calamities in Japan and Thailand) that impacted production output of Toyota and Honda, adversely impacted overall industry sales volumes during the last year and a half. In H1, 2012-13, the domestic PV industry volumes grew by

6.7% over the corresponding previous period, but segment-wise performance was characterized by a wide dispersion in growth rates. While sales volumes of small cars and vans (multipurpose vehicles) declined by 4% and 5%, respectively; sales volumes of sedans and utility vehicles grew by 11% and 55%, respectively in H1, 2012-13. The relatively stronger growth of higher priced PV segments coupled with rising proportion of diesel-run vehicles (that are Rs. 1-2 lakh costlier than the petrol variants) in domestic sales mix, is estimated to have contributed towards a much stronger growth of the PV industry, in

New Model Launches And Strength Of Market Response

In H1, 2012-13, the domestic PV industry volumes grew by 6.7% over the corresponding previous period, but segment-wise performance was characterized by a wide dispersion in growth rates. value terms, by ~13% in 2011-12 and ~20% in H1, 2012-13. The year 2011-12 and H1, 2012-13 were amongst the most challenging periods for the mar-

1 - 31 JANUARY 2013

Auto Monitor

REPORT

Segment-wise Volumes

ket leader Maruti Suzuki as it saw its market share slide sharply from 45.3% in 2010-11 to 34.1% in H1, 2012-13. The primary market share gainers over the last year and a half have been M&M (supported by volume expansion of Bolero facelift and XUV500), Toyota (on the back of its new cars Etios and Liva, besides strong customer response for the Innova facelift), and Nissan (driven by sustained scale-up in volumes of Sunny). In case petrol-diesel price disparity persists, we expect companies having a strong portfolio of die-

Capacity utilization levels have dropped in recent periods given the demand slowdown, supply shocks experienced by few OEMs plus the impact of recently added capacities (installed capacity of PV industry increased from 4 mn units as on March 2011 to 4.5 million units as on March 2012).

sel cars to further consolidate their market share.

Capacity and Capital Expenditure Plans Capacity utilization levels have dropped in recent periods given the demand slowdown in the domestic industry, supply shocks experienced by select OEMs plus the impact of recently added capacities (installed capacity of PV industry increased from 4.0 million units as on March 2011 to 4.5 million units as on March 2012). Capacity utilization levels are expected to remain dull over the near term with PV volumes estimated to expand only moderately. The utilization levels may however differ across OEMs as demand for certain models/ platforms could be signiﬁcantly different from that of other models in the market. For instance, new model launches and spike in demand for diesel cars in India at present has pushed up capacity utilization of models falling in these categories. In contrast, ageing models and several petrol car models have been experiencing a dip in production output and consequently capacity utilization. However, we expect capacity utilization levels to inch upwards to 75%+

levels from 2013-14 onwards (70% in 2011-12) as automotive demand recovers gradually putting behind the ensuing cyclical dip. Severa l OEMs i ncludi ng Hy u nd a i, Toy ot a , Renault-Nissan and Volkswagen currently rely on imported diesel powertrains to produce their vehicles. Following the rapid shift in consumer preference towards diesel-run cars over the last two years, most OEMs have struggled to meet the strong demand for diesel-run cars. Accordingly, a bulk of the capacity expansion programmes of PV OEMs proposed over the next two years is oriented towards creation/ expansion of diesel engine capacity. Between Maruti Suzuki, Hy undai, RenaultNissan and Toyota, a capex of Rs. 30 billion may be incurred over the next two years, to enhance diesel engine manufacturing capacity. This apart, select OEMs viz., Peugeot Citroen, Ford and Maruti Suzuki are at respective project stages towards settingup Greenﬁeld manufacturing facilities in Gujarat, which may involve a combined capex outlay of ~Rs. 120 billion over the next three years. A majority of the above capex is being done keeping in mind the strong medium

term grow th opportunities offered by the domestic small car segment, besides the strong exports potential. While the above capex ﬁgures may appear daunting given the current environment wherein demand remains sluggish, these investments may be necessary for the industry to gear up with adequate capacity when domestic demand recovers. Outlook: In ICRA’s view, the PV industry’s domestic volume growth is expected to be around 5-7% in 2012-13, as we expect the small car segment that accounts for 55-60% of the industry’s volumes, to continue to grow at a rate slower than other PV segments. However, as some of the cyclical variables become less spiteful, the PV industry is expected to revert to a volume CAGR of 10-11% (domestic + exports) over the medium term. The proﬁtability metrics of industry participants too are unlikely to have any meaningful respite over the near term in view of (a) increase in expenses related to launch of new models, (b) increase in employee costs as several OEMs have announced substantial wage hikes, (c) likely sustenance of discounts-led sales push, and (e) restricted pricing power in the wake of

Following the rapid shift in consumer preference towards diesel-run cars over the last two years, most OEMs have struggled to meet the strong demand for diesel-run cars. intense competition. Market share in the domestic PV industry still remains concentrated in the hands of few players, reﬂected in the fact that top four players account for 75% of industry volumes. This implies that profitability pressures on the relatively low volume players may be even higher resulting in sustained external ﬁnancing dependence to fund losses and capital expenditure requirements.

Auto Monitor

1 - 31 JANUARY 2013

INTERVIEW

“A National Mission Is A Welcome Step” ..says Dy. Managing Director (Marketing), Toyota Kirloskar Motor, Sandeep Singh. He sees a solid future of hybrid and electric vehicles in India. He further suggests four catalytic steps for the government that can kindle the electric/hybrid vehicle fire in the Indian automotive industry. Jagdev Kalsi Toyota was one of the ﬁrst to bring electric technology in India through Prius but it sells in few numbers. Why do you think electric/hybrid vehicles aren’t still popular in India? Toyota is a pioneer of Hybrid vehicles. Toyota hit 4 million units globally for hybridvehicles this year . TKM launched the Prius in India to demonstrate its commitment to offer the latest eco-friendly automotive technol-

ogy to its customers in India. With the Prius we wanted to bring in the latest technology to the Indian market. We have sold 156 units so far. Selling numbers was never our aim as the hybrid market is still at a nascent stage in India. The hybrid vehicles will take some time to emerge as it is more of a style statement to drive a hybrid vehicle. The hybrid market in India has a long way to go before it develops. The price of Priusis high in India ,due to the high customs duty. The sales would improve if this issue isaddressed.

Despite excise beneﬁts and support from government (central as well as state), why are there very few serious players or products in the electric/hybrid segment in India? Hybrid vehicles attract high customs duty and thus are highly priced in India . The demand for these vehicles is therefore low and very few manufacturers/serious players are there in this segment. How inclined is the government to get electric/hybrid

As the fuel/ oil prices rise the best alternative is hybrid, so the hybrid car market has a good future. technology in India? Ans) Government is making efforts to get electric/hybrid technology in India. Recently Government introduced The National Mission for Hybrid and Electric cars at the budget, which is a welcome step. This will further look into the growth of the hybrid segment in the Indian market. TKM believes that it is a good initiative taken by the Government to encourage hybrid vehicle sales in India. What necessary steps should be taken by the government to bring affordable electric/ hybrid technology in India? Creating awareness about hybrid with the help of various Govt bodies and by fostering private initiatives in this regard is one step. R&D is also an important step in the development of this segment in India. Government should also introduce various sops to encourage manufacturing as well as imports in India. Reduction in the excise duty will further give a great boost to the sale of hybrid vehicles. What minimum investment on infrastructure is required to use hybrid/electric technology by common man and when can you see it happening? Vehicles using both electric motors and gasoline engines are examples of hybrid electric vehicles. They do not need to be externally charged, instead they are continuously recharged with heat from the gasoline engine and regenerative braking. Like a normal vehicle it only needs to be fuelled at an ordinary fuel station. In which segment of cars do you think the electric/hybrid technology can be successful and why? (Hatchback, Sedan or SUV?) It can be successful in all segments like any developed country as is in case of US and Japan. Our market will also move towards this over a period of time provided the Govt supports the growth of these segments. How far do you believe that electric/ hybrid technology will be the future of automobiles? As the fuel/ oil prices rise the best alternative is hybrid, so the hybrid car market has a good future. Also this technology compliments the rising environmental issues. However, this will take a long time.

1 - 31 JANUARY 2013

Auto Monitor

F E AT U R E

An Electric Future BMW is innovating ﬁercely to make electric cars a viable reality, from reducing body weight to a dual accelerator/ decelerator pedal. Jagdev Kalsi

MW has been actively working on developing electric mobility solutions since 2007 under the sub brand BMW i. Initially, BMW attempted to integrate electric components into vehicles originally designed for combustion engines, as in the case of the Mini E and BMW ActiveE test cars. But it soon became clear that automotive electriﬁcation involves making complex modiﬁcations throughout the vehicle since electric drive components place totally different demands on a vehicle when it comes to installation space, and cannot be integrated into any vehicle without adding weight and compromising interior space. As a solution to this, BMW has come up with its own LifeDrive concept

Recycled CFRP and aluminium for the i BMW has been manufacturing CFRP with their joint venture partner at the Moses Lake plant (USA) using electricity generated entirely from renewable hydroelectric power, and the CFRP used in the Life Module itself consists of 10 percent recycled material. BMW has also been able to replace 25 percent (by weight) of the interior plastics with recycled and renewable materials, and 25 percent by weight of the exterior thermoplastic components in the BMW i3 Concept car. Recycled aluminium, also known as secondary aluminium, and aluminium produced from 100 percent renewable energy, to reduce CO2e emissions, is also used. As per BMW, using renewable energy CO2e emissions per kilogram of aluminium produced can be reduced by 50 percent

in the BMW i range of vehicles. The LifeDrive concept looks at the vehicle as two separate units, a Life module and a Drive module. The Drive module is the heavier, lower part and forms the vehicle’s suspension, battery, drive system, and structural and crash functions, and is therefore made mostly from aluminium. The upper Life module on the other hand is made of high-strength and extremely lightweight passenger cell made from carbon-ﬁbre-reinforced plastic (CFRP) to reduce weight. “The LifeDrive concept avoids the additional weight involved in modiﬁcations to conversion concepts. At the same time, in both vehicles we’ve been able to cancel out all of the extra kilos added by the electric motor(s) through the innovative use of materials and intelligent lightweight design”, says Bernhard Dressler, responsible for bodywork and equipment for project i. While an electric drive system including battery can be as much as 200 kg heavier than a comparable combustion engine and full tank of fuel, the light Life Module reduces the extra weight with the use of CFRP and other light materials. CFRP not only has the weight advantage over aluminium, BMW says it saves 50 percent weight over steel, compared to the 30 percent saved by using aluminium.

Lightweight Lighting for the i Apart from reducing body weight, BMW is also planning to use laser technology to reduce the weight of the lighting equipment. With a length of just ten microns (μm), laser diodes are one hundred times smaller than the small, square-shaped cells used in conventional LED lighting, which have a side length of one millimetre. While BMW has no plans to reduce the size of the lights, the size advantage can be used to reduce the depth of the headlight unit, opening up new possibilities for headlight positioning and body styling. BMW plans to convert the bluish laser light beam to pure white by means of a ﬂuorescent phosphor material inside the headlight, and implement the same in the future in technologies such as Adaptive Headlights, the Dynamic Light Spot spotlighting system, and the Anti-Dazzle High-Beam Assist.

compared to the conventional manufacturing process, while the savings from using secondary aluminium are as high as 80 percent. So, wherever possible BMW has been using standard castings for the BMW i3 Concept containing 100 per cent secondary aluminium, and for high-strength structural components and crash management components, 50 percent low-emission recycled content is used. BMW states that a total of more than 80 percent of the aluminium used in the BMW i3 Concept is produced either using renewable energy or from secondary material.

Multi-purpose accelerator pedal The BMW i range of cars have a dual accelerator/decelerator function on the accelerator pedal for energy recuperation. When the driver eases up on the accel-

Automotive electrification involves making complex modifications throughout the vehicle. erator, an attached electric motor works as a generator to convert the kinetic energy of the vehicle into electricity, which is then fed back into the battery. This energy recuperation generates a braking effect that contributes to vehicle deceleration. If BMW is to be believed, approximately

75 per cent of all braking operations can be performed without using the brake pedal. Not only that, intensive use of this feature of the electric motor can also increase the driving range by up to 20 per cent. Adding further to the multipurpose use of the accelerator pedal is the coasting feature that makes the accelerator singularly capable of acceleration and braking. The BMW i3 Concept offers a “neutral” gear position on the accelerator pedal that disconnects the drivetrain, coasting the vehicle and increasing the driving range further as the vehicle runs without consuming any power.

Auto Monitor

1 - 31 JANUARY 2013

F E AT U R E

Going Electric P

rime Minister Manmohan Singh, at the recent launch of the National Electric Mobility Mission Plan 2020, summed up what needs to be done to make NEMMP-2020 a success, “While promoting private transport through electric vehicles is a positive step forward, we must put far greater focus on

the development of public transport using energy efficient and alternative energy technologies. Given our population size and urban densities, public transport should be given greater priority than private transport”. Electrification of public transport, apart from benefiting more people, will also encourage adoption and acceptance of electric

Nissan Leaf charging

and hybrid technology. It will be a test of the practical utility and viability of the fuelling system, the refuelling or recharging of public transport vehicles will set a benchmark for the public to compare against. While the government has been able to set standards when it came to operating a CNG-run public transport system in the capital, questions are still raised about countrywide adoptability of the fuel. Also, CNG has also been partly successful for public and private transport since it can work on conversion vehicles. On the contrary, electriﬁcation will not only require an upgraded charging system but will also require investment in transport. According to the Press Information Bureau, the government has planned an investment of `13,000 – `14,000 Cr (estimated) over the next 5-6 years to facilitate automotive R&D and put the charging infrastructure in place. It has also urged automobile manufacturers to match the investment by developing

Toyota Prius at a charging station.

products and creating a manufacturing eco-system. Currently in India, we have Mahindra’s Reva, an all-electric car, and Toyota’s Prius, which is a hybrid. But these vehicles sell in small numbers because the vehicles are relatively costlier than their counterparts and do not make a proﬁtable buy currently. DM and COO, Toyota

Kirloskar Motors, Sandeep Singh, on the slow acceptance of hybrid/electric cars says, “The hybrid market in India has a long way to go before it develops. The price of the Prius is high in India due to the high customs duty. Sales would improve if that issue were addressed”. TKM has managed to sell 156 Prius cars since its launch, and believes that the

The National Electric Mobility Mission Plan 2020 aims at 6-7 million electric vehicles on the roads by 2020, with resultant liquid fuel savings of 2.2-2.5 million tonnes, and corresponding lowering of vehicular emissions and decrease in carbon dioxide emissions by 1.3-1.5%. hybrid market has a good future. Honda had also previously launched its Civic sedan as a hybrid in India, but it cost nearly twice as much as the petrol version and didn’t sell well, though it managed better fuel economy figures. Bavarian car manufacturer BMW however believes that conversion vehicles can’t make the best solution for electric mobility because of the different demands of electric vehicles. However, manufacturing all-electric vehicles and introducing them in the market has proven costly and unprofitable for manufacturers thus far. Additionally, in India, where power cuts are frequent, existing and future electricity production capacity also needs to be calculated. The National Mission for Electric Mobility (NMEM) has projected sales of 6-7 million units for new, full range electric vehicle by 2020 along with fuel savings of 2.2-2.5 million tonnes, and corresponding decrease in carbon dioxide emissions by 1.3% to 1.5%, but the question of availability of electric power everyday for these vehicles remains unanswered. It has been suggested, however, that the implementation and rollout of NEMMP 2020 will be done through various specific schemes, interventions, and policies that are currently under formulation and will be considered by the Government in the near future.

NEMMP 2020 At A Glance The National Electric Mobility Mission Plan 2020 aims at 6-7 million electric vehicles on the roads by 2020, with resultant liquid fuel savings of 2.2-2.5 million tonnes, and corresponding lowering of vehicular emissions and decrease in carbon dioxide emissions by 1.3-1.5%. In order to achieve this, the Plan aims at providing an initial impetus through demand support measures that facilitate faster consumer acceptance of EV technologies. The government will also facilitate automotive R&D and build charging infrastructure that will require an investment of about `13000-`14000 crore over the next 5-6 years. NEMMP 2020 projections also indicate savings from the decrease in liquid fossil fuel consumption as a result of the shift to electric mobility. India currently imports over 80 percent of its petroleum products requirements, and a shift to electric mobility will create substantial savings for the exchequer.

Auto Monitor

NEWS

Volt Charged Wirelessly By Philadelphia Company As EVs gain in popularity, so does the desire to ﬁnd a way to get rid of the inconvenience of the charging wire.

o m e n t u m D y n a m i c s Corporation (MD) has a nnounced that it has successfully charged the Chevrolet Volt with its wireless charging technology at the full power capacity of the vehicle. MD considers this as a signiﬁcant technical accomplishment, due to the complexity of the Volt, and a major milestone in the development of wireless charging as a crucial enabler for the widespread acceptance of electric vehicles (EVs). The Momentum Dynamics wireless charger delivers more than 20,000 watts of power from

1 - 31 JANUARY 2013

the electrical grid to the electric vehicle, far more than can be provided by conventional Level 2 (240 volts) plug-in chargers, which are typically restricted to 3,300 watts maximum. This higher power potentially allows greatly reduced vehicle charging times. The technology used by MD uses a simple receiving pad installed on the underside of a vehicle, and a transmitting pad placed on, or embedded into the road surface. “Momentum Dynamics has surprised many people in the industry by the amount of power that can be safely delivered with-

out the use of cables, and by its low cost relative to plug-in chargers,” said Andy Daga, company CEO and co-inventor. Daga also said he believes that Momentum’s technology will spur EV adoption, because future owners of electric and hybridelectric vehicles will demand the safety and all-weather automatic operation of wireless charging at an affordable cost. By contrast to plug-in chargers, wireless systems operate in all weather conditions. MD says they are immune to vandalism, and operate automatically. “We do for EV charging what systems like E-ZPass have done

for automated toll collection — except in this case it’s about more than reducing toll gate congestion — we are actually enabling the growth of an international industry,” said Daga. Daga further explained that the primary emphasis of his company has been high-power wireless charging for the demanding commercial EV market. For MD, charging the Volt represents a scaling back of Momentum’s technology to the more modest power requirements of passenger EVs. “This was a bit of a diversion for us, but we proved to the industry that wireless charging

can be rather easily integrated into current production EVs. Nevertheless, our mission remains focused on the larger commercial vehicles where the economics of reducing fuel costs for ﬂeet operators by more than 85 percent are clear and compelling,” said Daga. Several planned field trials with the participation of key strategic partners are scheduled to begin in early 2013. According to Daga, the company expects to be providing wireless charging rates in excess of 60,000 watts (60 kw) to targeted advanced commercial electric vehicles in the coming year.

More Hybrid Vehicle Technology On The Way

GE Shows Battery Fuel Cell Bus

hile the recent torrent of new hybrid auto models may be slowing, hybrid technology, especially in fossilfuelled cars, is just picking up speed. “I see the market moving quickly to ‘microhybridization’” says David Vieau, CEO of battery makerA123 Systems, referring to the implementation of fuelstretching hybrid components across all new vehicles, including gas-guzzling light trucks and SUVs. The main component of this microhybridization is the “start-stop” system, which shuts off an idling gas-powered engine when the vehicles comes to a stop, and then uses stored electricity rather than gasoline to get it moving again. “That first burst of the gas combustion engine is very inefficient,” says Vieau, pointing out that an electric start is quieter and more fuel efficient. Various industry studies have shown that vehicles that operate most often on congested city streets could see a 5-10 percent increase in fuel efficiency just with start-stop technology. John Gartner, transportation analyst at clean tech research firm Pike Research, thinks it could be up to 15 percent in savings — from a technology that he says could add as little as 10 percent of the hybrid premium onto the sticker price. With “full” hybrids like Volkswagen’s new 2013 Jetta — to be unveiled at this year’s North American International Auto Show in Detroit — commanding an average of $5,000 over the cost of a gas-powered comparable vehicles, these “micro hybrids” or “start-stop vehicles”, SSVs, that could add as little as $500 onto the price of a car. Compare that to electric-only vehicles like the Nissan Leaf, which can costs up to $10,000 more than a comparable gas-powered vehicle, and requires another $1,000 for the

News taken from Global Sources

charging technology at home or work. A typical commuter would see a payback in gas savings within two years, according to U.S. Department of Energy gas pricing and consumption data. Consumers now have dozens of hybrid vehicle options from which to choose, with almost every carmaker, from luxury marquees Porsche andto mass market makers Ford Motor and Honda , making at least one “full” hybrid. These new models include plug-in electric vehicles with gas engines to extend their range, like GM’s Chevy Volt, or non-plug-in versions that have both electric and gas-powered motors, like the ToyotaPrius. But analysts say the real market penetration for hybrid technology will be in vehicles whose owners may think they’re buying a fossil fuel-powered engine. Pike’s Gartner says SSVs are unlikely to cannibalize the existing hybrid market, but he adds that these micro-hybrids will instead do battle with smaller, more fuel-efficient gas-powered vehicles. “They’ll most directly face competition from smaller compact vehicles that can offer similar fuel efficiency by reductions in weight and in other technologies” like fuel injection and aerodynamic improvements, he says. Driven by a need for fuel efficiency in expensive gasoline markets, European and Japanese fleets have used this technology for a number of years, but it’s just coming to North America now. In 2011, about seven SSVs were sold for every two hybrids in 2011, but Gartner sees that growing to 16-to-1 by 2017, due to lower cost of adoption. He adds SSVs would typically be sold under an “eco” or “blue” label, and come standard on some newer vehicles or as an option on others. A123’s

Vieau says that once the battery pack is installed for stop-andstart, other energy recovery technologies become more inexpensive since the storage issue is solved. Other “hybridization” technologies use years-old concepts like regenerative braking systems, which grab the otherwise-lost energy from braking a car, to embedded solar panels designed to replenish batteries while driving. For firms like Vieau’s, wider application of battery technology is good news, since the pure electric vehicle, EV, market is still small. “The largest [green vehicle] population will be microhybrid, and the smallest will still be EVs” by 2015, he predicts. He says EVs are still expected to be a small overall player for the next 10 years, but “from a communications standpoint, all of the focus is on EVs.” He adds his firm is still bullish on EVs — especially since EVs need 10 times the battery capacity of hybrids, meaning more potential sales for his firm — but he expects more focus on battery technologies across all vehicle platforms, including SSVs. Hybrids have become so ubiquitous it’s easy to forget the first Toyota Prius rolled off a car lot in the U.S. in 1999. The Japanese automaker will debut the redesigned version of its flagship hybrid, the Prius v, for the 2012 model year. But with gas prices still high since that first U.S. Prius was sold, it’s the economic motive that has pushed hybrid technology into the mass market. Squeezing more miles out of a tank of gas has become critical, says Pike’s Gartner, when 95 percent of world’s vehicle fleet still uses fossil fuels. “You’re taking the best feature of hybrids and scaling it down,” he says, all at a reasonable cost. “That’s something that will blow past (full) hybrids in implementation.”

he researchers at GE Global Research, the General Electric Company’s technology development arm, have achieved a first step in reducing the cost of clean-fuel, zeroemission buses, with a vehicle powered by GE’s new Durathon sodium battery in tandem with a lithium battery and a hydrogen fuel cell. This development of a new energy management system could, according to GE, help accelerate both fuel cell acceptance and electrification of bus f leets, delivery trucks and other larger, heavy-duty vehicle fleets enabling clean vehicle technologies. Now, further testing using GE’s new Durathon battery has produced even better results. GE researchers believe that the kind of energy management architecture they’re building will allow for a bus to operate at full performance with a significantly smaller fuel cell than previously possible. The fuel cell power plant represents a significant cost and GE says its energy management system has the potential to bring down those costs by up to 50 percent. “For years fuel cells have been talked about as a clean transportation alternative but cost has always been a roadblock to widespread adoption,” said Tim Richter, systems engineer in the Electric Propulsion Systems Lab at GE Global

Research. The research is being done as part of a $13 million research project GE is engaged in with the Federal Transit Administration (FTA) and Northeast Advanced Vehicle Consortium, funded under the National Fuel Cell Bus Program. “GE’s Multi-Energy High Voltage Energy Management Technology releases vehicle designers from the traditional constraints of single battery configurations,” Richter continued. “GE’s Energy Management Technology combined with two or more batteries or energy devices allows GE to enable various power-to-energy configurations that match the vehicle needs. By leveraging the right battery to do the right job, overall system cost and efficiency can be improved.” Most types of batteries today come with a trade-off between power and energy storage. Sodium batteries, like GE’s Durathon, are on the opposite side of the spectrum. They store large amounts of energy, but are less optimized for power. In the hybrid transit bus demonstration, the lithium battery focused on the high power acceleration and braking, while the Durathon battery provided an even electric power flow to extend the bus range. GE’s Durathon batteries are produced at the company’s start-up Energy Storage business in Schenectady, N.Y. which opened in July 2012.

Auto Monitor

1 - 31 JANUARY 2013

F E AT U R E

CG’s EV Charging Stations to Fuel Smart Grid Growth Smart Grid Market to be Worth $57 billion by 2016

he Automation arm of CG, ZIV Metering Solutions, has bagged an order to supply IBIL, the Spanish electric vehicle charging operator, with 90 Electric Vehicle (EV) charging stations. The IBIL order helps

showcase CG’s capabilities at the cutting edge of the energy revolution in transportation and its strength in the exciting Smart Grid space. The depletion of fossil fuels, rising oil prices and increasing environmental awareness

are leading governments, utilities and consumers to explore energy-efﬁcient transportation technologies. The Smart Grid and EVs are critical in this respect. According to a report, by 2025, 35% of all cars sold will be electric, 25% of which will be hybrids and 10% pure EVs. These vehicles require an accessible and reliable charging station network which only a Smart Grid can provide. A

The IBIL order helps showcase CG’s capabilities at the cutting edge of the revolution in transportation in the Smart Grid space.

Smart Grid balances the ﬂow of power through the electrical network. Its intelligent systems communicate with each other to manage and compensate surges and dips in demand for power, thus enhancing system efﬁciency. The increasing popularity of EVs - especially in the US and the European Union - is driving increased and more rapid deployment of Smart Grid technologies. CG’s EV charging stations are Smart Grid-enabled, communi-

cating information in real time to and from meters and generators. Moreover, CG offers comprehensive Smart Grid solutions through its end-to-end product offerings ranging from meters and protection devices to routers, current sensors and EV charging stations. The global Smart Grid market has seen double-digit growth rates over the past ﬁve years and is expected to continue along this trajectory, reaching approximately $57 billion by 2016. CG is

well-positioned to penetrate this sizeable market on the strength of its global footprint, R&D prowess, and manufacturing capability. This will help the company provide its consumers with innovative, reliable and intelligent offerings, even as it helps the environment. CG Executive Vice-President & President of Automation Norberto Santiago said, “CG has bagged this order from IBIL in the face of intense competition from large and established Original Equipment Manufacturers (OEMs) for the automotive industry and the Spanish industrial administration. EVs will play an important role in the electricity network of the future and help meet important challenges such as Europe’s 20-20-20 objective, wherein the continent aims to reduce CO2 by 20%, source 20% of energy from renewable sources, and lower energy use by 20%. CG is an important player in thispromising market.” CG CEO and Managing Director Laurent Demortier said, “I thank IBIL for reposing its trust in the expertise and differentiation CG brings to the table. The repeat order is a reﬂection of our strong capabilities in the important and growing Smart Grid segment. CG is well-positioned – in technology, R&D, manufacturing, and access to market - to seize its wide-ranging opportunities.” IBIL - a JV between REPSOL, the leading Spanish oil company, and EVE, the Basque Energy Agency - had earlier selected CG’s Automation arm for the design and supply of 150 charging stations based on their past successful engagement history. ZIV, which was acquired by CG in July 2012, created its portfolio of EV charging products in 2010. CG is a global pioneering leader in the management and application of electrical energy. With more than 15,000 employees across its operations in around 85 countries, CG provides electrical products, systems and services for utilities, power generation, industries, and consumers. The company is organized into four business groups: Power, Automation, Industrial, and Consumer. CG clocks US$2.3 billion in revenues from product lines that cover the entire value chain of engineering offerings. The US$ 4 bn Avantha Group is one of India’s leading business conglomerates. Its successful entities include BILT, Crompton Greaves, The Global Green Company, Avantha Power & Infrastructure, Solaris ChemTech Industries, Biltech Building Elements, Salient Business Solutions and Avantha Technologies. With an impressive global footprint, Avantha operates in more than twenty countries, employing over 22,000 people worldwide. The Group has business interests in diverse areas including power transmission and distribution equipment and services, paper and pulp, energy and infrastructure, food processing, farm forestry, insurance, chemicals, IT and ITES.

Auto Monitor

1 - 31 JANUARY 2013

F E AT U R E

Tariff Troubles High import duties are straining Indian manufacturing, and FTAs seem to only put the foreign partner at an advantage, observes Nabeel A. Khan. being offered to India (in engineering and automobile especially) by the European Union is going to end this year, and it is very unlikely to be revised as they no longer see India as a ‘developing’ economy. The US is still considering whether Indian should receive it, since it expired in 2010. At the same time, the Indian automotive industry is battling with an unparalleled high cost of capital, power and import duty on raw material, compared to many of their counterparts in other countries. They are operating on very thin proﬁt margins. Count r ies li ke Japa n, Thailand, and the EU offer free import of raw material to manufacturers, while in India manufactured goods are sometimes cheaper to import

Q3 F13 Export Performance Source: SIAM Quarterly Review, Q3 FY13

he time may have come to end the celebrations that began with liberalization and delicensing in the early ‘90s. After an unreasonable delay, the government has finally taken actions which will bring cheer to the economy, although the government received flak from some corners for taking their decisions under the threat of foreign rating agencies downgrading India. Ironically, now we are neither considered a developing economy, to seek special favours, nor have we graduated to a mature economy, especially when it comes to the automotive industry. This is reflected in the way global economies are responding to India. The Generalised System of Preferences (GSP)

compared to the raw material. Two examples being rubber versus tyres, and aluminium versus

its components. We may dream of competing with China, but let’s not be so unrealistic. A coun-

try like Thailand, which is much smaller than India, exports over USD 10 billion worth of auto com-

Arvind Kapur, Ex-President of ACMA and MD of Rico Auto Industries

ponents compared to India’s USD 6.9 billion. Meanwhile, the import bill of Indian auto component manufacturers is to the tune of USD 10.6 billion, which creates a massive trade deficit, the overall turnover for domestic production being USD 43.5 billion. It’s been more than two years since a free trade agreement (FTA) with Thailand came into force, but it has not brought much cheer to the automotive industry for many reasons. A number of Indian parts manufacturers are strongly considering setting up plants in Thailand if the government does not come up with a new support policy immediately. They plan to manufacture in Thailand and then export to India, but this is not viable for all because of the new nature of production – just in time delivery. “We are not against signing of FTAs with any country, but what we want is a level playing field”, says Arvind Kapur, Ex-President of ACMA and MD of Rico Auto Industries. In Thailand, the government allows raw material to be imported at zero duty for export purposes and even for domestic usage. Thanks to the FTA, they can export to India and many other countries at almost zero duty. However, if an Indian manufacturer is importing the same raw material from the same source, be it Japan, Taiwan, or Vietnam, it has to pay import duty. The RBI, though, has extended the two percent interest subsidy scheme for exporters in segments like handicrafts, carpets, SMEs, and certain engineering goods till March 2014, expressing worry over the current account deficit, falling foreign exchange reserves, and

Contd. on Pg 40

Auto Monitor

1 - 31 JANUARY 2013

F E AT U R E

Tariff Troubles...

S Q R F

Global Comparison: Calendar Year

the tumbling rupee. According to the Reserve Bank of India, the country’s current account deﬁcit widened to USD 22.3 billion, or 5.4 percent of gross domestic product (GDP) in the July-September quarter in 2012, from USD 16.4 billion in the April-June period. It was at USD 21.7 billion in the January-March quarter of the same year. “At 2011-12 end, our exports grew 33 percent compared to the previous year’s USD 5.2 billion. Europe was our single largest

export destination, accounting for about 35 percent of exports. Unfortunately for this year, as Europe economy isn’t good, exports have come down. Our exports for current ﬁscal may end in ﬂat or even negative growth,” says Vinnie Mehta, Executive Director, ACMA. The automotive industr y wanted at least five percent subvention in interest rates for the exports segment, and also sought a restoring of the seven percent interest on capital of three years ago to help the current sluggish market. Interestingly, Thailand not only has lower import duty, but money is available at 3.5 percent or so against India’s average of 12 percent. How is the Indian ma nu fact u rer to compete with them? And while Indian component makers remain worried about the unfair advantage foreign players derive

Source: SIAM Quarterly Review, Q3 FY13

Contd. from Pg 38

from FTAs, India is currently looking at signing more such agreement with countries such as Brazil and European Union. “In principle, ACMA isn’t against signing FTAs, but once you sign it, you must ensure that trade in both nations should

beneﬁt, not just one, which in our case is the foreign partner. We are urging the government to sign FTAs with countries like South Africa, whose tariffs (in terms of duty) are higher than us. When our tariffs are lower, they are able to export. So, there

is no real advantage that we get out of FTAs”, adds Mehta. Echoing the same opinion, another industry expert says, “Look at the duty structure. If you want a level playing ﬁeld and R&D, push for sustainability of the Indian automotive industry.”

In Thailand, the government allows raw material to be imported at zero duty for export purposes and even for domestic usage. An FTA with the EU, being planned by the government, might help consumers and car buyers, but some OEMs who have already invested in the country may not like the idea. And it doesn’t augur well for component makers for the same reasons as with Thailand because Europe currently has lower tariffs than India. It will encourage imports; and the focus is more on ﬁnished vehicles than on components. Of late, vehicle exports have also been hurt because of the slowdown in the Euro-zone. Sri Lanka increased import duty on automobiles from India by around 100 percent, which will beneﬁt China and other countries in the region. Last year India exported vehicles worth USD 6 billion, out of which automobiles worth USD 800 million was sold in the Sri Lankan market. Adding to its woes is the Drawback Committee’s reduction of drawback rates for commercial vehicles (CVs), and two and three wheelers from 5.5 percent to 2 percent in October 2012. This negatively impacted automobile exports, especially of CVs and two-wheelers. As regional blocs become stronger, India should look at signing FTAs with these trade blocs, where there is advantage to both parties in the success of the agreement. African, Asian, and South American countries are the prime export markets for Indian manufacturers. According to the Society of Automobile Manufacturers (SIAM), during April-December 2012, overall automobile exports declined by 2.92 percent against the same period last year. Passenger vehicles grew by 10.52 percent, while segments like commercial vehicles, threewheelers and two-wheelers fell by 4.76 percent, 20.88 percent, and 2.79 percent respectively. In December 2012, the passenger vehicle, and two and three wheeler segments grew by 31.59 percent, 9.36 percent, and 4.63 percent, respectively, while commercial vehicles declined by 25.79 percent. The Indian automotive industry has both opportunities and challenges. Growing technical and R&D capability will help India remain relevant in the global market. The country has 10-11 vehicles per thousand people. We have a young population who are ambitious and are keen to buy cars. A lot of the growth will come from the domestic market itself. So, by and large the exports ratio will be very similar. “By 2020 you can expect the domestic market’s production to be between USD 110-115 billion, of which around USD 30 billion will be from exports”, says Vinnie Mehta.

Auto Monitor

1 - 31 JANUARY 2013

COLUMN

Indian Auto Manufacturing Gets A Boost Recent developments have allowed India to emerge as an auto manufacturing hub, says Shashank Srivastava of Maruti Suzuki.

here was a time not long ago when Indian manufacturing was not considered up to global standards. As a result, there was little discussion about India’s participation in the world demand, and the only demand that we really bothered about was domestic demand. The Indian domestic market was also rather small. In 2005, our market size was around one million units, while the world market was around 78 million. Economies of scale and acceptance of Indian cars were low. Since then however, there has been a sea change. While overall demand in 2012 is expected to be around 81 million units, the Indian domestic demand should be around three million. Thus while world demand increased only marginally, the Indian domestic demand increased three times. This has had a phenomenal effect on our industry. The increased volumes

While exports from developed nations have become more expensive, the reverse is true for us. have put us on the international map not only as a lucrative market, but also as a manufacturing base. With the conﬁdent backing of large sales volumes at home, the development of manufacturing capacity both in volume and quality, Indian manufacturers can now look at other markets as well. Our lower production costs and the now large vendor base also play a role. Many other factors also favour the export of cars from India. High fuel prices have forced consumers to shift to smaller, more fuel-efﬁcient cars, and this is a segment where Indian companies are

strong. The reason being that in our country this has traditionally been the largest segment, and hence ‘frugal engineering’ has developed well. Fuel prices are expected to remain high in the future, and the demand pattern transition stated above should continue. The other major factor is currency rates. Due to various macroeconomic factors in the global economy, there has been a hardening of the major currencies against the currencies of the smaller and developing economies. Thus the Japanese yen, the euro, and the US dollar all have strengthened against the Indian rupee. This is a big opportunity for India so far as exports are concerned. While exports from developed nations have become more expensive, the reverse is true for us. And this is the main reason why India is being increasingly looked at as a possible hub for exports, especially in the small car segment.

Maruti Suzuki now exports to more than 125 countries, and its volumes have grown over the years. Last year it sold more than 127,000 cars, which is about 13% of its overall volumes. Hyundai has done even better, and last year they exported about 237,000 cars, including the i10, i20, and Santro, among others. Nissan exported almost 100,000 cars, which is way above their domestic sales in India. Recently, Honda started exporting Brio, and Toyota started exporting the Etios, to countries like South Africa. All this indicates the increasing trend of exporting cars from India. Overall, passenger vehicle exports increased by 14% last year, from 444,326 in 2010-11 to 507,318 in 2011-12. Not only this, the markets for which we have an afﬁnity are the growing ones. Thus such markets as Africa, Latin America, Middle East, the ASEAN countries, etc., are projected to grow at much higher rates than countries like Japan , Europe or America. Again this is an opportunity for us. In fact, for Maruti Suzuki, exports to Europe make up only 20% of its volumes, with 80% being non-European. Just three years back, in 2009-10, exports to Europe were 77% of the market, and non-Europian exports only 23%! Miraculously, almost, the numbers lost in Europe have been made up with huge increases in exports to nonEU countries. Today, Africa and Latin America comprise more than 60% of Maruti-Suzuki exports, and it is growing. But while the opportunity is there, it is by no means an easy task. We are not the only country with advantageous conditions. Countries like Turkey, Indonesia, and Brazil are more or less equally placed. A big challenge will be to manage the trade terms between India and other trade blocs. In this, of course, it is the government which must take the lead. Increasingly, other countries are entering into FTAs with trade blocs, and this threatens exports from India. For example, the trade agreement between EU and the North African countries in which import duty on cars from EU will progressively reduce, while staying the same for India, will be a threat to the export of cars from India. Nonetheless, car exports represent a very big opportunity for Indian car manufacturers. We will need to improve our manufacturing and quality processes. We also need to focus on expanding our distribution network in the developing markets. This will not be easy and will require all our business acumen! Shashank Srivastava is an Electronics Engineer and an MBA. He joined Maruti-Suzuki as a management trainee and is currently an executive director, overseeing product planning and international markets. He has rich experience of almost 23 years in the domestic market at the regional, zonal, as well as corporate levels, and took up his current position this year.

Auto Monitor

1 - 31 JANUARY 2013

COLUMN

The Last Course India’s achievements in the automotive segment have not only been steady but is growing continuously. But it needs to spruce this further with local product development and R&D, says Rakesh Batra, Partner at Ernst & Young.

ver the last decade, India’s automotive sector has established global credentials, with both domestic and international OEMs and suppliers leveraging the domestic demand and manufacturing potential. India is currently the sixth-largest (LMC Automotive, 3Q12 Global Car & Truck Forecast) passenger vehicles market in the world. Furthermore, it has emerged as the ﬁfth largest light vehicle production base globally (overtaking Brazil in 2010), specializing in production of low-cost, small and fuel-efﬁcient cars, SUV’s and light trucks supported by its frugal engineering capabilities and skilled manpower. Vehicles and components manufactured in the country are increasingly meeting global standards of quality, reliability and cost.

Strong Growth In Auto Exports India is Asia’s third-largest exporter of passenger cars behind Japan and South Korea. The automotive vehicle export from the country has grown at a CAGR of 24 percent — from 1.2 million units in FY08 to 2.9 million units in FY12. Presently, vehicles produced in India are exported to around 110 countries with key markets being the UK, Germany, Italy, South Africa and Sri Lanka. In the passenger vehicles segment, exports are primarily driven by small cars produced by Hyundai with 47 percent share (Eon, i10), Maruti Suzuki with 25 percent share (A-Star and Alto) and Nissan with 20 percent share (Micra). In the two-wheeler segment, Bajaj Auto is the largest player with over 65 percent share in total exports followed by TVS Motors and Hero MotoCorp. In the CV segment, Tata Motors and M&M are the key exporters. Export of auto-components from India have grown at a CAGR of 16 percent — from $3.8 billion in FY08 to $6.9 billion (ACMA FY12 annual report) in FY12 — and is expected to rise to $29 billion by FY21. Europe, (37 percent share) followed by Asia (28 percent share) and North America (24 percent share) are the largest export markets for auto components from India. Engines (42 percent share), transmission (21 percent share) and electronics (17 percent share) are the largest export segments (ACMA FY12 annual report and ACMA-EY 2020 Vision).

Source: Ernst & Young

Strong Regulatory Measures The government policies and regulations have been key driving forces in promoting investments in the automotive industry. Now with a reasonable scale established, and expectations that the industry could reach an overall capacity of 9-10 million PV’s by 2020, the industry seeks to further leverage India as a global and regional development and manufacturing hub. From an overall strategy perspective this allows OEM’s to exploit the low cost manufacturing advantage, increase localization levels, and hedge currency volatility. While state governments offer attractive incentives to attract investment, including tax breaks, facilitated access to land and guaranteed access to energy, these are biased in favour of production for domestic market. The government has provided some incentives such as the Focus Market Scheme, which provides manufacturers with cash incentives of up to five percent for export of vehicles to specified markets. The government has also entered into free trade agreements (FTAs) and preferential trade agreements (PTAs) with various countries. These agreements reduce, and at times completely waive-off, customs duties. The 12th Five Year Plan recommends the waiver of minimum alternate tax (MAT) on automotive export earnings (Central Board of Excise and Customs India). However the Central and State Governments should also provide incentives and efficient infrastructure to further promote investment in manufacturing for export markets. India has a strategic advantage with its low cost engineering and manufacturing capabilities, domestic market size, established supplier base and large resource pool that can be exploited, however we need to also keep in mind the emerging competition from neighboring countries.

Competition From Emerging ASEAN Hubs India faces strong competition from automotive hubs in the ASEAN region including Thailand, Indonesia, Malaysia and the Philippines. The ASEAN Economic Community (AEC) aims to achieve economic unity by 2015 and the automotive industry is one of the 12 priority sectors for integration. The

Thailand is the dominant export and production hub in the region, driven by its low wage structure, established supplier network and efficient infrastructure. Almost 50 percent of the annual PV production in Thailand is exported to Asia, the Middle East and Oceania. ASEAN governments aim to create local production and export hubs by driving the local automotive production with incentives and preferential treatment. Strong growth in domestic demand ensures that OEMs are able to achieve critical production levels and export cost-competitive vehicles to emerging markets in south-east Asia, Africa and the Middle East. Furthermore, Japanese OEMs are developing ASEAN countries as their production base in Asia, following conﬂicts with China and natural disasters in Japan. Thailand is the dominant export and production hub in the region, driven by its low wage structure, established supplier network and efﬁcient infrastructure. Almost 50 percent of the annual PV production (~2 million units) in Thailand is exported to Asia (31 percent), the Middle East (26 percent) and Oceania (20 percent). Export of auto components from Thailand has grown at a CAGR of 8 percent — from US$7 billion in 2007 to US$9.7 billion in 2011. Nissan has recently announced plans to invest $358 million in a new plant with a capacity of 150,000 units. Ford Motors has opened a new $450-million plant in 2012 (capacity of 150,000 vehicles), to meet rising demand in neighboring ASEAN countries. Indonesia is the next emerging automotive export hub in this region, with several competitive advantages. These include a stable political scenario, an improvement in corruption issues and a presence of various local OEMs providing JV and partnership opportunities. By 2017, automotive exports from

Global suppliers are setting up and expanding their R&D centers in India to increase local content in vehicles and leverage it as a global hub for design and technology. Delphi’s Technical Centre India is a global small-car component design hub focused on localization.

Source: Ernst & Young

Indonesia are expected to rise from 10–12 percent to 20-25 percent of the total production. Toyota, Daihatsu, Honda, Nissan, Suzuki, Isuzu and Mitsubishi have plans to invest around US$2 billion in Indonesia for capacity addition to cater to both domestic and export markets in the ASEAN region. Automotive suppliers, such as Denso, Unipres and Pirelli are also investing in Indonesia to develop a strong automotive supply chain. After a period of automotiveindustry protectionism, Malaysia is now focused on liberalizing the automotive sector. It is reviewing its National Automotive Policy to continue domestic market liberalization and use incentives to drive FDI and become a hub for production and exports. The Philippines is re-crafting its Motor Vehicle Development Program to expand domestic production, sales and eventually the exports of CBUs and auto-components. Vietnam is drafting a special sales tax support for sub-1,500cc vehicles, with over 40 percent localization and with special preferential import tariffs.

OEMs Go Global; Suppliers Local Global OEMs are investing in local manufacturing and design capabilities to meet domestic demand and establish India as an export hub with the development of global platforms. Toyota’s Etios and Liva, Honda’s Brio and Hyundai’s Eon are some examples of car platforms which were developed in India and are now exported to other emerging markets. Renault is planning to invest 1.5 billion in India for its small car project in Gujarat and plans to set-up a vendor base for sourcing cheaper components for global Renault models as well. Indian OEMs are vying for joint-assembly operations and contract-manufacturing in other emerging markets, and are also expanding their dealer/franchise network in global markets via organic and inorganic routes. Tata Motors, Mahindra & Mahindra and Bajaj Auto are enhancing their presence in international markets via both organic and inorganic routes. Global suppliers are setting up and expanding their R&D centers in India to increase local content in vehicles and leverage it as a global hub for design and technology. Delphi’s Technical Centre

India is a global small-car component design hub focused on the localization of engineering validation and manufacturing capabilities. Domestic suppliers are focused on forming alliances/ partnerships to access advanced technologies and global best practices in R&D, to meet the OEMs’ needs for faster introduction of new products and greater levels of outsourcing.

Collaboration and Govt Policy For Exports Despite rising competition from these South-East Asian manufacturing hubs, India continues to increase its stature in the global automotive production and export landscape with its inherent advantages of low-capex production facilities, skilled labor, fast growing domestic demand and proximity to new emerging markets in the Middle Eastern, African and Eastern European regions. Going forward, the country needs to focus on promoting local product development and improving R&D infrastructure to exploit its export potential. Suitable policies need to be defined to promote and incentivize investments in capacity which ensures business model simplicity. This is currently not possible with the SEZ schemes given that a vehicle assembly plant is a large investment and capacity needs to be cater to both domestic and export demand. OEMs need to collaborate and invest in their suppliers to strengthen their quality and production processes. Domestic tier-1 suppliers should explore opportunities to take-up greater responsibilities including testing, validation and product development. They are also expected to offer ﬂexibility and follow the OEMs’ strategy of operating from multiple locations. With these initiatives and focus areas, the automotive industry can expand its export volumes by delivering high quality and cost competitive products in both developed and developing markets. Rakesh Batra, Partner at Ernst & Young, is also an Automotive Advisory Leader for Europe, Middle East, India and Africa. He is based in Delhi and has extensive experience of over 30 years in both corporate and consulting roles.

Auto Monitor

1 - 31 JANUARY 2013

REPORT

GM Buys Back 200 Mn Shares From US Govt Our Bureau New Delhi

ne of the important developments in the concluding days of 2012 was General Motors’ announcement to buy back 200 million of its shares from the US Department of the Treasury in an effort to downplay the ‘Government Motors’ scorn which it had been receiving from some corners since the bailout it got from the US government in 2008 and 2009. Treasury, as part of it efforts to wind down its investments in the Troubled Asset Relief Program (TARP), has announced its intent to fully exit its investment in General Motors (GM) within the next 12-15 months, subject to market conditions.

The vehicle manufacture will purchase 200 million shares of GM common stock held by the U.S. Department of the Treasury for $5.5 billion, or $27.50 per share. Treasury currently holds 500.1 million shares of GM common stock. Treasury intends to sell its other remaining 300.1 million shares through various means in an orderly fashion, subject to market conditions. Treasury intends to begin its disposition of those 300.1 million common shares this month to a pre-arranged written trading plan. “This announcement is an important step in bringing closure to the successful auto industry rescue, it further removes the perception of government ownership of GM

Dan Akerson, Chairman and CEO, GM

among customers, and it demonstrates conﬁdence in GM’s progress and our future,” Dan Akerson, Chairman and CEO, GM

said in a press statement. Treasury had invested a total of $49.5 billion to help stabilize and restructure GM – as

part of a broader rescue of the American automotive industry during a severe economic crisis. Including GM’s purchase

of common stock from Treasury announced recently, Treasury has recovered more than $28.7 billion of its investment in GM to date through repayments, sales of stock, dividends, interest, and other income. Treasury intends to begin its disposition of its remaining shares as soon as January 2013, consistent with a pre-arranged written trading plan. In addition, Treasury has agreed to relinquish certain governance rights that were included in the U.S. Treasury Secured Credit Agreement with GM. In a media release, Dan Ammann, Senior Vice President and CFO was quote as: “A fortress balance sheet has been a pillar of GM’s financial strategy and has enabled us to undertake today’s actions. GM’s balance sheet will remain very strong, with estimated liquidity of approximately $38 billion at the end of 2012, following the closing of the share buyback.” Previously, treasury announced that it expected to make significant additional progress winding down TARP’s bank programs in 2013. Treasury had sold its final shares of AIG common stock. Overall, to date, through repayments and other income, Treasury has recovered more than 90 percent ($381 billion) of the $418 billion in funds disbursed for TARP. “The auto industry rescue helped save more than a million jobs during a severe economic crisis, but TARP was always meant to be a temporary, emergency program. The government should not be in the business of owning stakes in private companies for an indefinite period of time,” said Assistant Secretary for Financial Stability Timothy G. Massad. “Moving to exit our investment in GM within the next 12 to 15 months is consistent with our dual goals of winding down TARP as soon as practicable and protecting taxpayer interests,” he added. According to independent estimates, the rescue of the American auto industry helped save more than 1 million jobs. Moreover, since June 2009, the auto industry has added a quarter of a million new jobs. For details on Treasury’s lifetime cost estimates for TARP programs, “The repurchase price of $27.50 per share represents a 7.9 percent premium over the closing price on December 18, 2012. The share buyback is expected to close by the end of the year. This transaction will be accretive to earnings per share, as GM’s total shares outstanding on a fully diluted basis will be reduced by approximately 11 percent. In association with this share buyback, GM expects to take a charge of approximately $400 million in the fourth quarter, which will be treated as a special item.” the carmaker said in a press statement. The automotive industry in general, and GM in particular, have rebounded sharply since the rescue. Since the rescue, GM has announced investments of more than $7.3 billion in the U.S. and created or retained more than 20,000 jobs.

1 - 31 JANUARY 2013

Auto Monitor

INTERVIEW

A Big Mismatch? The growth of road has not kept pace with the growth in the automobile industry. Overloading, potholes, and patches continue to mar the lifespan of vehicles, and jeopardize lives. Nabeel A. Khan finds out what can be done to improve the scenario by speaking to Dr. Subhamay Gangopadhyay, Director of Central Road Research Institute. How do you see the mismatch between the growth of roads automobiles? What is the solution going ahead? The growth in roads and highways is not keeping up with the pace in the growth of vehicles and that happening in the automobile industry. It is imperative that we look for a simultaneous speedy growth of the National Highways, State Highways and city roads. There is little check on the growth of the automobile industry -- everybody is free to own his/her individual vehicles. This has led to dealing with a new kind of problem in terms of ways to mitigate the problems faced by urban areas and on the other hand finding a way to expand the intercity roads that are the national highways and expressways. One way to solve the traffic congestion problem faced by cities is encouraging the use of public transport because one needs to ease the traffic snarl. And this can only be achieved through the constant use and the growth of the public transport system. Since it is hard to expand much in urban areas in terms of road systems and network, it is imperative that the extensive use of public transport system and non-motorized systems like pedestrian, bicycles etc, are also encouraged. For instance, if you look at the road in front of us (Mathura Road-Delhi), it carries about two lakh vehicles each day. We found this out through a survey we conducted about 14 months ago and I’m sure the figure has shot up to more than two lakh now. This is as far as the scenario of the urban roads or city roads are concerned. If you come across the national highways or the connectivity in the major cities or ports and other medium towns, NHAI is working very hard for connectivity amongst these cities. So you are saying the increasing population of vehicles is also an area concern. Why is it hard to upgrade the roads to suit traffic conditions? If you look at some of the major cities - Mumbai-Ahmedabad, Mu m b a i-P u ne, Kol k at aDurgapur, Delhi-Ambala, they are all being upgraded. If you travel on the Delhi-Ambala route up to Panipat, you will realise clear and free travel movement.

So there’s a tendency along with good work being done by NHAI which is to provide connectivity on a faster mode, and not just connectivity just for the sake of providing connectivity. I cannot give readily available figures as to the growth, but as I understand the NH carries about 80 percent of the intercity traffic, and hence national highways play an important. It is besides the fact that a majority of the NHs are two-lane. That’s why the government along with the NHAI is concerned about upgrading national highways to 4- and 6-lane and makes it the expressway level. So when can we expect all the NH to be up to the level of expressways? The government is concerned and working on it. It is talking about speedy connectivity – with around expansions of 20 km a day of new construction. This is their target. And if this is the case, then I don’t find any problem in being able to accommodate the growth in the automobile industry. A day will come when you will go by your vehicle From Delhi to Mumbai within 18 to 20 hours and that is not far. A drive from Delhi to Amritsar is now eight hours, and Delhi to Agra has come down to 2.3 hours. These limits are remarkable. Probably with our better design and stricter emission norms there will lesser pollution and more mobility. You cannot compromise with the safety and security in order to accommodate the high growth of automobiles. On the other hand mobility has to be encouraged to propel economic growth. India reports a high number of accidents not to mention the high level of pollution. What is the solution for this? Every facility you provide will have some ill-effects elsewhere. And one major ill-effect is, of course, safety. We have so far refrained from giving a higher extent of importance to the safety aspects of the human life when they travel on the road. But one good thing has happened. CRRI has conducted a number of road safety audits of the national highways in the country. These audits are being carried out on behalf of NHAI at the design stage, construction stage, as well as operation stage at every aspect

of the national highways right from its planning stage. The government is very much concerned about safety at a time when we see a loss of 1.6 lakh human lives every year in India. In terms of environment, there’s the pollution to be tackled in terms of both air and noise. While air pollution norms have been set as BS-IV, we may have BS V – VI coming in the next few years. I understand the automobile industry is working hard on creating innovative designs that will deliver better fuel consumption and better fuel characteristics so that indirectly pollution level can be minimized. In terms of noise pollution, we have internal and external noise pollution. CRRI, being a premier institute on road research, is working on environment issues and covers many aspects like how to mitigate the air pollution and noise pollution in terms of noise barriers. We are also working on design of noise material, like rubber pads, vibration material control, etc. Lifecycle and durability of roads are a cause for concern as it results in much investment of time and money. Under the 11th Five-year Plan, you were assigned with a project to file a report on the maintenance strategy. How’s it going? I think it is a major concern maintaining the roads. We often come across potholes and broken roads which not only reduce speed but also damage the vehicles. Hence we need to build a maintenance strategy. We have to form a strategy as to how to maintain and also allocate the necessary budget. It appears that the lifecycle of a good pavement or road ought to be 20 to 30 years. This means that we have to build a road keeping this in view, figure out the future projected traffic and travel demand and then maintain the road at almost zero maintenance. In terms of maintenance, there should be some routine periodic maintenance and not anything major. That is the target one should have. We have design standard of the roads well set, which is per IRC norms. The major glitches that actually cause problems are by overloaded trucks, and poor workmanship (which is the major cause) at the time of building roads.

We have executed a project under the 11th Five year Plan on the maintenance strategy of high-speed corridors of India. The report is expected to be ready in the next six to eight months. This was part of the 11th Fiveyear Plan, but we got a revised extension date of up to December 2013. This project is of course for maintenance and budgeting schedule for the high-speed corridors which are mainly the expressways and national highways that carry high-speed vehicles. Under this project we will quantify the time at which repair will be required. Is there any existing norm on budgeting of maintenance of road or provision for penalizing the errant contractors? Right now there is no budget set for maintenance of important roads as such. We should have minimum maintenance restricted to patch work and all. The major gray area of our research is that we are not very sure about the projected traffic after 10 to 12 years on any given road and that is important to understand the quality and kind of roads we would like to build. Usually the growth rate of traffic is around six to seven percent (in urban areas) and based on assumption, we calculate the expected traffic. But it goes as high as nine percent at some places or eight or six percent at certain locations. Concrete roads are notorious for incidents of tyre bursts be it Agra Highway or Pune-

Mumbai. How does one counter this? People go in for concrete roads in spite of the incidents of tyre bursts. Actually concrete roads are highly cost effective as there is little investment on maintenance. It is near zero maintenance. Yet another problem is that bituminous may not be available after few years and will be in short supply because of the rising global oil consumption. That’s the reason we have to adopt concrete for roads. It is a good area of research, but we have taken it in our mandate of CRRI so far. Is it to enhance public transportation and discourage private vehicles that the government is again planning to extend the BRT system in Delhi, despite the hullabaloo? No, the concept of BRT is excellent because one should always consider public transport system so that it can be given its boost. You are right one way that it is a policy and I don’t negate this. In any urban transport system, public transport should be given encouragement but the way do it, the way you design it, the way you implement is yet to be realized. Every city has got its unique characteristics and nature. It is necessary to recognize local conditions and discover how BRT can be better utilized so that people are enables to use public transportation and will move from moving around frequently in private vehicles. You cannot design a system and make private vehicle owners suffer. We have to take care of private vehicles movements also.

Auto Monitor

1 - 31 JANUARY 2013

COLUMN

For a Rainy Day Disaster can strike any time and in any form, leading to losses. Every business needs to take stock of possible future risks, and plan for contingencies. Sudam Maitra of Maruti Suzuki gives us a lowdown on the Supplier Risk Management (SRM) initiatives undertaken by his company.

utomotive companies today are embroiled in a worldwide industry transition. Nearly everything about the businesses is changing â&#x20AC;&#x201C; the products, the services, the challenges, the unprecedented risks, and even the fundamental business models of the industry. At the centre of this massive change is the automotive supply chain. For automotive companies to emerge from this transition as healthy and vibrant businesses will depend largely on how their supply chains proactively adapt to change, respond to risks, and keep clear visibilities. The top challenges for automotive companies are: s -INIMISING COSTS s - A X I M I S I N G D E L I V E R Y performance

s !CHIEVING WORLD CLASS QUALITY s !G I LIT Y F LEX IBI LIT Y A ND responsiveness

s 'AINING lRST MOVER ADVANtage in deploy ing new technology

s 3UPPLIER RISK MANAGEMENT !S PER A CROSS INDUSTRY )"- study, one-third of all sup-

ply chains fail to manage risk on a formal basis. The story is slightly worse for automotive

As per a crossindustry IBM study, onethird of all supply chains fail to manage risk on a formal basis. companies, with 37 percent acknowledging the absence of formal practices for monitoring risk. ,ET S TALK ABOUT HOW -ARUTI 3UZUKI HAS FARED in the risk management race. Before I start with THE ACTIVITIES BEING DONE BY -ARUTI ) WOULD like to cite a few incidents. Cost reduction, delivery performance, faster capacity buildup, and imbibing new technology have been the traditional focus of supply chain which has created a niche in the markets compared to competition. 7HILE THE -3), SUPPLY CHAIN WAS INVOLVED in the above activities, and in addition trying to cope with high inďŹ&#x201A;ation, rising commodity PRICES WEAKENING FOREIGN EXCHANGE AND FUEL price disparity, suddenly to no oneâ&#x20AC;&#x2122;s notice on -ARCH IN THE EARLY AFTERNOON *APAN WAS ROCKED BY A MAGNITUDE EARTHQUAKE 4HE EARTHQUAKE AND THE TSUNAMI WHICH FOLlowed devastated most of the eastern coastal AREAS OF *APAN !N ACCIDENT AT THE &UKUSHIMA nuclear power plant was also reported. The widespread damage to the eastern PARTS OF *APAN WAS THE WORST NATURAL DISASTER in the countryâ&#x20AC;&#x2122;s recorded history, and has been REFERRED TO AS 4HE 'REAT %AST *APAN %ARTHQUAKE 7HILE WE WERE CONDOLING THE LIVES LOST IN *APAN WE CAME TO KNOW THAT -ICA PAINT WOULD NOT BE available for our car production. Further investigation revealed that the Xirralic pigment MANUFACTURER IN &UKUSHIMA REGION IN *APAN had been destroyed, and no supplies would come from there. It took weeks to discover this information. We immediately began mitigatING THE RISK OF NON PRODUCTION AT -ARUTI A similar incidence of severe ďŹ&#x201A;ooding OCCURRED DURING THE *ULY MONSOON SEASON in Ayutthaya province in Thailand. The World "ANK ESTIMATED BILLION BAHT 53 billion) of economic damage and losses due TO mOODING AS OF $EC -OST OF THIS WAS to the manufacturing industry, as seven major industrial estates were inundated by as much METERS FEET OF WATER DURING THE mOODS 7E WERE HIT AGAIN 4HIS TIME IT WAS A 4IER supplier, who supplied electronic parts for various controllers and car electronic devices. We had no clue about any alternate supplier, and lNALLY WE HAD TO CHANGE THE SPECIlCATIONS OF THE CAR AND CREATE A NEW VARIANT -ANY MORE 4IER AND 4IER SUPPLIERS WERE DISRUPTED 7E

Contd. on Pg 52

Auto Monitor

COLUMN

For a Rainy Day Contd. from Pg 50 had to hunt for alternate suppliers all over the globe and get them approved through Suzuki, our parent company, for usage in vehicles. Another incident was a ďŹ re at one of our suppliers, where the entire plant was charred owing to inadequate safety systems and practices, and the improper storage and handling of volatile chemicals. Our supplies were once affected, since we had no alternate approved suppliers for those speciďŹ c components. All tools had to be shifted to another plant on a war footing.

Another major step in SRM excellence was to develop an SRM academy, a professional training centre for supply chain employees.

1 - 31 JANUARY 2013

A not her u nprecedented event occurred when the semipermanent structura l roof (constructed under Kaizen activity) of a supplierâ&#x20AC;&#x2122;s plant completely collapsed due to excess loading of material on a non-load bearing mezzanine ďŹ&#x201A;oor. We had to moderate our production plans due to nonavailability of components from them, and the non-availability of buffer material due to lean manufacturing practices. And of course, the several industrial relations issues and strikes at some of our vendors are also worth mentioning. The impact of supply disruption was very high, forcing MSIL had to shift from a lean inventory to an inventory buffer based manufacturing. The situation necessitated introduction of multiple sources in every model, and Maruti was forced to resort to expensive overseas imports. One of the other issues which Maruti faced was the high disparity in diesel and petrol prices.

Maruti being traditionally and primarily a petrol vehicle manufacturer, we were put in a tight spot due to the skewed increase in diesel vehicles, leading to shortage in diesel engine and engine components, and idle capacity of petrol. On another occasion, we come to know about anti-dumping measures being planned by the Government of India against aluminium cast alloy wheels. Other problems such as the ever f luctuating foreign exchange rate, spike in commodity prices, economic downturn, and cash ďŹ&#x201A;ow problems at our vendors and suppliers had to be dealt with. All our strategies and planning went hay wire due to these unprecedented risks, and left us with no alternate but to scramble and take reactive countermeasures. All this happened due to supply chain vulnerabilities created by optimized and lean supply chains, supply chain complexity due to increased purchasing variety, dependence on outsourced processes, reliance on less stable Rapidly Developing Economies, and a large and complex global manufacturing network. To summarize, we followed a ďŹ reďŹ ghting ethic in our day-to-

day activities, with no planning for future scenarios, low visibility into risks faced by tier 2 and tier 3 suppliers, and poor prediction of long-term risks across the globe about various facets of the business due to a reactive approach. Every buyer and manager had a different understanding of potential risks, and with no standard library of actions to mitigate them, the responses were intuitive and ad hoc. And so, a strong need was felt for a structured framework for proactive supplier risk assessment and mitigation. Back in the boardroom, the supply chain senior management finally thought of initiating and developing a pragmatic and robust Supplier Risk Management (SRM) policy in the Maruti-Suzuki supply chain. Accordingly, in consultation with one of the top consultants, experienced in worldwide implementation of Supplier Risk Management in auto OEMs, we ďŹ nally set up an SRM cell at Maruti Suzuki. The key objectives of the new SRM Phase 1 were: s 1UICK IDENTIFICATION AND assessment of risks long before they become evident s $EVELOP A STRUCTURED 32-

approach using various risk buckets and appropriate scoring logic s #OMPILATION OF 32- PROcesses and IT enablement for cockpit view to support SRM s 3TRATEGIES TO MITIGATE ELIMInate, or hedge/transfer the identiďŹ ed risks before they occured s $EVELOP COMMODITY BUDGET lines s $EF I NE A GOVER NA NCE mechanism s 0REPARE FOR AN UPGRADE TO SRM 2nd phase We did an extensive study and analysis of the different types of risks and brainstormed for a structured way to assess them, and found ways and measures to mitigate them. We categorized risk mitigation into different types: s 2EDUCE RISK IMPACT s 2EDUCE RISK LIKELIHOOD s 4RANSFER RISK s !CCEPT RISK Some of the risk mitigation strategies could be -- work collaboratively with vendor, alternate supplier, hedging, i nvest ment s, cont i ngenc y plans, etc. Finally, a library and a standard vocabulary for mitigating actions were built up for a stand-

All our strategies and planning went haywire due to these unprecedented risks, and left us with no alternate but to scramble and take reactive countermeasures. All this happened due to supply chain vulnerabilities. ardized set of actions. A cost-beneďŹ t analysis of risk mitigation actions was also done, before actual action being taken. Another major step in SRM excellence was to develop an SRM academy, a professional training centre for supply chain employees. Modules being taught there are Basics of SRM, and Intermediate and Advanced SRM. At the end of the course, the person is called an SRM certiďŹ ed professional FROM -ARUTI 3UZUKI AND #ONSULTANCY PARTNER The ďŹ nal objective is to gain expertise in utilising the SRM framework for all components and commodities in the future. The IT department was instrumental in developing an IT-based application for the SRM system, which had been the backbone of all the analysis of Red, Yellow, and Green of Risks. While most companies created contingency plans to mitigate supplier risk, less than half of them actually used these plans when issues arose. Hence, a robust governance mechanism had also been devised to track and monitor SRM activities, and actions would be based on it so that the initiative wouldnâ&#x20AC;&#x2122;t lose its primacy in actual day-to-day activities. Having now a structured approach to supplier segmentation, SRM leads to actionable prioritization of â&#x20AC;&#x153;at riskâ&#x20AC;? suppliers, components, and commodities for mitigating actions. #OMMON SYSTEMATIC PROCEDURES HAVE BEEN developed which everyone can now follow. The probability of an event occurring in the future is not an intuitive understanding and reactive approach now, and we now act proactively to reduce reaction time. We now have a deeper understanding of supplier risks and have disciplined process to pick up early warnings and proactive identiďŹ cation, and can prioritize risks to act faster with our library of actions. Sudam Maitra is Chief Operating OfďŹ cer Supply Chain, at Maruti Suzuki India Limited. He has a degree in Mechanical Engineering from Indian Institute of Technology (IIT) Delhi. In his present capacity, he is responsible for the entire Supply Chain Vertical which includes procurement and development of local, imported components, and raw materials from the local as well as foreign suppliers.

Auto Monitor

1 - 31 JANUARY 2013

COLUMN

Sound Unsound Vehicular vibrations are not an enjoyable experience. Akhtar Nasim of the Central Road Research Institute (CRRI) explains the study process that CRRI has been doing the last couple of years.

ibration may be imparted on a human body from different modes, such as transit vehicles, handheld power tools, industrial machineries, and civil engineering structures. Vibration may be applied at one or more locations of body and in one or more directions. It may be in the form of force input or a motion input. People are generally exposed to mechanical vibrations in their working environment or in the daily trafﬁc situation. Consequential negative effects on health, performance and comfort can appear. The wide range of impacts from human vibrations, affecting almost all branches of industry, requires an interdisciplinary approach to the problem. For investigating health and comfort aspects, innovative methods such as the numerical simulation and the use of dummies open up new perspectives and provide completely new approaches for the development and evaluation of vibration reduction measures for ISO 26311 (whole-body vibration) ISO 5349-1 (hand-arm vibration). Vibration can cause long term painful damage to our hands & ﬁnger. Whole-body vibration (WBV) is transmitted through the seat or feet of driver, who drive vehicles, over rough and uneven surfaces. Large shocks and jolts may cause health risks including back-pain. Other work factors, such as posture and

heavy lifting, are also known to contribute to back problems for drivers. Such studies are important for Indian conditions. CSIR-CRRI is implementing a research on “human response to vibration”. Under the study, the whole body vibrations as well as the hand arm vibrations for different types of vehicles for different types of roads with different drivers and different timings (peak and lean time) are being monitored. Human response to whole body vibration result into ﬁve separate effects viz. interference with activities, degraded comfort, impaired health, perception of low magnitude vibration and occurrence of motion sickness. The degree to which vibration is transmitted in the body depends on vibration frequency. It is found from the research that z directional vibration is more dangerous than y directional and y directional vibration is more dangerous than x directional vibration. Vehicle comfort depends on three factors i.e. static factors (thermal, pressure, posture) dynamic factors (transmissibility, SEAT value) and temporal factors (extended sitting time, opportunities for changing posture, driving breaks). Fig. 1-6 is a case study of a brand new Jeep which has been studied on an hourly basis under its normal running condition. It was observed that the acceleration was very high and varies between 2.5 to 6 m/s2.

W hen compa red w it h European norms, acceleration action level is 0.5m/s2 and limit value is 1.15 m/s2 for 8 hours/ hourly acceleration (ﬁg. no.7 & 8). These values are very high for Indian vehicles which were tested. For vertical vibration frequency weighting ‘Wk’ (or ‘Wb’) & people are most sensitive to vibration at 5 Hz; while For horizontal vibration Frequency weighting ‘Wd’ people are most sensitive to vibration at 1 Hz. Roads are equally responsible for generation of vibration i.e. due to bad condition of road, unevenness, speed breaker and different types of roads; vibration in vehicle increases. Exposure to whole-body vibration is a risk factor for the development of low back pain. The causes of low back pain associated with prolonged exposure to whole-body vibration are not taken into consideration in India. Due to high acceleration, shoulder pain, back pain, low back pain, neuro-vestibular disorders, arm pain and vomiting tendency etc. are common in India, but due to lack of awareness, we are suffering. There is urgent need of formulating Indian guideline on *Vibration and * Human response to vibration Without guidelines, no one can appreciate that the acceleration is so high in any vehicle. CSIR-CRRI is working in this direction to formulate the guidelines for India.

Fig.No: 1Acceleration at 4 gear, 50km/h Speed

Fig.No: 3 Peak-peak value at 4 gear, 50km/h Speed

Fig.No: 5 Acceleration after vehicle after startup

Akhtar Nasim is Senior Scientist, Transportation Planning division, CSIR-Central Road Research Institute (CRRI), and the current Editor-in-Chief of the International Journal of Noise, Vibration & Harshness. He holds

Fig.No: 2 At 4 gear, 50km/h Speed vibration fluctuation

Fig.No: 4 Impact of Airborn vibration due to pass by train th during at 4 gear, 50km/h Speed

Fig.No: 6 Acceleration at 2 gear, 25km/h Speed

a B. Tech in civil engineering, and an M. Tech in environmental engineering. He has worked on a number of large projects and has published more than 50 papers on noise pollution in national and international journals.

Auto Monitor

REPORT

Public Money In HSR 19th ACEA has brought out a report on the feasibility of investing public money in high-speed rail.

s with other ways of spending public money, the key question with high-speed rail (HSR) is not whether people want to travel faster and more comfortably, but whether they value these beneﬁts highly enough to compensate for the huge investment costs of constructing the line, its environmental impact and its operating and maintenance costs. The point is whether society is willing to pay the opportunity cost of HSR. It performs very well in terms of market share in corridors of 400-600 km but this success is in many cases the result of rail users not being charged the infrastructure costs. A high-speed line requires high volume of demand to share the investment costs associated with its construction. Many lines are heavily subsidized, so high load factors and market share are compatible with a poor social return. It is not surprising that HSR investment is more popular among politicians and the general public than among economists. A potential beneﬁt of HSR investment is the reduction of environmental externalities, though this depends on the volume of demand deviated from less environmentally-friendly transport modes and whether demand is high enough to compensate for the negative externalities during construction, the barrier effect, noise and visual intrusion. Analysis shows

1 - 31 JANUARY 2013

that in order to balance the annualised emissions from highspeed line construction, trafﬁc volumes of more than 10 million annual one-way trips are usually required. It is only in a case of high diversion of passengers from aviation in combination with low CO2 emissions from the marginal electricity production that substantially fewer trips sufﬁce (still more than 7 million). The economic evaluation of permanent infrastructure requires a careful construction of the counterfactual and there are many assumptions that might seriously bias the results. This is the case for transport pricing during the lifespan of the project. Pricing policy needs to be explicitly addressed. We need to consider how the alternative transport modes are going to be charged.

The Right Decision Transport infrastructure do not follow the same long-term planning criteria. Private operators, including car owners, decide how much and when to invest in new capacity (also includes technology). Private airlines decide which type of aircraft to buy depending on demand expectations and business strategies. On the contrary, roads, airports, ports and railway tracks and stations ultimately belong to the public sector (with some exceptions). Although many crucial transport decisions are in the hands of private operators subject to market discipline, the public

sector can heavily influence future modal split and the configuration of transport networks through investment, pricing and regulatory decisions affecting capacity. This is the case with high-speed passenger trains operating largely within the public sector, both in the areas of infrastructure and services. The endorsement of railways by the European Commission, and specially of the development of a highspeed rail (HSR) network, has provided this rail technology with public funds and political support. The future of interurban transport is expected to be dominated by strict budgetary constraints and the introduction of efficiencyoriented policies affecting pricing and investment decisions, such as the application of polluter-pays and userpays principles, and the planning of infrastructure on a strict economic basis. The ultimate objective is to have an “integrated and sustainable transport system” that promotes economic growth and social cohesion (European Commission, 2009). What is the role of HSR infrastructure?

Economic Angle An economic evaluation of projects would, in principle, lead to the best ones being selected, but there is overwhelming evidence that this is not happening. The context in which the social appraisal of projects is carried out cannot be ignored in the economic assessment of major infrastructure projects. The institutional design

is a key element for understanding public decision-making when different levels of government are involved, as is the case in the EU or generally when the national and regional governments of the same country do not necessarily share the same objectives, particularly with regard to where public investment should be made.

Investment s 3UNK COSTS REPRESENT MORE than 50% of HSR investment. This implies huge costs for poor decisions due to irreversibility. s (32 INVESTMENT DEVELOPS maximum potential at medium length corridors. s 4O BE SOCIALLY PROlTABLE (32 requires high-demand to compensate costs. s %NVIRONMENTAL BENElTS RARELY justify the investment because of emissions during construction period. The investment in HSR infrastructure is one of the feasible `do something´ alternatives to deal with transport capacity problems in intercity passenger corridors, but is not the only one. The economic case for HSR option is more likely when there are capacity constraints in the conventional rail network, roads and airports; and the release of capacity generates additional benefits for freight, long-haul flights and other side effects of the marginal capacity that avoid major investments. Another potential benefit of HSR investment is the reduction of environmental externalities, though this depends on the volume of demand diverted from less environmentally friendly transport modes and whether the demand is high enough to compensate for the negative externalities during construc-

tion, the barrier effect, noise and visual intrusion. Some critics of HSR investment point to the high investment costs associated with the construction of a new highspeed line. However, the point is not whether the passenger prefers to travel with this technology instead of the conventional modes, nor the high cost of the HSR, but whether society is willing to pay its opportunity cost. There is nothing intrinsically good or bad about this railway technology and economists do not have any other a priori position with respect to the construction of new HSR lines, beyond the suggestion of the importance of comparing social beneﬁts and costs of the project under consideration before taking any decision.

The Pricing Imperative There is considerable pressure on governments to build new high-speed lines as if the investment were a kind of `now or never´ decision. The construction of HSR infrastructure is irreversible and there is uncertainty associated with costs and demand. The optimal timing of the investment should be addressed in the case of a positive net present value. Even the idea of `all or nothing´ is false, as it could be proﬁtable to build a line today and another in the future. Moreover, it is feasible to build an HSR rail track on parts of the overall line and use it for traditional trains as it is prepared for high-speed services that would operate once demand motivates building new tracks on missing links. This report is a summary of works undertaken for the BBVA Foundation, the OECD/ITF Transport Research Centre, the CTS, Stockholm, and the EGES (Ministry of Finance, Sweden).

Auto Monitor

1 - 31 JANUARY 2013

F E AT U R E

Better Labour Following the recent headline-grabbing labour strikes at Maruti Suzuki, manufacturers want more ﬂexibility in labour laws. Nabeel A Khan New Delhi

ince the brutal labour strike at the Maruti Suzuki plant, a number of ideas and recommendations have been going around the country. The bodies representing the automotive industry have been demanding a flexible hiring and retrenchment policy based on the rise and decline in production requirements. But the subject remains forbidden, and no one from the company is willing to make a public statement. And yet, many auto and component makers admit that the labour issue has impacted the growth of the automobile industry. “We should acquire some amount of flexibility in labour laws, in the sense that when there is a ramp up of production, we are able to hire more people, and when the production goes down we should be able to layoff. It seems heartless, but what is recommended is that there be some kind of insurance when they are out of a job so that they can sustain themselves for the time they are jobless. This is what happens in most countries globally”, says Vinnie Mehta, Executive Director, Automotive Component Manufacturers’ Association (ACMA). In the Delhi-NCR region, every factory has on average 65 percent of casual labour, and it can be as high as 96 percent in the case of small factories, where out of 500 employees only 20 to 30 are permanent, the rest are employed on a casual basis. “What happens is that since there is no flexibility in the labour law, you only keep temporary workers. That’s the problem. Keeping

temporary workers is not what is recommended because you have to train people for productivity anyway. You train temporary workers, and they go away after some time. That’s the challenge, ﬂexibility will help”, an industry expert said on condition of anonymity. Abdul Majeed, Pa rtner Automot ive, PricewaterhouseCooper, agrees with the f lexible hire and retrenchment policy. “However, we also have a provision to adequately compensate workers being laid off”, he says. An International Labour Organisation (ILO) report observes, “The crisis in the automotive industry has offered an opportunity to reconsider the models of labour management relations. New, voluntary, ways for labour and management to work together need to be developed. Within this development, the appropriate role of the government needs to be ascertained. This development needs to be done in line with the evaluation of the government policies being implemented during the crisis.” ILO further explains that the traditional workplace model, with a “social contract” between workers and management, designed to overcome opposing interests of employees and management, is no longer sufﬁcient. Nonetheless, it has helped to transform the working class into a middle class. A new concept of an “enterprise compact” would emphasize the common interest of all parties in the success of the industry. In this new model, both unions and management are responsible for improving productivity and quality and for the transition towards a greener industry. The current crisis could

be the moment to institutionalize the enterprise compact as a paradigm for working together. Contesting this opinion, a contract worker at an automobile factory says, “The easy retrenchment policy will be misused and will allow the company to retrench people who have spent a few years and become old, so that they can hire young boys, and it will become like a use and throw policy.” The other concern from the labour side is that “they sack contract employees whenever there is a slowdown, but in a similar fashion they should share proﬁts also when things look up,” a union leader says.

According to NSS data, casual or contract workers went up from 38 percent in 2000 to 58 percent in 2010 in organized sectors such as manufacturing and construction. According to reports, manufacturing has cut five million casual jobs in five years. In the last couple of years we have seen rising labour issues of varying severity across the country. Dunlop in West Bengal, Bosch in Karnataka, GM in Gujarat, and Rico Auto and Honda Motorcycles in NCR, all have had labour issues. Among these strikes, the worst and probably most violent labour-management scufﬂe was seen at Maruti Suzuki India

Limited (MSIL), India’s leading carmaker. Industrialists and the company in this GurgaonManesar-Daruhera belt blamed the incident on external players. However, it is also important to understand that MSIL hurriedly ramped up manufacturing a few years ago. Work load increased tremendously at its plant in Gurgaon, production rose substantially, and at Manesar it galloped at a staggering rate. To maintain production levels, breaks were cut to two tea-andtoilet breaks of seven minutes and 30 seconds, and one 30-minute lunch break in each eight-hour shift. Things did not end there, and on many occasions pay cuts for missed work were enforced which impacted morale on the shop floor. Manufacturers are also under tremendous pressure to maintain acceptable profit margins amidst strong competition, inf lation, high cost of raw material, slowing demand, and rising domestic interest rates. Companies are under pressure to increase efficiency and productivity, while the aspirations of the young population, and discrimination between casual and permanent employees keeps the work environment on edge. MSIL has also admitted after the ghastly strike that they need to understand the younger lot of workers, and their aspirations to be able to deal with them. “In the last one decade there has been great growth in the automotive industry, and the company must pass it on to the workers. Some of the demands of the workers are justifiable,” says Kapil Arora, Partner, Automotive Practice, Ernst & Young. Casual employees get only a fraction of the salary compared to permanent workers.

The difference is so wide that a permanent employee earns Rs 40,000 a month for the same work for which a casual employee earns Rs 10,000. Despite suffering losses worth thousands of crores of rupees, the companies are not able to look at solving this discord of disparity. “Often, it is people from outside who provoke labour issues. Politics is also involved in it. If you notice, you will find that these incidents usually take place during election time,” says Arvind Kapur, MD, Rico Auto Industries, which had major labour strike in 2009. According to industry sources, the Hero MotoCorp Gurgaon plant has 1100 permanent employees against 7500 casual, while the Honda Motorcycles plant has 1800 permanent against 4500 casual employees. MSIL had a workforce of 3,300 before the strike, of which 1,528 were permanent. These casual workers were not in a direct contract with MSIL, but were provided by a contractor. According to National Sample Survey (NSS) data, casual or contract workers went up from 38 percent in 2000 to 58 percent in 2010 in organized sectors such as manufacturing and construction. According to reports, manufacturing has cut five million casual jobs in five years. In the 2011-12 period, corporate India owes around Rs. 711 crore in unpaid wages to permanent workers. The other disturbing figure comes from the labour courts which had a backlog of 13,642 in 2012. And these are cases involving permanent employees, since casual and contractual workers have little room

Contd. on pg 60

Auto Monitor

F E AT U R E

Better Labour Contd. from pg 58 for legal recourse, given their tight employment contracts. Ashok Yadav, President of the Employee Union at Honda Motorcycles, Gurgaon, says, “The biggest problem is that management have a very negative impression of employee/labour unions. They try to curb registration and formation of labour unions. This is where the problem begins. I think they should understand that unions also help management to smooth things, and solve problems.” Yadav has been an active member of the struggle for the forma-

1 - 31 JANUARY 2013

tion of a labour union at Honda Motorcycles. The labour strike at the Honda Motorcycle plant continued for a month before management ﬁnally allowed the formation of the employee union. In some, countries it is mandatory for companies to have labour unions. The effect of the global crisis is wide ranging. Direct effects include decreased demand for automobiles at home and abroad. An indirect result is reduced demand for parts and components. High interest rates and lack of ﬁnancing have forced

automobile producers to cut back on production by using partial plant shutdowns, layoffs and employee transfers, and to defer new investments and cancel new vehicle launches. For example, Tata Motors retrenched 4,000 temporary workers and closed its commercial vehicle plant in Jamshedpur for three days in November 2008. Force Motors reduced its working week to ﬁve days, while SKF (Svenska Kullagerfabriken), a components supplier, transferred some of its employees other 36 divisions. MSIL’s Manesar plant has seen a lot of labour unrest in recent times. The plant witnessed a 13-day standoff between management and labour in 2011 as the workers were demanding recognition of a new trade union. In

September 2011, the MSIL plant was again rocked by a monthlong strike over a ‘good conduct’ issue. A month later, business was hit again when workers went on strike demanding that workers who were ﬁred during the strikes be reinstated. The labour unions of several other industrial units also came out to support Maruti workers, leading to concerns across the industry. Students from the premier Jawahar Lal Nehru University also came forward to express their support for workers. The trade union blamed MSIL, alleging that management had been paying less than the prescribed wages for industrial workers. However, the union could have taken legal recourse and sought redressal for the alleged anomalies instead of rioting. For all the wrongs we cannot not blame the labour laws alone as this is a story that is not conﬁned to India, the land of the rigid Industrial Disputes Act (IDA). No doubt the IDA has contributed to stagnation in organised sector employment growth, but it alone cannot explain the broader phenomenon of the labour-management tussle. The unrest has badly impacted the automotive industry. Suppliers also suffered losses. “This is not only a corporate issue but also a socio-political and economic issue. All three stakeholders, the workers, the management, and the government, should devise a transparent mechanism illustrating the reasonable rights of all the party to solve this issue. This will take some time”, says Kapil Arora, Partner, Automotive Practice, Ernst & Young. According to data from the annual survey of industries conducted by economist C P

The effect of the global crisis is wide ranging. Direct effects include decreased demand for automobiles. An indirect result is reduced demand for components. High interest rates and lack of financing have forced automobile producers to cut back on production. Chandrasekhar, in the aftermath of strikes in the 1970s, the real, inflation-adjusted wages for workers increased by nearly 40 percent in 15 years, from 1981-82 to 1994-95, and then fell 15 percent in the next 15 years. In the last 30 years, wage payments as a percentage of the net value created by companies have dropped from 30.3 per cent to 11.6 per cent, and profits have increased from 23.4 per cent of net value to 56.2 percent. Wages have not risen in proportion with profits. One reason is increasing use of cheap casual labour, reduction of perks such as health benefits, provident fund, and pension. However, carmakers MSIL and Hyundai Motors gave record high pay hikes of 50 and 45 percent in 2012. Talking about learnings from the labour strike, Arvind Kapur says, “We have seen that there was a lack of communication between management and workers. Now we have activated all the communication channels. We are always in touch with them, and are functioning quite smoothly.”

Auto Monitor

1 - 31 JANUARY 2013

F E AT U R E

Going The Extra Mile Given the recent spate of labour strikes in the auto industry, companies explore ways to motivate the work force and earn their loyalty.

ne major problem facing the industry today is that of dealing with a disgruntled workforce. In recent times we have witnessed a number of fallouts between workers and management at many companies, irrespective of size and type. Yet there are some who have gone the extra mile to build a better relationship with their workforce through novel approaches and initiatives. During a recent visit to the Daimler India Commercial Vehicle (DICV) plant in Chennai, Auto Monitor found a simple initiative aimed at going beyond a purely business relationship and building a social and emotional connect with the workers. Once a week workers can bring their families on a visit to the plant. “Such initiatives create a sense of ownership and pride in the workers’ minds,” says a DICV

spokesperson. Such initiatives are not limited to bigwigs; even small component makers are becoming more and more proactive in creating goodwill among their workers. “We also have a very fair salary structure, and moreover we go to every individual from time to time to check on their requirements and needs, which give them a sense of belonging and loyalty towards the company,” says Naveen Behl, Executive Director at Kay Jay Forgings, during a visit to their plant in Ludhiana, Punjab. They can boast of a tiny, almost negligible, attrition rate. The `400 crore forge components maker also have family get-togethers with all the workers on occasions like Deepawali. Companies are experimenting with various initiatives to give workers the feeling of family. They try to be with them through thick and thin. The rela-

tionship has extended to helping with marrying and educating the children of the workers. A

Ghaziabad-based auto ancillary manufacturer, Abilities India Piston, organizes computer and

other training courses during the summer vacations for workers’ children every year at their plant.

One of India’s biggest auto component makers, Samvardhana Motherson Group (SMG), used to be a small company of `200 crore or so, and has now transformed itself into a multibillion dollar enterprise. “We have the right kind of people, and they are loyal and have been with us from our humble beginnings,” says V.C. Sehgal, Chairman of SMG. Sehgal gives all credit to his team, and every person is continually motivated. Though he is travelling across the globe most of the time, and has to manage over 140 plants across various countries, his rapport with his team is very good, and that has paid off handsomely.

Content Connect We have seen many complications in handling the workforce in foreign locations when an Indian company makes an acquisition, due to various preconceived notions and cultural differences. SMG has acquired many companies abroad, including Visiocorp. “It is true that people abroad sometimes have many misconceptions about India and Indian work culture, and we have to be very careful, but as a company we have not had any such difficulty, and the reason is that we have a policy of retaining the local workforce and not forcing Indians upon them” says Sehgal. He further explains that the local workforce, be it in Germany, Brazil, or the US, are as competent as Indians, if not better. However, they do sometimes appoint Indian managers. The Group’s largest revenue share currently comes from Germany. Back home, Toyota Kirloskar Motors beautifully connected its corporate social responsibility to boost human resource quality at its plant in Bangalore, Karnataka. The company has its own technical institute where it selects a certain number of poor students after class ten. They are also imparted on-job training to make them industry ready. These students sometimes join the centre with one pair of clothes to wear, and on graduating earn a salary of `18,000 a month working for TKM. “We have not made it mandatory for them to join us. They are free to join other companies, but thus far over 90 percent of past students have joined us,” says an official. The company provides all the facilities which any decent college or institute would provide, including a hostel and canteen. Bicycles are also provided to every student to move within the campus. Toyota started this a few years ago, and it has helped the company build a nice image among the local population. To further strengthen bonds with shopfloor workers, Toyota has initiated periodic training programmes which train workers to enable them to rise to the mid-management level. These efforts have paid off well. TKM had one labour strike a couple of years ago, but the situation overall remains cordial.

Auto Monitor

COLUMN

SDC Axes 370 Agency Positions

ew jobs blow has hit Swindon with the announcement that 370 agency positions are to be axed at Honda’s logistics company in South Marston. Managers at DC Ltd, which is owned by the Japanese car giant, broke the grim news in phases as workers turned up for shifts during the day. Honda announced two weeks ago that it is axing 800 out of 3,500 jobs at its plant in South Marston due to a slump in demand in Europe. The latest jobs cull will not affect permanent staff at the distribution centre, which employs a total of 970 associates. The temporar y workers began six months ago when Honda stepped up production and they were hired with the intention that they would eventually be made permanent. The cull will only leave 80 agency staff at the supply chain hub, part of the KeyPoint Development in Thornhill Drive. Steve Gopal, the general manager at DC Ltd, said the cut was a devastating blow. But he said events at the Honda plant left the ﬁrm with no other option. Honda had forwarded a production plan to its logistics company showing that it intends to reduce production from 166,000 to 150,000 cars before the end of this ﬁnancial year. Mr Gopal said: “Because of that downturn we have had to reduce our workforce by 370 temporary associates. “We

1 - 31 JANUARY 2013

are inextricably linked with Honda’s production. As it goes up our labour force goes up and as it comes down our labour force contracts. It’s never a good day for any company to reduce its workforce and we view our associates as an intricate part of the company. To see any reduction in that is a devastating blow for us.” The logistics company is part of the Honda Logistics Incorporated group. It processes and distributes parts intended for the Honda plant. A Honda spokesperson said: “Whilst it is never easy to hear of such news, SDC is entirely independent of HUM and whilst there are strong links between the businesses, any manpower decisions at SDC are not made or decided on by Honda of the UK Manufacturing.”

Honda had forwarded a production plan to its logistics company showing that it intends to reduce production from 166,000 to 150,000 cars before the end of this financial year. The logistics company is part of the Honda Logistics Incorporated group.

Orders Surge As Jap Firms Seek New Sites Rising tensions between Japan and China are having a knock-on effect on industry as Japanese companies look for new factory locations outside China to reduce their risk.

he result has been a dramatic upsurge in demand for industrial machinery, as witnessed at Metalex, the region’s largest international machinery trade exhibition and conference, held annually in Bangkok. Order volumes at the most recent edition of Metalex, late last year, were up 42% from the year before. Exhibitors pointed to three factors driving new demand: Japan-China tensions, the higher minimum wage in Thailand, and further integration of Asean economies. Many Japanese companies operating in China last year began contemplating relocating production, as tensions mounted between the two countries the islands known as Senkaku in Japan and Diaoyu in China. Sales of Japanese goods in China have plunged, with automobiles down as much as 70%, and some Japanese factories were damaged by angry Chinese protesters. Asean countries seem to be the preferred destinations for those Japanese companies that want to move out of China. Japanese businesses can have the best of both worlds because Asean and China have a free trade agreement, while the formation of the

Asean Economic Community will make doing business in the region easier. Soichiro Goto, a representative of the overseas sales section with Horkos Corp, a Japanese manufacturer of machinery for the automotive industry, said many Japanese auto companies wanted to avoid risk from China. At Metalex he saw many Japanese companies seeking new machinery to install in new factories outside China, and Asean countries were their targets. Goto said that China had become the most important market for many Japanese companies, overtaking the United States and Europe. However, if the conﬂict in the East China Sea cannot be resolved, Japanese businesses have to be prepared to change their strategy. According to the Ministry of Commerce in Beijing, FDI by Japanese companies totalled $460 million in October 2012, a decrease of 32%. However, Goto is still optimistic that the dispute between China and Japan will be shortlived. China will remain a high-potential market for Japanese companies, while Asean also offers good opportunities for machinery sales. In any case, he said, Asean

was a fast-growing market for the automotive industry given rising urbanization and afﬂuence. More Japanese companies are pouring investments into the region to meet demand. Horkos, for example, plans to start operating a factory in Chachoengsao province this year to support its customers, which are leading carmakers. Increasing wage costs are another factor driving machinery sales in Thailand, one of the industrial centres in the region. Theerapat Songlerk, product manager of T.N. Metal Works Co, the distributor for Hyundai Heavy Industries of robots and automation machinery, said the company attracted a lot of interest at Metalex from visitors seeking to automate factories and reduce human labour. Automation has been used in Thailand for years, but robots are not yet widespread. The use of robots will reduce production losses usually made by human errors, Theerapat added. Hyundai Heav y Industries only introduced robots in Thailand last year and has yet to receive many ﬁrm orders, as prospective customers are weighing the cost and payback period before making decisions, he said.

1 - 31 JANUARY 2013

COLUMN

2013

Auto Monitor

How The Winners Emerge T

he OVERDRIVE awards consider vehicles that went on sale in the country in the last calendar year. For the 2013 award, all vehicles launched between January 1 and December 15, 2012, were eligible for awards. OVERDRIVE does not consider refreshes, updates, facelifts and minor model changes for awards unless the changes cause a major shift in the positioning of the vehicle. In all the major categories, car of the year, bike of the year,

SUV and MUV of the year and scooter of the year, only vehicles manufactured or assembled in India are considered. Direct imports are restricted to their own categories. The process of identifying the winners follows the international norm for awards of this kind. The OVERDRIVE jury is allotted, per juror, a set of points (maximum of 25) which they distribute among the nominees having driven, ridden and tested the vehicles extensively. No juror can award

Stars Arjun Rampal and Chitrangada Singh along with Shereen Bhan, executive editor CNBC-TV18 and jury member and motorcycle racer Sarath Kumar present the trophy to Yamaha national business head, Roy Kurien.

SCOOTER OF THE YEAR Eligibility All the bikes and scooters launched in the calendar year 2012 are eligible for the OVERDRIVE Awards 2013. In addition to fresh model launches, revamped models which include styling and engine upgrades leading to a change in price point and product positioning in a segment, qualify as new launches, as does a complete mechanical revamp, including engine change.

Nominees (Scooter Of The Year) *Yamaha Ray *Piaggio Vespa *Hero Maestro

Winner Yamaha Ray Just when you thought the 100-110cc scooter market couldnâ&#x20AC;&#x2122;t possibly need one more automatic for the people, Yamaha came out with the Ray, saying it was a girlâ&#x20AC;&#x2122;s scooter. Turns out, the scooter is light, among the sharpest looking (and not obviously feminine at all), scores highly for its neat ride and segment-best handling and is light on the pocket as well. What a debut, Yamaha.

top marks to two vehicles, each juror has to clearly identify his best

choice. After the scores are accumulated from all the jurors the

highest point tally puts the spotlight on the winner.

Auto Monitor

1 - 31 JANUARY 2013

A N A LY S I S

The passenger car segment fell by 0.33 percent during the April-December period this ﬁscal, while the utility vehicles segment grew at a robust 59.1 percent due to strong sales of Mahindra & Mahindra, the Renault Duster and the Maruti Ertiga. People movers or MPVs showed 3.71 percent growth pulled back by Maruti’s slump in sales in the segment despite a good showing by Tata Motors. Honda Nissan and Renault were the fastest growing passenger car manufacturers, all aided by successful new offering this ﬁscal.

Passenger Cars OEMs

2011-12

2012-13

BMW**

7,224

6,129

Fiat

10,439

5,924

Ford

64,482

60,149

65,126

49,181

2,047

1,813

HSCI

32,560

51,292

HMIL

277,754

280,860

M&M

12,915

11,597

MSIL

574,477

597,019

Merc

5,289

5,006

Nissan

16,653

28,124

Renault

841

8,555

Skoda

21,095

22,104

Tata

171,011

146,828

1,597

62,232

52,288

Two-Wheelers

Commercial Vehicles

Passenger Vehicles

-15.16% -43.25%

Commercial vehicles segment registered a flat growth of 0.74 percent in April-December, 2012-13 as compared to the same period last fiscal to touch 576,588 units. M&HCVs sales fell by 19.13 percent clocking 198,079 units compared to 244,921 units in the same period in the previous year. The slump in M&HCVs was offset by a strong showing in the LCV space growing by 15.61 percent to 378,509 units in this fiscal, compared to 327,406 units in the same period last fiscal. Three-wheelers too performed better than M&HCVs registering a steady 4.96 percent growth in sales at 402,126 units in April-December period compared to 383,131 units in same period last year. Passenger carrier sales grew by 8.96 percent in April-December while goods carriers fell by 10.29 percent in the same period. ALL’s Dost continues to clock strong sales in the LCV segment and Atul Auto and TVS are growing consistently to new heights in the three-wheeler segment. LCVs (PC+GC)

-6.72%

OEMs

2011-12

2012-13

ALL

2,937

24,214

-24.48% -11.43% Force

57.53%

HM 1.12%

17,538

15,804

118

149

M&M

92,349

103,746

MNAL

7,315

5,850

Piaggio

8,736

2,175

-10.21%

26.27% 12.34% -20.03%

Scooter/Scooterettees -75.10%

3.92% -5.35%

OEMs

-17.49% Swaraj

3,407

2,811

188,091

217,067

Tata VECV - Eicher

4.78%

Total

-14.14%

6,915

6,693

327,406

378,509

15.41% -3.21% 15.61%

Audi

4,534

6,901

57,621

46,184

220 1,381,771

52.21%

2011-12

2012-13

Force

3,211

3,479

ALL

54,638

49,081

1,985 17,315 1,524

1,379

211

186

HMIL

1,198

589

ICML

363

260

M&M

143,632

191,850

MSIL

4,534

60,652

191

701

Nissan

7,329

4,894

262

24,039

1,300

880

Tata

31,823 45,697

67,679

Total

25,641 247,344

26.67%

385,672

330,252 18.44%

1,839,100 2,178,209

OEMs

2011-12

2012-13

MNAL

2,191

2,685

Swaraj

5,760

5,712

Tata

147,370

109,178

VECV - Eicher

26,572

25,545

-3.86%

VECV - Volvo

501

475

-5.19%

Volvo Buses

475

509

Total

244,921

198,079

BAL

1,950,241

1,907,716

149

809

HML

4,217,490

4,031,447

HMSI

553,687

872,285

IYM

272,324

231,068

55,407

86,761

SMIL

37,389

67,496

-2.18%

HDMC

-0.83%

-4.41% 57.54%

-9.51% -11.85% -50.83% -28.37%

-15.15%

M&M 2W 7.16%

56.59% 80.52%

-19.13%

-11.08%

33.57% 1237.72%

TVS

473,186

Total 7,559,873

267.02%

420,761

7,618,343

0.77%

3-Wheelers (PC+GC) OEMs

2011-12

2012-13

Atul

19,326

23,407

Bajaj

149,742

166,052

Force

M&M

51,114

50,065

-2.05%

Piaggio

140,616

138,635

-1.41%

Scooters

12,329

11,453

TVS

9,995

12,513

383,131

402,126

Mopeds/Electric 8.91%

34,660

TKM

195,262

22.55%

-25.92%

-32.31% Skoda

1,062,838

442.95%

8.35%

9075.19% Renault

85,101

24.29%

Motorcycles/StepThroughs

15,269

34,109

106,429

Total

-0.33%

1,253

HSCI

32.48%

392,924

-33.22%

-11.82% GM

IYM

TVS -10.17%

-36.88% Ford

855,157

-14.37%

UV 2011-12

296,580

SMIL

OEMs

Daimler*

OEMs

HML

Piaggio

M&HCVs (PC+GC)

AMW

Total 1,386,300

-20.04%

-19.85%

Porsche

2012-13

HMSI

M&M 2W -15.98%

TKM

2011-12

BAL

68.88% 917.24%

Tata JLR

724.45% -9.89%

The second largest two-wheeler market in the world grew at a steady 4.09 percent this fiscal to 10,376,811 units against 9,968,976 units during the same period in the previous fiscal. Motorcycle sales struggled to clock a negligible 0.77 percent growth rate with sales of 7,618,343 units in AprilDecember period as compared to 7,559,873 units in the corresponding period in the previous fiscal. This is mainly due to the fact that the world’s largest two-wheeler manufacturer, Hero MotoCorp registered flat sales of 527,375 units in December. Honda motorcycles is growing from strength to strength due to sucessful product launches registering a sales growth of 37.36 percent this fiscal. Other major motorcycle manufacturers - Bajaj, Yamaha and TVS have fallen in sales by 2.18 percent, 2.62 percent and 6.83 percent respectively. Scooter sales in the current fiscal grew by 18.44 percent due to increase in models in the segement. Hero MotoCorp, Honda and Suzuki ruled the roost in this segment clocking above avergare 28 percent growth rate in this period. The entry of Piaggio and Yamaha in this segment has also helped scooter sales reach new heights. TVS’s monopoly in the moped segment continued to work to its advantage growing at 1.8 percent between AprilDecember with sales of 580,259 units compared to 570,003 units in the same period last year.

48.10% 650.00%

253,252 402,921

21.12%

2011-12

2012-13 1.80%

TVS

-88.89%

59.10%

OEMs

10.89% 570,003

Electrotherm*

580,259

- 0.00% 1.80%

MPV OEMs

2011-12

2012-13

Total

137

Total

11 28.70%

M&M

18381

23657

Maruti

105,881

84,504

Tata

44,098

66,580

168,497

174,752

-20.19%

Total

50.98%

3.71%

580,259

-7.11 25.19%

-91.97% Force

570,003

4.96%

* Data not available since August 2008 onwards ** BMW monthly data not available

Auto Monitor

O V E R D R I V E AWA R D S

MIDSIZE SEDAN OF THE YEAR Eligibility Vehicles launched in the calendar year 2012 are eligible for the OVERDRIVE Awards 2013. Revamped styling which includes a change in price point and product positioning in a segment qualify as a new launch, as does complete mechanical revamp, including an engine change.

Judging Parameters The judges looked for sheer superiority of a product in its class, to see how it compares as also how it performs in various conditions.

The judges also looked for: s "UILD QUALITY s 2IDE AND HANDLING s 3TYLING n BOTH OF THE INTERIOR and exterior of the car s 6ALUE FOR MONEY AND AFFORDABILITY n 4HIS ASPECT IS OF utmost importance specially in a price sensitive market like India. Value-for-money vis a vis affordability brings about an interesting scenario for comparison s %NGINE AND TRANSMISSION s &UEL EFlCIENCY n !N EXTREMEly important aspect for the Indian buyer Overall, the vehicle which the

Team Maruti Suzuki led by chairman RC Bhargava collects the trophy from Arun Maira, member planning commission, Geet Sethi, former world billiards and snooker champion, Hari Singh, jury member and five-time national rally champion and Sandeep Srikanth, associate features editor, CNBC-TV18.

jury conferred the title on had to be one which makes a significant impact on the market in terms of volumes, driving the market forward, or creating a new niche. The judges were allotted 25 points from which they could award points to the competing vehicles in a category. No vehicle could be awarded more than 10 points, while no two cars could be awarded highEST POINTS "Y DOING SO A JUDGE clearly indicates his/her clear winner for the award. This also ensures that partiality and ambiguity are reduced. A third party independent body tallies the scored and validated

the process, ensuring a biasfree result. Otherwise the judges were free to mark the vehicles as they wish. This year Ernst & Young TALLIED THE SCORES AND RATIlED the results. The results were not declared in advance. Winners were announced only on the night of the OVERDRIVE Awards ceremony. This maintained the eager anticipation associated with such premier awards.

Nominees

"-7 3ERIES *Hyundai Elantra

(YUNDAI 3ONATA

1 - 31 JANUARY 2013

-ARUTI !LTO

-ARUTI 3UZUKI $ZIRE *Toyota Camry

Winner Maruti Suzuki Dzire 4HE $ZIRE OBVIOUSLY SNUCK under the four-metre line but the difference from the old car to this all-new one is vast. It HANDLES LIKE THE 3WIFT OFFERS a smarter, just as spacious cabin and that coupled with THE -ARUTI RELIABILITY AND SERvice makes it one of the easiest CARS TO OWN IN )NDIA 4HE -ARUTI 3UZUKI $ZIRE ESTABLISHES NEW standards for the segment and IS THEREFORE OUR MID SIZE SEDAN of the year.

Auto Monitor

1 - 31 JANUARY 2013

O V E R D R I V E AWA R D S

HALL OF FAME Mahindra Scorpio

TATA Safari

In 2002 Mahindra & Mahindra began an all-new journey into the unknown. From making general purpose SUVs Mahindra & Mahindra dared to venture into a segment that was uncharted. From the outset the Scorpio established itself as the lifestyle choice of thousands of Indians. Its blend of style, sturdy engineering and off-road ability pioneered the craze for SUV’s. Over the last decade the Scorpio has constantly reinvented itself to achieve the same results - unparalleled driving pleasure. Hundreds of thousands of owners today stand testimony to the efforts of a few visionaries who saw the inﬂuence a lifestyle SUV would have on our market. We welcome this landmark SUV into our Hall Of Fame.

In 1991 TATA Motors saw the need to provide India’s masses with the ability to choose personal vehicles that best reﬂected their lifestyles resulting in the Sierra and the Estate, early expressions of indigenous engineering and design. In 1998, this led to the birth of the TATA Safari, a wholly indigenous SUV which addressed the needs of a nation that was eager and willing to explore the vast expanse of our country. With luxurious comfortable interiors and a 4x4 package, it inspired Indians to ‘Reclaim Their Life’. It has and always will be remembered as one of the ﬁrst luxury off-roaders built by Indians for Indians. 15 years on, the original enters the Hall Of Fame while the successor is a nominee for SUV Of The Year.

MUV OF THE YEAR Nominees *Nissan Evalia *Mahindra Quanto *Maruti Suzuki Ertiga

Winner Maruti Suzuki Ertiga Another vehicle that has created a new segment for itself in the market is the Ertiga. India’s ﬁrst compact 7-seater MUV was designed in house by Maruti Suzuki and is based on the Ritz platform. Offered with a choice of petrol and diesel engines, a surprisingly versatile and spacious cabin and attractive styling the Ertiga has been a runaway success for India’s largest carmaker selling close to 7000 units a month. The Ertiga impressed us no end with its space, design, engineering and value for money proposition. But above all this what we liked most about this car is that it drvies pretty much exactly like a Swift does. An MUV that drives like a car, we love it!

SUV OF THE YEAR Nominees *Mercedes-Benz M-class *Renault Duster *Tata Safari Storme *Ssangyong Rexton *Mitsubishi Pajero Sport

Winner Renault Duster The Renault Duster is one of those products that creates a new category in the market and completely changes the way a company is perceived by the customers. Given India’s love affair with SUVs a compact SUV that offered up eyecatching styling and compact dimensions was always going to be a winner. The new entry-level SUV also offers a well engineered chassis with a high ride height that’s ideal for Indian roads as well as good ride quality while being as fun to drive as some premium hatchbacks. By offering the Duster with a choice of a petrol and diesel engine in two states of tune and three trim levels Renault has given the consumer a range of options to suit requirements and budget. Its effortless performance and packaging redeﬁnes the expectations from an entry-level SUV and propels it to the pole position for the 2013 SUV Of The Year.

Auto Monitor

O V E R D R I V E AWA R D S

BIKE/MID DISPLACEMENT BIKE OF THE YEAR Nominees * * * * * * * * * *

Bajaj Discover 125ST Bajaj Pulsar 200NS Kawasaki Ninja 650 Harley-Davidson Super Glide Custom Harley-Davidson Street Bob Honda CBR150R Honda Dream Yuga Hyosung GT250R KTM Duke 200 Suzuki Hayate

1 - 31 JANUARY 2013

WINNER KTM 200 Duke If you have read OVERDRIVE over the past year, you know that the KTM 200 Duke has more or less creamed the competition in every single comparison, whether it be on the street or the track. The KTM is perhaps the ﬁrst motorcycle we have tested that suggests that street motorcycles need not be versatile jacks of all trades. That there is a role specialisation makes a big difference. This manifest in its gearing which makes highway runs a bit harder than we expected. But the trade off was eyewidening street performance and an incredible turn of pace at the racetrack and on mountain roads where we found the 200 Duke to be nigh uncatcheable. What makes the package more persuasive still is the fact that unlike almost every other motorcycle in the country, the 200 Duke is a hard-edged motorcycle that rewards skilled riders while encouraging newer riders to work on their skills. Underlying all of this is an astonishingly well-ﬂeshed out package. The aggregates, for example, are all top notch by international standards and unprecedented by Indian standards. From the Indian-made upside-down forks and the radially mounted callipers to the super sticky tubeless radial tyres and the aluminium swingarm, the Duke doesn’t cut a single corner on the equipment. The engine similarly, not only makes 25PS, it is also a fuel-injected liquid-cooled, four-valve DOHC engine that feels effortless at low revs and beautifully urgent at the redline. What makes it a winner is how all of these character and material positives blend together into a compelling motorcycle that comes to market at a price point guaranteed to give headaches to its peers. It’s this incredible combination of performance and value that makes the 200 Duke our Bike Of The Year. The Duke is also our Mid-Displacement Bike Of The Year and you, dear reader, resoundingly selected it as our Viewer’s Choice Bike Of The Year as well.

EXECUTIVE CAR OF THE YEAR Hyundai Elantra The Hyundai Elantra has already won the OVERDRIVE Car Of The Year title in its earlier avatar and when the new car was launched we naturally expected great things from it. And suffice it to say that the Elantra not only met and beat those expectations, but it saw off the challenge of a particularly strong crop of excellent cars to win the 2013 Car Of The Year. Hyundai has brought to the Indian market some very well-designed cars in the past couple of years with their new styling ethos, fluidic design. The Elantra stands head and shoulders above its siblings with its swoopy, curvaceous form finding a wonderful resonance with the size and proportions of the executive segment automobile. The result is a striking sedan that is at once fresh, sharp and elegant. Under the skin are petrol and diesel options, a full set of transmission options all of which performed beyond expectations in performance, economy as well as real world street testing. The breadth of powertrain options allows customers to come as close as possible to the car they want. This abundance of choice carries on to inside the cabin as well with the car offering a set of features across trim variants that rivals cars from several segments above it. The cabin itself uses high-quality materials and execution to create a warm, spacious and well-made space for the occupants and will appeal to drivers who like it sporty as well as owners looking for style and class. The final step of the ascent to victory is Hyundai’s usually excellent pricing and warranty along with effective country-wide service coverage. Within its segment, the Elantra offers an unusually strong value-for-money proposition. It’s a winning package that clawed its way to the top without breaking a sweat. The CNBCTV18 OVERDRIVE Car of the Year, ladies and gentlemen, is the Hyundai Elantra.

1 - 31 JANUARY 2013

REPORT

Market Trends and Outlook for Fuel Technologies in India

line car sales, but limited to the mini segment. The prominent models, herein, include Maruti Suzuki Wagon-R, Alto 800, Omni, Hyundai i10, Santro, Eon, and Tata Nano.

Chart 1.1: Trends in domestic demand for PVs, UVs, and Vans (From April to November 2012 - Units in ‘000) 600.0 21.0

500.0 19.7 400.0

39.0

17.3 40.6

300.0

168.4

163.2

23.0 15.2 38.1

16.6 44.9

155.8

143.5

48.2

21.2 45.1

157.5

53.3

20.1 48.7

172.5

158.3

118.1 200.0 100.0

ith gasoline prices soaring twice as much as diesel rates, t he market for diesel-powered cars in India is witnessing a growth curve. It must be noted that the Government has slashed massive subsidies on gasoline prices since 2010. Diesel subsidies were, however, retained, as it is a fuel which is also used by farmers and economically weaker segments of the society. As a result of the evident cost beneﬁts, diesel-powered utility vehicles and other diesel cars are fast becoming the preferred choice of India’s burgeoning middle class segment. By contrast, sales of gasolinepowered cars have dropped by 30–40 percent in the past year. This has driven passenger vehicle (PV) manufacturers to cut gasoline car production and make way for diesel car output. Interestingly, diesel prices rose by a whopping INR 5-6/liter in September 2012. The erstwhile “cheap” fuel is, thus, now, at par with “expensive” petrol rates recorded in April 2010. Direct effect: recovery in gaso-

Auto Monitor

227.0

221.1

April

May

209.0

205.0

June

July

228.8

246.7

227.1

September

October

november

184.4

0.0

Total

Passenger Cars

August

Utility Vehicles

Vans

Source: SIAM, Frost & Sullivan Analysis

Market Trends and Fuel Preference Even though diesel prices increased in September 2012, the current trend is still inclined toward diesel. In the past 5 years, gasoline has dominated the Indian fuel market with 75-80 percent market share in the PV segment. Today, however, the gap between petrol and diesel vehicles is narrowing; wherein diesel PVs garner about 50 percent market share. Although diesel PV market price is much higher than their gasoline counterparts, they are gaining popularity due to comparatively economical diesel prices. Even though a minor shift in the diesel-petrol ratio has been projected, the overall impact of this will be nominal. There may be marginal shift for petrol cars only in the Mini and Compact category, but not for the UV category.

Considering the recent hikes in petrol prices, most manufacturers are introducing diesel variants in the Compact, Super-Compact, and Mid-size segments. Chevrolet Beat, Toyota Etios and Etios Liva, Nissan Micra, and Renault Pulse are the most recent market launches with diesel variants. This will further boost the demand for Compact segment PVs. New launches in the diesel segment, especially in the UV/Sport Utility Vehicle (SUV) segments, also tipped the balance in favor of diesel cars. Recent launches in these segments include Renault Duster, Mahindra Quanto, XUV 500 and Rexton, and Maruti Suzuki Ertiga. Also, Ford, Chevrolet, and Nissan are now exploring opportunities in this segment.

Contd. on Pg 79

Table 1: Sales split of gasoline and diesel vehicles for select models Model Ford Figo Ford Fiesta Classic Ford Fiesta New HM-Ambassador Nissan Micra Nissan Sunny Renault Duster Renault Pulse Renault Scala Renault Fluence Skoda Fabia Skoda Rapid Skoda Laura Skoda Superb Toyota Liva Toyota Etios Toyota Corolla

Sales in November Month (Units) 4,785 881 124 260 849 1,663 5,251 436 807 82 133 1,099 209 120 2,181 2,050 362

% Gasoline

% Diesel

3% 9% 15% 30% 17% 19% 2% 4% 1% 12% 26% 23% 11% 59% 17% 21% 39%

97% 91% 85% 70% 83% 81% 98% 96% 99% 88% 74% 77% 89% 41% 83% 79% 61%

Source: Vehicle Manufacturers, Frost & Sullivan Analysis

1 - 31 JANUARY 2013

REPORT

Market Trends.....

Chart 1.2: Trends in domestic demand for PVs by type of fuel (From April to November 2012 ) 90% 80%

Emission and Fuel qualityrelated issues There are several issues pertaining to diesel PVs that are yet to be addressed. Most importantly, diesel cars emit more pollutants than gasoline cars. Currently, Bharat Stage IV norms are in force in 20 cities. It must be noted that nitrogen (NOX) emission values of diesel remains almost two times higher than that of gasoline. As per a study by the Center for Science and Environment (CSE), diesel-powered cars emit 7.5 times more toxic particulate matter as compared to gasoline cars. Reason being, the quality of diesel used in the country is still very high in sulphur content. If the Government decides to remove subsidies on diesel even partially, it will help oil companies invest in new technology that would aid in lowering sulphur content.

100%

Contd. from Pg 77 Apart from diesel prices, the taxation and duty structure applicable to gasoline PVs remains the same for diesel PVs.

Auto Monitor

At present, there is no diesel option available in Mini segment cars. According to Frost and Sullivan, if this persists, gasoline PV demand will remain at par with diesel vehicles in future. Also, vehicle manufacturers providing alternative fuel options (CNG/LPG), which are compatible with gasoline engines, may result in increased demand for dual-fuel PVs.

Key challenges in fuel technologies and adoption of alternative fuel technologies 1. Fuel Price Volatility: a. Volatility in fuel prices affects growth of the PV market. Rising fuel prices, especially petrol prices, are impacting demand for petrol vehicles. Oil prices have an impact on inﬂation, affecting savings and disposable income of consumers, thereby affecting demand for passenger vehicles. Thus, volatility in oil prices affects prospects of the industry.

As Bharat Stage V norms are expected to kick-in shortly, automakers will need to install a high-quality diesel particulate ﬁlter (DPF) in their engines. This is essentially a device designed to remove diesel particulate matter from the exhaust of a diesel engine in order to make the car more environmentfriendly. However, the additional cost of DPF will make diesel cars dearer by INR 30,000-40,000.

Alternative Fuel PV manufacturers are placing greater faith in dual-fuel technologies than in battery-powered alternatives because the necessary support infrastructure, such as recharge stations, is not yet in place for widespread adoption of the latter. Although PVs running on Compressed Natural Gas (CNG) are gaining popularity due to lower cost of operation; much more needs to be done to improve the fuelling infrastructure before CNG vehicles become more mainstream. It is estimated that at least 5 percent of new car buyers are now opting for a CNG variant where available. According to Frost & Sullivan analysis, this could rise by 8–10 percent in future as the demand increases for vehicles with lower running costs. Although currently most Liqueﬁed Petroleum Gas (LPG)/CNG variants of passenger cars cost about INR 15,000 to 50,000 more than their conventional counterparts (gasoline).

Strategic Outlook Persistent rise in fuel prices has steadily been keeping the overall inﬂation rate high. Inﬂation may continue to remain high for next few months, especially in case there is further rise in petrol prices. The cumulative passenger car demand has consequently slowed down, posting a weak 1.2 percent growth during the period of April-November 2012, compared to the corresponding period last year. On the other hand, UV demand has increased, posting a healthy 61.9 percent growth during the same period as compared to the prior year. Ambiguity over diesel pricing and the possibility of additional duty on diesel cars has forced several carmakers, including market leader Maruti Suzuki to go slow on or even abandon their expansion plans in the fastest-growing segment of India’s automobile industry. While manufacturers are reacting to the existing environment by trying to increase diesel vehicles’ supply, no one really knows which way the market is headed in the long run. Demand for diesel variants has shot up; but this can change if macro variable factors related to diesel vehicles, such as fuel pricing and production costs are altered, as per Frost & Sullivan analysis. It is understood that in Europe the mix between diesel and gasoline is 50:50 and India, too, is likely to go the same way.

47%

49%

51%

48%

49%

53%

51%

49%

52%

51%

April

May

June

70% 60% 50% 40% 30% 20% 10% 0%

July Gasoline

August

September

October

November

Diesel Source: Frost & Sullivan Analysis

2. Customer power: a. Fuel economy is the primary driver in the Indian market 3. Government/Regulatory Support: a. There is no national policy for electric vehicles/CNG vehicles and Biofuel/ethanol pricing. b. There is lack of coordination among various Government agencies, such as Ministries of petroleum, forests and environment,

agriculture, etc. 4 Fuelling/Charging Infrastructure: a. Low number of CNG ﬁlling stations (about 900-1,000) vs. about 40,000-45,000 convent iona l f uel (gasoline/diesel) b. Inadequate number of charging stations for electric vehicles and that too limited to select cities

Conclusion Currently, demand for die-

sel PVs is high and will remain so if gasoline prices continue to increase, beneﬁting the diesel car market. However, if the Government imposes additional duty on diesel cars and further increases diesel prices, demand for diesel PVs may take a beating. Moreover, vehicle manufacturers providing alternative fuel options (CNG/LPG) that are compatible with gasoline engines may lead to increasing demand for dual-fuel passenger vehicles in future.

Auto Monitor

1 - 31 JANUARY 2013

F E AT U R E

Leather Matters Automotive leathers are now being processed in India, and with wide acceptance by OEMs around the country, the industry is on the upswing. Anand Mohan

othing spells comfort and luxury better than leather seats in a car. Most top-end mass market models have them as a standard ﬁtment, and there is a aftermarket segment available too at OEM dealerships. And there’s just one manufacturer for them at the fore – Tata International.

The trend of leather seat covers as an aftermarket product has fallen considerably with most OEMs now offering it as standard fitment. Two years ago, manufacturers would import ﬁnished leather from abroad and have them stitched here to the ﬁtting of the seat. An ambitious company called Saddle, Inc. (aptly named), a major seat cover sup-

plier to OEMs, would be supplied processed leather which the company would ﬁt onto seat covers and deliver to OEMs. Around that time, Tata International, a major player in the supply of leather for shoes and garments, got into the business of producing automotive leather. The company forged an alliance with Saddle, Inc. to supply OEMs with leather that could now be processed in India. Processing leather from raw hides for automotive applications at the OEM level is done by a handful of companies around the world. When Tata International took the plunge into the automotive industry in 2010, it added a number of OEMs to its client list. The company owns one of the world’s largest tanneries in a small town near Indore called Dewas. Here, it began processing leather for automotive applications. Having a tannery for automotive leather within India provides advantages in terms of both cost and logistics. The price advantage of leather processed in India vis-à-vis one procured abroad is obvious. Further, it is easier for OEMs to be involved in choices, alterations, and the development

process. Imported leather leads to inventories going up, and you are at the mercy of an international delivery schedule which will definitely take longer than leather processed in India. There has been a shift in buying trends in the recent past. From a predominantly hatchback market, where luxury features like leather seat covers are not that popular, the market has seen a rise in the sedan segment, and the success of SUVs and MUVs in the past year. Ac c ord i ng to Tat a International, around 3.5 percent of vehicles produced in India have leather seats. This financial year, the company expects this number go up to 4-4.5 percent. That’s a little over 1.1 lakh vehicles produced this year. If you take a ballpark figure of Rs 30,000 for a set of leather seat covers per car, the automotive leather industry is worth Rs 330 crore. These are conservative estimates that don’t take into account premium leathers, the aftermarket segment, and also the size of the vehicle. “In USA and Europe, this percentage is in double digits so we expect plenty of growth in

the coming years”, says Suman Nayak, Head of Marketing and Sales at Tata International. Nayak adds that there are about 7-8 companies in the world that have the technology and the capability to cater to the demands of OEMs, and Tata International is one of them. Automotive leathers come in the category of performance leathers. This means that the product has to comply with a set of speciﬁcations that are higher than leathers used for other purposes. The variables, says Nayak, are very high. “It is not just leather, but an engineering product. The speciﬁcations and process controls needed, and the techniques for producing this leather are different from the fashion products we produce.” Raw hides are imported from Latin American and European countries due to their size and quality (size is important because the pieces need to be large for seat covers). The company is also working on locally available hides to bring costs down and the results, says Nayak, are positive. Tata Internationa l has observed that OEMs don’t mind using imported leather despite the cost involved, but are keen to localize leather upholstery owing to the shorter supply chain and faster supply. On the supply front, Saddle, Inc. has four workshops catering to the major automotive clusters in India – two in Bangalore for manufacturers in the South and for the aftermarket, one in Pune that supplies mainly to Tata Motors, Mahindra, and Fiat, and a fourth unit up north in Gurgaon. The trend of leather seat covers as an aftermarket product has fallen considerably with most

OEMs now offering it as standard ﬁtment. As an aftermarket product, when leather seat covers are offered through the accessories division of a dealership, taxes and multiple entities in the supply chain catapult the price of the product to almost double that of an OE ﬁtment.

The specifications and process controls needed, and the techniques for producing this leather are different from the fashion products Tata International produces. The costing of OEMs is quite stringent, so profits aren’t as high compared to an aftermarket product, but continuity and large orders more than make up for the smaller profit per unit. Even if the market reaches a conservative target of 10 percent of vehicles in the next few years using leather seat covers as OE fitment, the automotive leather industry more than doubles in size. In the beginning of the last decade, luxury features in cars included air-conditioning and a music system. These are now available as standard fitment across almost the whole range of passenger cars. Among premium manufacturers, leather seats are a must-have, but some of the upper mass market vehicle segments too are likely to start offering leather seat covers as standard fitment in the near future. There are no points for guessing who will benefit then.

“R&D In India Means Affordability” …says Saju Mookken, Country Manager India, Magneti Marelli, as the company pads up to drive the Indian innings in top gear. Magneti Marelli wants to capitalize on its Indian talent pool to the maximum by getting them to the drawing boards, so he tells Jagdev Kalsi. You are a fairly new entrant in the Indian automobile industry. How are you planning to progress? When you set up a new company in a new country you ﬁrst look at the industrial competence. First area is to manufacture the products, which, in terms of technology is provided by Magneti Marelli. So design responsibility in most of the cases is by Magneti Marelli. In India, we have a JV with the Motherson group that was signed in 2008. They have two plants, one in Pune in Chakan for lighting products and another for intake manifolds. In the area of electronic systems we have a plant in Manesar, which is a joint venture with Unitec

good technology at affordable cost, which can further be done by local manufacturing and local engineering base. Next phase is we have the frugal engineering, and most global OEMs are taking advantage of that. Chrysler has a large engineering base out of Chennai. GM has signiﬁcant engineering base in Bangalore.

Machines. It’s also known as Alpha Toyo. The ﬁrst joint venture that we established in India was with Suzuki Motor Corp (Japan) and with Maruti Suzuki in powertrain to make ECU. It started in 2007 and production started in 2008. It’s in the Maruti Suzuki supplier park. We came in India in 2007 and have seven JVs today, with eight manufacturing plants. Do you plan to invest in R&D in India? We are setting up R&D in each of these JVs. In some cases we have good engineers. I think historically India has not been very strong in automobile design but off late it has been improving.

India is now a manufacturing hub, especially for small cars. We are already the second largest production hub for small cars. Our ﬁrst focus has been manufacturing, once we have stabilized that, the second focus is design and development, so

we have both manufacturing and technical alliance in India. How do you plan to beneﬁt from R&D in India? By having R&D base in India we are reducing R&D from outside India. That translates into

How do you ﬁnd the talent pool in India for R&D purpose? I think the competence is available in India, it is growing and we are supporting our R&D centers from Europe to grow our people in terms of knowledge. So there are training programs going. There’s a lot of movement from India to global training centers, they work on projects jointly with their European colleagues, at times with Brazilian colleagues for shock absorbers and with Germans for lighting. They gain knowledge from there and bring it back to India.

Auto Monitor

1 - 31 JANUARY 2013

COLUMN

The Better Option The technology of producing bioethanol, biodiesel, bio oil etc is being actively pursued in several parts of the country. However the economic viability of production has to be established, says Professor L M Das

t is well known that fossil fuel reserves are being exhausted at an alarming rate. Oil prices continue to rise and awareness is growing about ‘peak oil’. At this point of time, every citizen has become increasingly conscious of the environmental impacts of using fossil fuels in the transport sector. Internal combustion engines form the backbone of our automobiles/ vehicles. Vehicular pollution is the primary offender for causing air pollution in the urban areas. These pollutants release into the atmosphere which sometimes interact amongst themselves and other pollutants thereby disrupting the ecological balance. Renewable alternatives to traditional transport fuels must be expeditiously identiﬁed which should also examine the possible

biophysical, social and economic impacts of their production and utilization. It will perhaps be relevant to mention here that Electric vehicles, hybrid vehicles and fuel cells have not been considered in this paper because the paper concentrates on substitutes to petroleum-based fuels. As far as automobiles are concerned, they are broadly of two types: Spark ignition and compression ignition. It should be borne in mind that a good fuel for diesel engine is characteristically a bad fuel for diesel engine and vice versa unless any major modiﬁcations are incorporated in the engine. As is well known that a host of alternative fuels such as Ethyl alcohol, Methyl alcohol, Compressed natural gas, Hydrogen, Liqueﬁed Petroleum Gas (LPG), Biodiesel, Dimethyl

ether(DME), Biomass to liquid (BTL), Gas-to-liquid (GTL), coalto-liquid (CTL)and a lot of others are being seriously looked into as alternative fuels in different parts of the world. However, the present discussion is restricted to some feasible options which are, in my opinion, very important for India. In view of the higher octane number, alcohols have been very attractive for their higher octane number. Methanol had been successfully used in automobiles sometimes in 1930s. Methanol’s other intrinsic advantage as an gasoline additive came out very glaringly when lead was being phased out. Many are now aware of the water-polluting chemical MTBE (methyl tertiary-butyl ether) and its rapidly growing threat to the

Natural gas has got a higher octane number and a higher flammability limit which can facilitate better fuel economy, higher power output and lesser level of emission. It is well-known that compressed natural gas (CNG) has been very widely used in transport sector in India and has substantially reduced the vehicular emissions. quality of drinking water. However, it was subsequently observed MTBE dissolves easily in water. When a spill or leak occurs, MTBE separates itself from the other fuel components and moves away from the spill site with water ﬂow. It has also been observed that it is difﬁcult and expensive to clean up, and MTBE was detected in drinking water supplies so quickly.

The Bigger Potential In Indian context ethanol has received greater attention than methanol. Ethanol has got a wider production potential. It is blended with gasoline to improve octane number of gasoline. At present, it is being blended with gasoline in several countries and gasohol (a blend of gasoline with ethanol) has been the major transport fuel in Brazil. Bioethanol and cellulosic ethanol have acquired status of “second generation” biofuel. Since ethanol molecules contain oxygen, therefore it ensures conditions close to complete combustion thereby reducing substantially the pollutants such as carbon monoxide and oxides of nitrogen. Even though ethanol is found to be useful for spark ignition engines, it needs an appropriate additive to form a stable mixture with desired cetane number necessary for use in diesel engines. It has been observed by some researchers that the fuel economy is emerging towards gaseous fuels. Natural gas consists of methane as its major combustible component with varying proportions of ethane, butane and propane depending upon the geographical locations. Natural gas has been successfully introduced in many parts of the world. Natural gas has got a higher octane number and a higher ﬂammability limit which can facilitate better fuel economy, higher power output and lesser level of emission. It is well-known that compressed natural gas (CNG) has been very widely used in transport sector in India and has substantially reduced the vehicular emissions. Liqueﬁed Petroleum gas (LPG), which is

Contd. on Pg 84

Auto Monitor

COLUMN

The Better Option Contd. from Pg 82 essentially a mixture of propane and butane, has also been successfully used in internal combustion engines. However LPG is being used in the country as a cooking gas. Apart from technical feasibility, the social constraints need to be carefully reviewed for using any alternative fuel for automobiles. Series of steps adopted in the country within the past few years have been very successful in cleaning the air. Hydrogen is an ideal fuel, and can be produced from a host of non-fossil sources. The engine can run at a higher compression ratio, at a much higher thermal efﬁciency than a corresponding gasoline engine. The engine can run un-throttled and thereby reducing pumping losses. Upon combustion in engines it does not produce any harmful pollutants such as oxides of carbon, oxides of sulphur, unhurt hydrocarbons, smoke, lead or any other toxic metals. Sulphuric acid deposition, benzene and other carcinogenic compounds,

1 - 31 JANUARY 2013

ozone and other oxidants are all absent in hydrogen combustion in engines/automobiles. Oxides of nitrogen (NOx) are the only pollutant of concern. Research in IIT Delhi has demonstrated that NOx level can be drastically reduced by adopting an appropriate fuel injection system and operating the engine/ vehicle in lean mode with lower of equivalence ratio. This technological approach has been very successfully adopted in the hydrogen-operated three-wheelers developed in a collaborative UNIDO-funded project to IIT Delhi, Mahindra and Mahindra Air products. However efforts are being made for economic production of hydrogen for transport application. In my opinion, diesel engines, the other family of vehicles which are used in transport sector now can be adopted for biofuels developed from locally available resources in the country. Obviously the feedstocks should be locally available in adequate quantities and need

Many researchers are of opinion that synthetic fuel, which is a liquid fuel obtained from natural gas, coal, oil shale and several biomass sources thru Fischer-Tropsch (FT) process can have a much wider application. not be produced from edible sources. The technology of producing bioethanol, biodiesel, bio oil etc is being actively pursued in several parts of the country. Any form of biofuel that can be produced from available resources and can exhibit physio-chemical characteristics close to those of diesel, can be used in diesel engines. Such an approach could contribute signiﬁcantly towards evolving a solution to the energy-environment crises sugarcane ethanol in Brazil and starch-based ethanol in USA have been identiﬁed as prospective substitutes. Corn ethanol, wheat-straw derived ethanol, sugarcane molasses

ethanol have been tried out in different parts of the world. Next generation fuels include biodiesl produced from algae, cellulosic ethanol and fuels produced from gasification of biomass. Many researchers are of opinion that synthetic fuel, which is a liquid fuel obtained from natural gas, coal, oil shale and several biomass sources thru Fischer-Tropsch (FT) process can have a much wider application. FT diesel is manufactured by the liquefaction of synthesis gas (mixture of CO and hydrogen) produced from gasification of biomass. Presently FT diesel is receiving a lot of attention in many countries. It has been successfully used in vehicles without any major modification in the engine hardware or in the fuelling infrastructure. Biomass to liquid (BTL), CTL, and GTL are being considered as alternatives by many researchers. BTL is a process in which different kinds of biomass (such as wood and agricultural residue) can be converted to liquid. Coal to liquid technology creates synthetic fuels by liquefying coal. GTL is an alternative to diesel. It is free of sulphur and aromatics and thus environment-friendly. It

can be blended with petro-diesel, and does not need any change in the existing diesel distribution system. Even though it might appear quixotic to collect information from several sources and describes the state of art without any definite conclusion. In an assessment and identification of the alternative fuels for automobiles, the merits and disadvantages often overlap. Keeping in view an ultimate freedom from fossil fuel crisis and environment degradation, I feel hydrogen is the ultimate perennial fuel for the existing designs of spark-ignited vehicles without a substantial modification in existing system hardware. However the economic viability of production has to be established. Till that time we can move ahead with CNG and a rationale blend of hydrogen-CNG mixture. As far as the diesel engines are concerned, probably biofuels are the answers. Dr. L.M. Das has wide research and teaching experience in alternative fuels and low emission engines. He is currently a professor at the Centre for Energy Studies, New Delhi.

Tesla Removing Barriers To EV Ownership

merican electric car company Tesla says it wants to “take away every hurdle” to electric car ownership - and is setting up a chain of free fast-charge stations so that owners will be able to drive exactly as they could in a car with an internal combustion engine. Tesla established eight of these so-called superchargers at the end of last year, mainly in California. They are said to be capable of giving the mid-sized Model S saloon a 150-mile range in 30 minutes. The plan is to cover the entire east and west coasts of America initially, and then the whole of the USA. And the supercharger idea will be rolled out in other countries where Tesla sells. “It is our aim that you will be able to take a trip just as you would in an internal combustionengined car,” said head of sales and ownership George Blankenship. “In the time it takes for you to stop and have lunch you can put another 150 miles of range into the car. “Ultimately it’s our goal to do this with solar energy. We have said that we will make electricity free forever on sunlight.” Tesla expects to sell 20,000 cars globally in 2013 and to increase its total of worldwide stores from 33 to 58. Half of the additions will be outside America, including its ﬁrst store in China. At Detroit the company showed a design concept based on the platform of the Model S. It is a stylish fusion of crossover and MPV called the Model X, with an additional electric motor between the front wheels to give it all-wheeldrive capability. Its most unusual feature is the “falcon wing” rear side doors, which raise vertically before swinging out so they can be opened in conﬁned spaces. Tesla’s next production car will be a small model costing around $30,000 (£20,000) in the US. It is expected to be on sale in three to four years.

Auto Monitor

1 - 31 JANUARY 2013

INTERVIEW

Start The Engines The Automotive Research Association of India (ARAI), Pune, has undertaken newer projects in electric mobility, vehicle safety, and NVH related areas. It wants to enhance its role in these evolving areas to develop its capabilities and work jointly with partners on newer projects. Shrikant Marathe, Director, Automotive Research Association of India, explains to Abhishek Parekh the areas where ARAI is expected to play a prominent role.

Can you provide a perspective on current and upcoming research initiatives and projects that ARAI is working on? We undertake work in three broad categories from funding perspective. These areas include projects undertaken by us, large-

ly self-ﬁnanced or funded, with the aim of building up our competency. Here, we are currently working on ﬁve to six major projects in the areas of electronics, powertrain development, and comfort/fatigue. We also have projects of

national importance where we feel we are in a position to make a major contribution. For instance, ARAI has built up a database of Indian road conditions and this can be simulated in a laboratory environment. The data captures around 120 odd parameters that pertain to actual operating conditions on the road. The auto industry in India has been using the data for the last couple of years and we have been adding additional parameters and variations on the data to enhance its utility. We also undertake sponsored assignments and projects for speciﬁc manufacturers or group of manufacturers. Any interesting project that ARAI is involved in? We are collating data on the stress and load conditions that a

wheel of a vehicle could be subjected to when vehicles operate on the roads here. In our view, such data and analysis work is extremely useful for the automotive industry as it reduces the need for experimentation on prototyping that can be time consuming and expensive process. The quality of analysis and developmental efforts can be greatly enhanced if road network in the country can be proﬁled and their conditions simulated in a more precise manner. The data on the actual road condition can also help in development of systems that can enhance safety and crash worthiness of a vehicle in a cost effective manner as actual road conditions can be closely simulated to predict vehicle behaviour. What research projects

are being undertaken by ARAI that have industry backing and sponsorship? We have worked on various projects that have added value for various automobile manufacturers. We were involved in testing the structural frames of Tata Motors’ world truck (the Prima range). Due to conﬁdentiality agreement with on-going projects, we cannot share details on such current projects. We have build up capabilities and expertise in data collation and analysis, early stage design related work, hybrid-electric powertrain, and light weighting of vehicles. We also provide instrumentation and testing to various automobile manufacturers for design and testing of vehicles. Electric mobility is another promising area from our per-

A major challenge is availability of Bharat Stage IV compliant fuel. This challenge could also throw interesting learning opportunities for us. Vehicle safety is another area where we are anticipating major challenges to arise. spective and we are working on a few projects in this area. Additionally, we have undertaken projects that have been sponsored as well as those that are critical from national interest perspective in the area of light-weighting. Around 60 percent of the projects undertaken by ARAI, undertaken from our own resources or sponsored by customers have found practical application in a vehicle or mobility related areas. We are hoping to maintain this momentum going forward. What are the key concern areas for the automotive sector going forward? A major challenge for the automotive sector is availability of Bharat Stage IV compliant fuel across the country. This challenge could also throw interesting learning opportunities for us. Vehicle safety is another area where we are anticipating major challenges to arise for vehicle manufacturers and component manufacturers alike. Crash avoidance, an area connected to the vehicle safety, is likely to emerge as a major challenge for vehicle manufacturers and we are looking to build up capabilities in the domain. We are anticipating major work to arise in the area of Noise Vibration Harshness (NVH) control and reduction as vehicle manufacturers are looking to offer safer and comfortable vehicles at affordable cost. Even as NVH level needs to be controlled in the internal combustion engine vehicles, an electric powertrain needs to emanate noise in order to make its presence felt for other vehicles and pedestrians alike. Most vehicle manufacturers are looking to ensure that the vehicle manufactured by them are not only safer but also economical to use and environment friendly and meeting these objectives is a major challenge. At one hand even as vehicles are increasingly connected and getting ‘intelligent’, extensive deployment of IT systems will also unclog the roads and highways and ensure smoother ﬂow of trafﬁc and we are looking to play a role in this area as well. The Indian auto industry has to take major initiatives in the electric mobility space through the private and the mass transportation route.

1 - 31 JANUARY 2013

Auto Monitor

F E AT U R E

Powering Ahead HMSI has grand plans for its India chapter. Jagdev Kalsi

a p a ne s e t w o -w he eler manufacturer, Honda Motorcycle & Scooter India (HMSI) is intensifying its Indian R&D operations to gain cost competence in the Indian two-wheeler market and developing indigenous products to suit Indian commuters. For this, the company has shifted its Honda Research & Development India Pvt Ltd (HRDI) technical center to the Manesar facility from Gurgaon to work in tandem with HMSI engineers. While the total brain strength of the new technical center is 200 engineers, Yadvinder S. Guleria, VP (Sales & Marketing), HMSI, said that half of the engineers in the tech center are from HMSI. With this Honda will be looking forward to sync synergies of both HMSI and HRDI engineers to develop home grown products for the market. Atsushi Amataka, President, HRID, said, “India is very important for HMSI and the reason we have come up with a new technical center. It will allow HMSI to develop new products speciﬁcally made for the Indian market.” At the new technical center, the company will carry out designing, engineering, BOP/ purchasing and quality checking to manufacture better products at lower cost. HMSI will also execute supplier quality assurance from now onwards from its technical center in Manesar. Amataka elaborated, “The technical center will also carry out

supplier quality assurance and we will be working with suppliers to improve their product quality.” This way HMSI will plan to better its product reliability and quality by improving the quality of its vendor products as well. Apart from quality and cost competence, the company is also looking forward to develop new home-grown products quickly to gain higher share in the Indian market. “HMSI is planning to launch new two-wheeler products every quarter in India,” said Guleria. He added that 3-4 products are already in the development stage and are being developed at the Indian technical center that are due for launch by 2014. However, he ruled out the fact that there will a completely new twowheeler launched every quarter, and instead conﬁrmed at least a new model or a variant of the existing two-wheelers will be on offer. In 2012-13 Honda is estimating selling over 26 lakh two wheelers with 14.1 lakh scooters and 11.9 lakh motorcycles. The company is also estimating an increase in the market share by 4 percent from the current 13 percent. In order to reach the said target, the company announced its new Karnataka plant to be operational in the ﬁrst half of 2013 with 1.2 million units capacity. With this plant operational, HMSI will have a yearly capacity of 4 million units (at full production) when the plant gets operational. Keita Muramatsu, President and CEO, HMSI, said, “As India becomes

the global innovation hub for Honda, customers can look forward to new products by Honda every quarter and also faster delivery of some of our higher demand models with the start of operations of third facility at Karnataka soon.” Further, to strengthen the development capabilities, the company has equipped its new technical center with wind tunnel for aerodynamics testing and chassis and engine dynamos for the respective product’s testing. The new tech center’s engine dynamo is currently testing the capabilities of Dream Yuga’s 109cc engine. The new tech center is spread in 10,000 sq mt area with a test track as well to perform real world tests. While the company is currently tightlipped on the investments that have gone in for the development of the test center, it is upbeat to announce that the tech center will allow the company to introduce new two wheeler products every quarter in India. HMSI will however be developing products for the local market only and is not planning to concentrate beyond. HMSI R&D has also developed Honda Eco Technology by virtue of which the company’s 110 cc engine that does duty on Dia, Activa and Aviator scooters will be able to deliver 60 kmpl fuel efﬁciency, an increase of 11 percent. HMSI has also upgraded its transmission by optimizing pulley converter ratio and driving force by which it managed to churn better fuel efﬁciency despite maintaining

The new engine.

the power output. The R&D team has managed to reduce friction by offset crank in the engine and reduced weight of the reciprocating parts. It has also lowered the tension piston ring and improved bearing oil seal to achieve higher fuel efficiency. Another factor that contributed to the higher efficiency is improved combustion using nickel spark plug and optimizing the engine’s inlet port. “We have achieved 60 kmpl now and we are further looking to improve the efficiency”, said Guleria pointing at other measures to improve efficiency like weight-reduction using light-weight materials in

manufacturing. Atsushi Amataka further conﬁrmed that the company will provide the HET engine technology in its motorcycles as well soon. The company has also launched the three aforementioned scooters with the upgraded 109cc HET engine and these will be the ﬁrst products featuring the Indian technical center developed engine. With 3-4 more products under development in the HMSI R&D, the company is planning to get aggressive in the market with back to back launches of home-grown good quality cost competitive products.

HMSI will develop products for the local market.

Auto Monitor

1 - 31 JANUARY 2013

INTERVIEW

A Gradual Process The uncertainty for tractor demand notwithstanding, the industry appears to be hopeful of better demand in the coming months. Bishwambhar Mishra, Chief Executive Tractor & Farm Mechanisation, Farm Equipment Sector, Mahindra & Mahindra explains to Abhishek Parekh the current scenario in tractors. How has the tractor segment performed last fiscal and what is your outlook going forward? The tractor segment grew by around 25 to 30 percent in the last to last fiscal and the financial year before that. The total industry volumes have almost doubled from around 300,000 units three to four years back to around 525,000 units currently sold per annum. It is unlikely that such a pace of growth is sustainable for the industry. Moreover, as a market leader in the farm equipment business we are increasingly looking to offer end-to-end cropbased mechanisation solution we feel is the way forward. We are seeing a faster growth in tractors below 30 HP and above 45 HP as average land holding

continues to be small and tractors get increasingly deployed in non-agricultural applications including infrastructure development. How is the industry dealing with the diktat about complying with emission norms? The industry has been bracing for progressively higher emission standards. The lesser the horse power of a tractor, the lesser it costs to make it compliant with emission norms goes down. It is more expensive and technologically challenging to make large or high HP (40 HP and above) tractors that are compliant with emission norms. We are constantly evaluating efﬁcient and cost effective methods to meet and comply with emis-

sion standards. Going forward we will need to take into account the industry evolution, market demand, and other cost related consideration on this matter. The effort at emission compliance also leads to increase in cost and in turn, could lead to lower demand for that particular capacity tractor. We expected the increase in price of 50 HP and above tractor due to emission related costs would to lead to a fall in sales. That did not happen in a big way and demand in that segment remains upbeat on account of agriculture and non-agriculture applications for such tractors. What are your plans in terms of new products development? We are evaluating opportuni-

ties and gaps in the market for introduction of new products or realignment of the existing product line. We need to offer end-to-end solutions to farmers. We have selected crops such

as rice, wheat, paddy, maize and are looking to offer all equipment for the entire lifecycle of these selected crops. The solutions for efﬁcient farming are not restricted to tractors but include add on

equipment like harvesters which can be used alongside or in addition to tractors. Harvesters are used for large scale farming and are expensive compared to tractors and are seeking out compact harvesters to enable their wider adoption. Similarly, we are working on a new range of rice transplanters to help farmers. The broader concept is to provide all technologies, equipment and a combination of solutions for select crops, to begin with, for efficient farming. We are targeting cash crops as of now and will gradually move to seasonal crops in the coming months. Additionally, there are two platforms that we use to evaluate to help us cater to the evolving requirements of domestic customers. Customer requirements have evolved from pure functionality oriented product to products that also offer comfort and ease of usage. What is likely to drive tractor demand? Factors like economic downturn, lack of infrastructure spending, and erratic electricity for farming and irrigation, etc may hamper farm productivity but it is unlikely to have a long term negative impact. Monsoons and farm productivity will continue to play a major role in driving sales of tractors. The increased use of tractors for non-agriculture applications is also playing a major role in growth. We are focussing on providing end-to-end crop specific farm equipment solutions in order to aid in higher farm mechanisation. Farmers are likely to go in for higher level of mechanisation if it is economically beneficial. We are looking at a more sober six to seven percent growth in tractor sales going forward. How is the international market penetration shaping up for M&M? Exports to neighbouring countries have suffered due to economic slowdown and lower level of mechanisation. We are hoping for a steady growth in North America and Latin America. Having said that, the fact is that market development is a gradual process and we are looking to have a steadily expanding long term presence in these markets. We are planning introduction of new models and expanding our service network in North America and Latin America and may also consider a larger manufacturing presence there over time. Currently, our volumes do not justify investment in a full-fledged manufacturing facility. We are expecting a growth of around 15 to 20 percent in North America albeit from a low base. We are not yet addressing a major part of the market which is in the range of 150 HP to 225 HP range and that is the segment we would be looking to address by developing suitable products. We are also looking to enhance our presence in markets in Africa. We have stated our goal of becoming the third largest player in China and we are on course to achieve that objective.

Auto Monitor

1 - 31 JANUARY 2013

INTERVIEW

With A Stronger Will It’s a double whammy for agricultural equipment manufacturers who are not only facing a slowdown in sales of tractors and power tillers but also bearing the brunt of policy inconsistency. BCS Iyengar, Executive Director, VST Tractors & Tillers and the Secretary of the Power Tiller Association of India tells Abhishek Parekh that a consistent policy framework in case of subsidy disbursal mechanism in various states and encouragement towards farm mechanisation can help revive sales. Tiller manufacturers in India have been under constant threat of imports from China. How does the scenario look now

from your company’s and the association’s perspective? The imports and availability of tillers manufactured in

China has continued unabated over the last few years. Our estimate is that there may be more than 35 different models of Chinese manufactured tillers approved and sold in the Indian market. This is leading to ﬁerce competition and is a cause of concern for the industry from the perspective of quality and service. Despite this unabated competition among local and cheaper imports, we (VST Tillers &Tractors) have been able to retain around 45 percent market share in the domestic market. Do you intend to make any representation to the government or any other authority in this regard? Though we are concerned

about the scenario, we are keen to have a level playing ﬁeld for all agriculture equipment manufacturers. The concern arises when ﬂy-by-night operators earn a bad reputation for the entire sector. Hence we are worried about indiscriminate entry of new types of players in the market. The government subsidy is available to all tiller manufacturers irrespective of brand, manufacturing origin or qual-

ity and this could lead to undesirable consequences for the genuine players in the sector. We have accordingly made our representation as an industry to the ministry of agriculture and are hopeful of a suitable resolution. Our key contention is that best practices in a particular state or territory for subsidy disbursal should be identiﬁed and implemented. This may lead to a situation of all stake holders

Rising rural prosperity and growth is unlikely to dampen the demand for power tillers in the same way that growth of two wheelers has not been adversely affected by preference for four wheelers. getting timely payments or credit for their contribution and the government is able to meet its objective of agricultural growth through farm mechanisation. In our view, the disbursal mechanism adopted by the Orissa government appears to be well suited to the needs of the different stake holders and could be adopted by other state governments. We have accordingly made our representation to the Central government. What is the growth outlook for the power tiller segment? The segment has grown signiﬁcantly over the last few years and the sales outlook continues to be bright. Rising rural prosperity and growth is unlikely to dampen the demand for power tillers in the same way that growth of two wheelers has not been adversely affected by preference for four wheelers. Each of these vehicles or equipments has its role to play in the ecosystem. Certain market segments like tractors in the capacity range of 20 to 30 HP tractors are growing faster than the overall tractor segment. We (VST Tillers & Tractors) have also set up a 30,000 unit capacity in Hosur for manufacturing 25 HP tractors and are looking to develop and sell a 22 HP tractor in the coming months. Though the segment of low HP tractor is getting increasingly competitive, we are looking to leverage our understanding of the market, topography, channel relationship and other factors that could help us in gaining an edge in the segment. We are also assembling transplanters in South India and are leading in that segment in this part of the country. We are looking to notch up big sales volume and value added products in this segment. Do you feel that authorities like UIDAI (Unique Identiﬁcation Authority of India) could help in direct disbursal of subsidy to farmers? We believe that any scheme that could reduce the administrative delays and multi layer mechanism in disbursal of subsidy can potentially prove to be helpful for the stakeholders in the sector. There has to be a political will to take measures and introduce reforms.

Auto Monitor

1 - 31 JANUARY 2013

F E AT U R E

Tractoring On The southern region may outpace the overall tractor market growth in coming months. Abhishek Parekh

ractor sales are expected to grow in the high single digits this ﬁscal, with the greater contribution coming from markets in Southern states, according to industry sources. Tractor sales in the East and South, which together account for one-third of total sales, are expected to grow faster over the next ﬁve years, according to a CRISIL Research report. In the South, higher investments in irrigation infrastructure and a low base will boost tractor sales. In the East, high crop yields and commercial demand will drive sales. The unit sales growth in West India is expected to be lower than in East and South India. By contrast, sales growth in the North will be slower, given the already high penetration levels in the region. CRISIL Research expects

tractor sales to grow at around eight to ten percent Compounded Annual Growth Rate (CAGR) over 2011-12 to 2016-17. “It is unlikely that tractor sales would maintain a high doubledigit growth rate over the coming months as the higher base would take effect, but we are likely to see growth in the low and very high HP segment,” says Bishwambhar Mishra, Chief Executive - Tractor & Farm Mechanisation, Farm Equipment Sector, Mahindra & Mahindra. He points out that replacement-led demand is likely to sustain growth in the coming months. Tractor penetration in India is 25 per 1000 hectares, as compared to highly mechanised countries like Germany which have around 65 tractors per 1,000 hectares, reﬂecting the relatively low mechanisation and fragmented land holdings in India. Within India, states such as Punjab and Haryana with rela-

tively consolidated land holdings and better irrigation infrastructure have much higher tractor penetration, demonstrating the criticality of these two parameters in determining tractor penetration. Factors that will drive growth, notwithstanding differences in region-wise dynamics, include higher investments in irrigation, rising farm incomes, and increasing mechanisation. The government’s efforts to increase investment in irrigation is likely to provide a ﬁllip to tractor sales, according to industry observers. Under the 12th Five Year Plan, investments in irrigation infrastructure are expected to treble. The increasing need for higher mechanisation due to rising farm labour costs, group buying of tractors by marginal farmers, and an increase in commercial use of tractors are other key growth drivers. The availability of low-cost ﬁnance for tractors, led by the

entry of more NBFCs and private banks will also boost sales. The tractor segment has been witnessing a contraction in demand since November 2011, after having experienced robust growth over the period FY10 till H1 FY12. Tractor volumes, including exports, declined by 3.4 percent (YoY) in the fourth quarter in FY12, and posted a modest 2.8 percent growth during ﬁrst quarter FY13, according to an industry report by rating agency ICRA. As per the study, the cyclical demand slowdown is led by the eroding purchasing power of farmers, with decline in farm-gate prices after the bumper harvest in the rabi season, and a delay in offtake from market intermediaries. Meanwhile, demand from the non-agricultural segment (~20 percent of sales) has been impacted by a slowdown in construction and infrastructure projects. A high interest rate regime and

price hikes by tractor manufacturers also deterred farmers from purchasing agri-mechanisation tools. The demand-side economics in the tractor industry, however, continue to find favour from structural and long-term drivers such as support from the Government of India towards rural development and agrimechanisation, scarcity of farm labour especially during the sowing season, increase in credit flow to agriculture, growth in high and low power segments, moderate penetration, shortening replacement cycle, and healthy exports. ICRA expects tractor sales growth to be slower in this fiscal, with fear of draught effecting consumer sentiments, as well as high base of last year, which saw record volume sales during the festival season. Sales growth is however expected to recover in this fiscal, on the back of higher MSPs and low base, provided there is recovery in monsoon

The cyclical demand slowdown is led by the eroding purchasing power of farmers, with decline in farm-gate prices after the bumper harvest in the rabi season, and a delay in offtake. rainfall, which so far has been in deficit. Tractor sales volumes are likely to witness a growth of 0-3 percent for full year FY13, while maintaining a volume CAGR of eight to nine percent over the next five years. Subrata Ray, Senior Vice President & Co-head, Corporate Sector Ratings, ICRA Ltd, says, “In terms of regional performance, demand from Southern states has shrunk rapidly over the course of last two quarters (-34.5 percent in first quarter and -18.3 percent in the fourth quarter) led by draught-like conditions in Andhra Pradesh and Karnataka, apart from weak prices of cotton and spices. Even the western region reported a lacklustre performance with volumes declining by 10.9 percent in the first half in the fiscal, stemming from correction in prices of cash crops like sugarcane and cotton. The northern region, which accounts for over 35 percent of domestic tractor industry volumes, supported industry figures and posted a healthy 14.1 percent YoY growth during the first half in current year, notwithstanding lower sales in Uttar Pradesh because of state assembly elections.” He added that while states like Punjab and Haryana will continue to generate a healthy replacement demand, ICRA expects the southern markets to recover from this blip and outperform the national average over the medium term, given low tractor penetration, increase in area under irrigation, and increasing focus by tractor OEMs and financers on this region. The outlook for exports also looks promising through inclusion of new export destinations, increased product offerings in the higher HP segment, ramping up of capacity as well as investments by OEMs to meet stricter emission norms, as well as greater acceptability of India as a cost-effective and reliable manufacturing location. In an effort to battle sluggish demand, tractor OEMs have expanded and refurbished their product portfolio with more application-based offerings, and offerings for niche market segments. Industry players witnessed a decline in profitability metrics during FY12, struggling from a partial or delayed pass on of increased cost of production, besides a denominator effect. Although players like Escorts and M&M have been able to protect their PBIT margins in the first quarter FY13, weak demand outlook, as well as increase in manufacturing capacity, portend margin pressures over the near term.

Auto Monitor

1 - 31 JANUARY 2013

COLUMN

East, South To See Faster Growth sales in the West are expected to grow at a CAGR of 8-10 per cent. However, the projected growth is lower than that of the past 5 years. Over 2006-07 to 2011-12, tractor sales grew at a CAGR of 17 per cent. Higher realisations from cotton crop — which accounts for about one-fourth of total crop output in Gujarat and Maharashtra — drove up sales. However, a subsequent decline in cotton prices in 2011-12, pulled down growth in tractor sales. Though a high base will limit growth over 2011-12 to 2016-17, it will still remain healthy.

Ajay Srinivasan Director, CRISIL Research Hetal Gandhi, Associate Director, CRISIL Research Geoffrey D’ Cunha Manager, CRISIL Research

Replacement demand to drive sales growth in mature northern market Traditionally, the North has been the largest market for tractors, aided by high irrigation intensity, cropping intensity and larger land holdings. Consequently, tractor penetration in the region is also higher at 30-35 tractors per 1,000 ha. While this has gradually pulled down incremental growth in tractor sales, the North still accounts for a third of total sales in India. Tractor sales in the region grew at a healthy CAGR of 10 per cent over 2006-07 to 2011-12, largely driven by replacement demand. In the next 5 years too, tractor sales in the North are likely to grow at a slow but steady CAGR of 6-8 per cent. While replacement demand is expected to drive sales in highly penetrated states like Punjab and Haryana, relatively underpenetrated states of Rajasthan and Eastern UP are expected to witness farmers not owning a tractor currently purchasing one.

ractor sales in the East and South, which together account for one-third of total sales, are expected to grow faster in the next 5 years. In the South, higher investments in irrigation infrastructure and a low base will boost tractor sales. In the East, high crop yields and commercial demand will drive up sales. Sales growth in the West is expected to be a tad lower than the above two regions. By contrast, sales growth in the North will be slower, given the already high penetration levels in the region. Overall, CRISIL Research expects tractor sales to grow at an 8-10 per cent CAGR over 2011-12 to 2016-17.

Growth in tractor sales in the South to double South India is typically a more evolved market, with penetration levels second only to the North. However, demand for tractors in the region is cyclical, and highly dependent on rainfall levels. Over 2001-02 to 2006-07, tractor sales in the South are estimated to have grown at a CAGR of more than 20 per cent. In the subsequent ﬁve years, however, a drought and successive crop failures in 2010-11 and 2011-12, pulled down average annual sales growth to 5 per cent. Additionally, as per our interactions with industry sources, the relatively low presence of public-sector banks has prevented farmers in the region from availing of the Centre’s Rs 600 billion debt-waiver scheme during the period. Led by a low base and higher investments in irrigation, (especially in Andhra Pradesh) which will boost crop yields, tractor sales are expected to increase at a 10-12 per cent CAGR, over 2011-12 to 2016-17. Player action will also aid sales. Manufacturers are launching more sub-20 horsepower (HP) models, which suits the region, as more than half of total land holdings in Tamil Nadu and Andhra Pradesh are marginal. Almost half of countrywide tractor capacities

Conclusion

likely to be commissioned in 201213 and 2013-14 will also be located in the South, including Mahindra & Mahindra (M&M’s) 1,00,000unit greenﬁeld plant.

Commercial demand, cropping intensity to drive sales growth in the East Tractor sales in the Eastern

Key parameters Tractor penetration – It is deﬁned by the number of tractors used per 1,000 hectares of net cropped area (Figures in this article are as of 2009-10). Irrigation intensity - The proportion of irrigated land as calculated by gross irrigated area / gross sown area (Figures in this article are as of 2009-10). Cropping intensity - Number of crops cultivated on the same land parcel during a year (Figures in this article are as of 2009-10). Average land holding size - Reﬂects the extent to which land holdings are consolidated/ fragmented (Figures in this article are as of 2005-06). Commercial demand – Driven by use of tractors for mining and haulage operations ((Figures in this article are as of 2011-12, based on industry interactions).

region are expected to grow at a CAGR of 9-11 per cent over 201112 to 2016-17. In contrast to the South, the East enjoys better cropping intensity, as perennial rivers such as the Ganges ensure better irrigation. However, the region is prone to ﬂoods, which keeps tractor demand volatile. Moreover, land holdings in the region are also fragmented, far below the pan-India average of 1.23 ha. In Bihar, for instance, 90 per cent of land holdings in Bihar are smaller than a hectare, which are not very suited for tractor usage. To fully tap the region’s agricultural potential, in 2010-11, the government launched the ‘Bringing Green Revolution in Eastern India’ (BGREI) programme covering 7 states - Assam, Bihar, Chhattisgarh, Jharkhand, Eastern Uttar Pradesh, Orissa and West Bengal. Under the scheme, the government aims to shift cultivation of rice, sugarcane and other water-guzzling

crops to the region. Commercial usage for tractors is another enabler. Almost half of total tractor sales in the East cater to commercial demand (use in activities like mining and construction).

Larger land holdings, low penetration highlight growth potential in the West Lower irrigation intensity – excessive use of ground water resources is depleting the water table – has limited demand for tractors and kept penetration levels in the West low. However, larger land holdings — a huge proportion of land holdings in Gujarat and Madhya Pradesh are larger than one hectare — and higher investments in irrigation, present a huge potential for tractor sales. The launch of more sub-20 HP models (as in the South), targeting marginal and small farmers, will also aid growth. Over the next 5 years,

To sum up, CRISIL Research expects domestic tractor sales to increase by 8-10 per cent CAGR over 2011-12 to 2016-17. Tractor penetration in India is at 25 per 1000 ha as compared to highly mechanised countries like Germany which have 65 tractors per 1,000 ha, reflecting relatively lower mechanisation & fragmented land holdings in India. Within India, states such as Punjab and Haryana with relatively consolidated land holdings and better irrigation infrastructure have much higher tractor penetration, demonstrating the criticality of these two parameters in determining tractor penetration. Factors that will drive growth, notwithstanding the differences in regionwise dynamics, are: higher investments in irrigation, rising farm incomes and increasing mechanisation. The government’s efforts to increase investments in irrigation will give a fillip to tractor sales – Under the XIIth Five-Year Plan, investments on irrigation infrastructure are expected to treble. The increasing need for higher mechanisation due to rising farm labour costs, group buying of tractors by marginal farmers and an increase in commercial use of tractors are other key growth drivers. The availability of low-cost finance for tractors, led by the entry of more NBFCs and private banks will also boost sales. (Please note that the views expressed here are those of CRISIL Research and not of CRISIL’s Ratings division. CRISIL Research operates independently of and does not have access to information obtained by CRISIL’s Ratings Division).

Auto Monitor

1 - 31 JANUARY 2013

F E AT U R E

The Pain Of Suspension Tiller manufacturers have made a representation to the Central government for streamlining subsidies. They also urge higher banking involvement in disbursal process, ﬁnds out Abhishek Parekh.

ven as some southern states in India have allegedly delayed the disbursal of subsidy provided to small farmers for buying power tillers, the Power Tiller Association of India has taken up the issue. It has urged the Government to implement a disbursal mechanism that could beneﬁt different stakeholders in the business. Power tiller is extensively used by small farmers with marginal landholdings for their farm mechanisation and can per-

At times release of payments to the manufacturers/ dealers had been held back in the name of regulating the market. In order to tackle such a situation, the association has suggested that for products like power tillers and certain range of tractors, the central government could consider issuing guidelines on the MRP.

form all functions of a tractor at a lower cost. According to a representation made by the Power Tiller Association of India to the Ministry of Agriculture, tiller manufacturers should be treated as implementing partners for the success of farm mechanisation and hence active dialogue is needed to hear each others’ point of view and assess the scope of implementing best practices. The association’s representation further pointed out that some states do not operate the subsidy scheme throughout the year leading to farmers not getting ﬁnancial support, at times during key months of May to August. It further pointed out that at times release of payments to the manufacturers/dealers had been held back in the name of regulating the market as open market price in case of certain equipments were found to be lower than the subsidised price. In order to tackle such situation arising out of market anomalies, the association has suggested that for products like power tillers and certain range of tractors, the central government could consider issuing guidelines on the Maximum Retail Price (MRP) and thereby reducing the need for individual states to regulate or issue a minimum price. “Many states insist upon tiller manufacturers to supply the products at subsidised price and do not release the sub-

sidy on time. The delay in the release invariably stretches the manufacturers’ resources as it becomes tantamount to credit sales and has to be managed with short and long term ﬁnancial resources,” said BCS Iyengar, Executive Director, VST Tillers & Tractors, who is also secretary of Power Tiller Association of India. He added that the delay in release of the subsidy amount invariably leads to higher prices of products. The association in its representation to the Ministry of Agriculture, Government of India has suggested that the Central Government could pass on the subsidy amount with single nodal agency like NABARD (National Bank for Agriculture and Rural Development) rather than release the amount through respective state government as Centre’s share of subsidy burden is around 90 percent compared to just 10 percent in case of state governments. Additionally, the association has also urged higher involvement of banks in the process that could not only help in streamlining the disbursal process but also help the banks to grow their tiller ﬁnancing business. Additionally, the association has also pointed out that the disbursal of subsidy to the manufacturers/dealers is carried out through state agro industries/seed corporation leading to additional three to four percent

service charges for suppliers of equipments for invoicing and clearances without providing much ‘value addition’. In certain states, such nodal agencies that have been tapped for disbursal of subsidies also insist on bank guarantees from manufacturers leading to hardship for the suppliers.

The Much-Needed Boost The power tiller segment is dependent on subsidy that covers around 33 percent of the maximum retail price. Farmers, who form the core customer segment for power tillers, generally authorise the dealer or the manufacturer to collect the government subsidy on their behalf at the time of purchase and the tiller is supplied net of subsidy under normal circumstances. Hence the manufacturer is invariably exposed to the vagaries of payment release cycle initiated and implemented by the concerned government department. Additionally, some states also provide top up subsidy to boost the farm mechanisation process. The penetration level of power tiller is much lower compared to neighbouring countries like China, Thailand and Bangladesh that have similar topography compared to India, according to an industry player. The segment is expected to maintain its double digit growth over the next three to four years.

Additionally, some states also provide top up subsidy to boost the farm mechanisation process. The penetration level of power tiller is much lower compared to neighbouring countries like China, Thailand and Bangladesh. Over 2001-02 to 2006-07, tractor sales in the South are estimated to have grown at a CAGR of more than 20 per cent. In the subsequent ﬁve years, however, a drought and successive crop failures in 2010-11 and 2011-12, pulled down average annual sales growth to 5 per cent, according to a recent report from CRISIL Research. It further pointed out that manufacturers are launching more sub-20 horsepower (HP) models, which suits the region, as more than half of total land holdings in Tamil Nadu and Andhra Pradesh are marginal. Almost half of countrywide tractor capacities likely to be commissioned in 201213 and 2013-14 will also be located in the South, including Mahindra & Mahindra (M&M’s) 100,000unit greenﬁeld plant.

Auto Monitor

1 - 31 JANUARY 2013

INTERVIEW

100

Return With A Whole New Approach Following its acquisition of Kinetic Motors and the formation of Mahindra 2 Wheelers, Mahindra entered the two-wheeler segment with the ill-fated Stallio. Now that the company is back with two considerably better products, Anand Mohan quizzes Viren Popli, Executive Vice President - Strategy and Market Development, Mahindra 2 Wheelers, on their future plans and strategies for the two-wheeler segment. What was Mahindra twowheeler strategy once the Stallio was recalled? We realized that we needed to do everything ourselves. First and foremost, we decided to build our own research and development facility. The second thing we decided on was to spend a lot of time and effort on building a strong manufacturing capability. These two factors have got us to where we are right now with the two new motorcycles – the Pantero and the Centuro. More speciﬁcally, we have decided that all engines, engine designs, and vehicle designs will be done in-house by us. We have a fairly large capability in that area so these were the initial steps we took.

We have decided that all engines, engine designs, and vehicle designs will be done in-house by us. How many two wheelers can you manufacture at optimal capacity? We can reach that capacity if we need to, but since we have a 50-acre plant, we have space to build more capacity. Later, we will expand to other parts of the country if required. When did you start to revamp the facility at Pithampur?

Revamping the facility at Pithampur actually started when we took over the company (from Kinetic), but since then we have constantly been improving the facility to bring it to its current shape. The capacity of the plant now with our scooters and motorcycles is about a million units. Coming to your models, since you are pitching the Centuro as a premium motorcycle in its segment, why isn’t a fuel injected variant in the lineup? Even disc brakes, at least as an option? So far as fuel injection technology is concerned, it is a very different setup. Fuel injection in the 100-110cc segment is a bit of an overkill. You can do it, but the cost of it will put you in a very small micro-segment where the customer says that if I get this at this price, why don’t I spend a little more and buy a 150cc motorcycle? That’s one downside of that technology. At the end of the day, customers in this segment are looking at a compromise on cost and ownership. With disc brakes, you are absolutely right and I can assure you that we are looking at it. In the long run, disc brakes are the way to go, but currently Indian consumers do not want to pay a premium for disc brakes, at least in the mass commuter segment. But we will be making it available as

an option in the near future. How much of a premium do you plan to charge for the Centuro over the Pantero? It is tough to say at this point since we aren’t discussing price points, but there is only so much you can play with in the 100-110cc segment. And Mahindra is also known for providing value-for-money products, so we are going to keep both these factors in mind when we price the product. Then you have the variants where you can go all the way up

since they straddle a very large price range. The strategy is to have a wide choice of variants, features, and options which allow you to play at the price the customer wants to pay. In terms of brand strategy, the 100-110cc segment is a space that depends on brand value. Since you are a new motorcycle manufacturer, why have you entered this segment ﬁrst? Well, let me put it this way: this segment is my prime customer base. I have more engines in this segment than any other segment in the country. I have millions of tractors, Boleros and Scorpios being consumed by exactly the same customer base where the Mahindra brand and the reliability of our vehicles have been well established in their segments. So when we look at customers in that space of rural, semi-urban and small towns, these people know Mahindra very well. So you’re counting on the strength of the Mahindra brand to help you in the two-wheeler segment? Exactly. We are part of one company building everything between two to sixteen wheels and we are all about mobility. A lot of work has been done on these motorcycles in conjunction with our capabilities in the automotive space. For example, we have a `65 crore noise, vibration, and harshness (NVH) lab at

the Mahindra Research Valley in Chennai. The NVH of the Pantero and Centuro have been dealt with at that level. How are you going to launch these motorcycles? We are going to have a phased launch. We are not looking at an all-India launch at this moment. How many dealerships does Mahindra 2 Wheelers have at this moment? At the moment, we have 400 authorised dealerships. We are building a strong network of subdealers and ASCs as we speak. So we have 600 touch points. We are planning to increase that number signiﬁcantly. What are your plans for the coming year? We are planning to launch one more motorcycle and scooter in the next twelve months. So is the Mojo next in line? We hope so. The engine testing of the Mojo is almost complete. It is a very complex engine. It is the ﬁrst time that an Indian manufacturer, or any other manufacturer for that matter, is attempting to build such an engine in India. A liquid-cooled dual over head cam (DOHC) four-valve engine has not been done yet. We think we can do it as we have a lot of capability and we can transplant a lot of our learnings from other parts of our business.

1 - 31 JANUARY 2013

Auto Monitor

F E AT U R E

101

Piece By Piece Unlike carmakers, most motorcycle manufacturers haven’t taken to assembling their larger capacity motorcycles in India. There is a big enough market waiting to be tapped but manufacturers are hesitating to take the plunge, says Anand Mohan.

t a recent press briefing, DSK Hyosung’s Managing Director, Sh i r i sh Ku l k a r n i revealed that the Korean JV has already assembled and sold 800 units of its sportsbikes and cruisers in India. For a company with hardly any pedigree and a product line-up that’s a tad weaker than its competition, it is a signiﬁcant number. An even better example than Hyosung is Harley Davidson since Harleys have larger capacity bikes in their line up. In the 8001000cc segment, that includes bikes like the 883L and the Super Low, HD sold 511 units. Move a segment higher, in the 1-1.6-litre capacity and Harley dominates this segment too. The American cruiser bike manufacturer sold 230 units in this segment. The Harley range starts at over `6

vendors and will begin localizing components for the 650 and the ST7 initially after which it will move on to other motorcycles. Tyres, batteries, headlights and a few more components are the parts that the company is aiming to localize as soon as possible. Kulkarni said that sales of at least

In the mid nineties, when Daewoo, GM, Ford and Fiat came to India and started assembling their cars, others took notice of the large untapped Indian car market. Motorcycles are facing the same scenario right now. lakh so it isn’t a cheap motorcycle by any means. In contrast, among other motorcycle manufacturers selling bikes with more than 500cc capacity, in the ﬁrst three quarters of 2012, Honda sold 70 units, Yamaha rolled out 37 and Suzuki fared slightly better selling 94 motorcycles. All these manufacturers import completely built units to India, which due to the current import duty structure, are priced through the roof. Besides HD and Hyosung, the only other big bike assembled in India is the Kawasaki Ninja 650. Bajaj sold 244 Ninja 650s from April to December 2012. When Harley Davidson decided to sell its bikes in India, the company knew from the word go that they had to assemble their motorcycles here to keep them competitive. More than that, buying a HD motorcycle is more about buying into the brand. The way Harleys are sold the world over are about inviting customers to the entire bike club culture experience. A standard Harley is as bare-bones as they come. Once you buy the bike, you can customize it to such an extent that even the key has its own accessories to add on to. This not only gives a certain degree of uniqueness but also increases sales of a directory size catalogue of available merchandise that every dealer has at its disposal. This is an excellent way to get customers more involved in the brand. If you cannot afford a new Harley, leave your contact information and requirements with a dealer and the dealer will contact you as soon as an existing customer comes with a tradein. It is a very proactive hands-on approach to sell their motorcycles in India and build on the Harley culture. Other manufacturers quite frankly aren’t putting even half the effort into their big bike line-up. DSK’s Kulkarni said, “The market is growing and we have a good partner in S&T Motors. I am trying to convince them to come to India instead of Korea. They are trying to invest in China but my point is why manufacture in China when you can manufacture here.” Hyosung has 21 dealerships and by the end of 2013, the company is targeting to open 40 dealerships. Localization is another important aspect to reduce prices further. Hyosung is in talks with

5000 units is necessary to have localized content in the motorcycle so once these numbers are likely, levels of local content will increase. Hyosung says that it can deliver a bike anywhere in India within a week of its purchase. For motorcycles in this segment, such a

short delivery time is unheard of. In the mid nineties, when Daewoo, GM, Ford and Fiat came to India and started assembling their cars, all other car manufacturers took notice of the large untapped Indian car market. Motorcycles are facing the same scenario right now. In a few years,

international motorcycle manufacturers will ﬂock to India too to assemble their bikes. Harley Davidson and Hyosung are standing examples of a market that is waiting to expand. With inputs Prabhakar.

from

Halley

1 - 31 JANUARY 2013

INTERVIEW

Korean Invasion DSK Hyosung’s Shirish Kulkarni talks to Abhay Verma of OVERDRIVE about the company’s plans for the Indian market. It’s almost a year since you took over Hyosung. how are things looking? Things are looking very positive. Infact, we have overgrown the number of retails for the GT250. So we are very happy. Now we are going to open sales for the new GT650 and GV650 (the Aquila Pro). Both the bikes will be a good success in the market because of the new look and design and the engine too is a strong point. We haven’t had any technical issues with the bikes. Hyosung is also very serious in terms of the Indian market now and they are talking about the various aspects of motorcycles here. Coming to the manufactur-

get today, I wouldn’t get it at the same rate in 2 years. It makes sense. We are into the construction business, so if we are buying a property for the factory and things don’t materialize, then we can always use the place for our construction business. You have a name in real estate. What made you get into automobiles? We started with Toyota. I myself am a rider and I love it. Hyosung was very attractive from the beginning. When Hyosung came in with the GT250 earlier, I wanted to buy it but was too young and so obviously my parents didn’t allow it. I was thinking

ing facility, it is coming up nicely. There are many plans and we slowed down a bit due to some complications in the land acquisition deal. By the end of March, we should have the facility with us. Once the new facility in Satara is operational, are you looking at localizing parts to bring the cost of bikes down? Yes. The idea behind setting up facility is to bring down the costs and this year will be primarily for that. We plan to achieve 5 to 10% reduction in costs by sourcing paints for the bikes locally and also getting local parts like bushes for example. They are also expensive components and cost a lot. We are looking at a couple of things but developing all this things entirely does take time and we are talking to suppliers from around Pune. We are trying to get as much parts ﬁtted locally as possible to bring down costs. As of now, the only thing local in the bikes is the horn. What percentage are you looking at localizing? To begin with, 15-20 percent and as the volumes rise, we are looking at more localization. The whole aspect of localization is only if you achieve a part for a particular price, then your goal is met. I cannot tell the local guys to give it to me at a cheaper rate unless I have the volumes. So that planning and business deal is yet to be done. We are talking and everybody wants us to grow and unless the numbers speak, nobody will believe us. It’s not that they don’t trust us, but this is a business and one need to draw a line. After that, we should be able to stretch to 50 percent localization towards the end of 2014. First and foremost, it will be on the 250. Unless we do it, we won’t be able to move forward. The bikes ﬁrst will come with new shoes. So, how is the response for the 250? It’s been phenomenal. Our target for the year was 350-400. We have already got more than 550 bikes on the road. People have accepted it very well. We initially thought that the price point may be an issue but so far, no one has come and said that the price is too expensive. People are happy with the price and the product. The only issue we are facing is the similarity between the 250 and 650. Many customers are moving onto the 650 instead of the 250 because they are getting a more powerful motorcycle. But now with the new 650, I think that will all change. People will now be more than happy to buy the 250 as it will have its own identity. Let’s see how it goes. Going back to time, when you took over the reins of the company, there were lots of problems. Lots of people would have advised you against making the investment in Hyosung. Not really. But I did get some advising that I am thinking about it too soon to go and invest in anything. Let it stabilize and get the market. I told them that this is the right time. What I will

Auto Monitor

103

Auto Monitor

1 - 31 JANUARY 2013

INTERVIEW

104 into going into manufacturing but investing in Hyosung was a lucrative proposition. The plate is almost 90% ready and manpower and everything was in place so that is why I decided to get into it. Per se, the group which was known as a local real estate company is now being looked at as a big player in the automotive industry. That is what was more important. So all the assembly right now is happening in Wai? Yes. Engine and everything is happening there. Entire bike comes in kits and we assemble it there. So what kind of investment is happening in Hyosung? It was not too expensive or cheap but just right. What kind of jump do you expect in the brand building and sales targets? That question should be answered by you guys. We are doing our part by investing and promotions. It’s the media which has to step in and make sure we are visible. We are part of shows and all. One way to ﬁnd out if the customer is noticing or not is by buying the bikes which that they are doing. The 250, a new launch, has made sure we have been noticed, 550 units on the road speaks for themselves. Now, what has happened to the ST7 and 650R is that since we are not marketing them much, when a customer comes to the showroom, he sees a ST7 and he realizes that we have a much bigger portfolio and he has many more options. In Mumbai, there have been instances when customers have come in for the GT250 and saw the naked, realized that they have to pay only a bit more to get it, agreed to fork out the extra and bought it. Our products complement each other and the entire national sales ﬁgures have seen it. That is the kind of jump we want. Plans for the future? We are looking on bringing in the 125 also and a 150. Given the kind of brand that Hyosung attracts, it will be viable for us to be present in the volumes segment as well. 150cc will be easy to

The GT650R

The GV650

ride as the power will be manageable. The 125cc engine is already there with Hyosung and I think we might get the 125 before the 150. But I don’t think it will happen before the end of 2015. Engine is one part but we don’t want to get the parts or anything from outside and want to do it here in India. Right now, it’s all in verbal and nothing is on paper. First we have to focus on getting the design and other aspects ready. If they have one ready, they call us and let us know, and then we’ll decide. Are you looking at taking technical help from Hyosung? Yes, we have to because they know the engine better. That’s not saying we don’t have qualiﬁed people here but at least for the ﬁrst couple of years, we will need them. After that, we don’t think we will require much assistance from them. Are you looking at setting

an R&D centre? Yes, we are. Initially it will be a small one particularly to understand the market and there wouldn’t be too much investment in the ﬁrst two years. Once we freeze on the 125 and start thinking more on the designs, frames and chassis, and then testing, then we will see how much more to invest. We also have to study how many changes to make to the existing assembly lines. In Korea, a 125 is not seen as a commuter and is more like a cruiser. What kind of bike are you looking at for India? In India, 125cc is seen as a commuter, a supersport position will not do as people will say that the riding position is not comfortable. We use bikes which we can take to work everyday. So the 125 here should be a comfortable one. I am looking at a crossover kind of thing for the 125 here. It shouldn’t be too tall and will be

having a straight seating position, not a cruiser but a commuter style. The overall ride and feel should be very comfortable as well. We will try to give as much features as possible. Probably a full digital speedometer and nice electronics on it. Rider and pillion comfort is primary. What are your immediate plans for the future? You are going to launch the GV650 now… We have the GV250, around March or April. After looking at the response for the Aquila, we can think about the 250. Will the design be like the Aquila Pro? No, it will be an entirely different design. It’s not similar to the Aquila. What are the plans for the GT250R? Will it follow similar lines of the new 650? I spoke to Korea but they don’t want to do it. The 250 is getting its own identity, why shake it? If anything will happen, it will be entirely different than the 650. But nothing is going to happen on it for at least a year. What is the vision for the Indian market? People are moving to fast motorcycles and there has been a change in the trend. What is your perspective? Market is evolving. If you see the premium bikes like those from Honda, they are doing great, not too well but still they manage to move one bike out of the showroom every month. Earlier selling Rs 8 lakh bikes was a task, now it’s not too hard. When we ﬁrst took Hyosung, we had about 58 ST7s with us and it was a task to sell them. Garware was successful and we had to take a strategy. The 650 is also getting good response because there are not too many bikes in this category. People upgrading from 150cc bikes like the Pulsar want something big and Bajaj isn’t able to offer it other than the Duke. The 220 Pulsar didn’t deliver on its promise and hence they have turned to us for the 250. This is how the shift happens and growth will continue.

You are already doing promotional activities like group rides and all. What else can we expect from you? Any plans to enter Motorsport? Motorsport is a little difﬁcult. F1 has just entered. First day, people were crazy, second day less crowds, third day, way too less admissions. I don’t think it is happening at all. Now that we are talking about MotoGP, Buddh is too big for it. We probably will have to create something new, which is not advisable. Instead we can try a tie-up with stunters like GhostRyders and those local promotions will be more beneficial than spending money on other activities. Customers and buyers can get a touch and feel of the bikes. It is powerful and can do stunts easily. If there is anything good coming up in marketing, we can consider for a one-off event. We don’t believe in brand ambassadors but maybe for one or two products, we may consider that too. HyRiders had 60 riders. Mumbai and Pune dealers were involved. Riders were doing stunts on the roads and all, which is dangerous but people were enjoying. There is a possession about the brand and biking is all about going in groups. This is the crowd mania that we wanted to create. We will do it in Delhi, Kolkata and even Bangalore. We might even do 3-4 rides in a year in each city. That’s what we have thought of. These rides give them a chance to explore their bikes. If we do plan it and people are ready to come, in terms of security, logistics and all, there might be one in a year. Day rides are more the game. Are you looking at any upgrades for the current models? Yes, they will be happening. The 650 Naked probably will have a styling update. I am pushing Hyosung to make high compression engines for the 650 and 700. But it will take some time. The current engines just have decent power and not too exceptional. They are working now on single cylinder 250cc engine and not much. In 2014, you might see those changes.

1 - 31 JANUARY 2013

Auto Monitor

INTERVIEW

107

Exhaust Effect Borg Warner India’s emission systems division is gearing up for the future when norms will be more stringent, and OEMs will have to turn to a supplier with EGR systems that comply with the norms. Sudhir Kumar Chawla speaks to Anand Mohan on the division’s plans. Can you update us on the emission systems arm of Borg Warner? After our joint venture with the Vikas group ended last year, we had to move from the Faridabad premises and move into a new one. The new plant we set up in Manesar is operational now. Which products do you manufacture at your new plant and can you tell us a little about them? We manufacture parts of the EGR (Exhaust Gas Recirculation) system like EGR coolers, EGR tubes, and this year we will begin

four years, we expect to be a `500 crore company. As of now, we are worth `100 crore. Are there any requirements that are India speciﬁc? In the Indian market, all the major players are present here. The difference here is in the volumes. What we produce here in thousands go into millions in western markets because there are fewer cars produced here. Requirement-wise, we are at Bharat Stage IV (BS4) in a handful of cities. In Europe, there are already talks of Euro 6 emission norms.

production of EGR valves as well. This will make us a completely localised EGR module manufacturer. That is our plan for this year. EGR coolers help reduce Nitrous Oxide (NOx) emissions, and our coolers provide better heat rejection with less soot and hydrocarbon build-up. These coolers are compact too, which means they offer better flexibility. We also produce a variety of EGR tubes for commercial and passenger vehicle applications. Can you tell us about your new facility at Manesar? It is an 8,000 sq.m. plant. It has a complete assembly facility to assemble EGR coolers, tubes, and valves. We also have designing competency available for EGR coolers, and we are also adding valve designing capabilities. Market growth in 2012 hasn’t been as high as the previous year, and this year is also expected to show average growth by industry standards. Adding more products to our portfolio and increasing our capabilities in India to match up to our global plans is the way forward for us. When do you plan to start production of EGR valves? This year, once we begin production we will have the whole module. This year we will set up the manufacturing facility and train our engineers abroad for designing competency. So in the next 12-18 months, we will not only have design capability but also validation as it is done in Europe. We will probably be the only company in India to have manufacturing, designing, and validation facility by next year end. We will be able to give that advantage to the customer to reach them faster at local costs. What is Borg Warner’s relationship with OEMs in India so far as emission systems are concerned? So far as passenger cars are concerned, we are one of the key suppliers for major OEMs with products in the diesel market. We have a good relationship with them, and are consistently increasing our clients. Since you are supplying to most of the major OEMs, what are your volumes like? We doubled the units we manufactured from a year ago, and this year we are planning to consolidate on the technology front and increase our capabilities. Do you undertake R&D responsibilities too or is it sourced from your headquarters in Michigan? We do not have a fixed product that can be fitted into any vehicle. We provide customised solutions to OEMs. Customers give us their requirements and we customise them to suit their specifications. What are your growth plans for India in the coming years? Last year we doubled sales. In the next three-

So what is Borg Warner doing towards the supply of products that cater to more stringent emission norms? We can’t really push for it, but we have the products available. It is up to the customer to fit their vehicles with systems that comply to the most stringent norms. If an OEM has to export its vehicles to Europe, it has to fit the vehicle with a Euro 5 compliant EGR system. Even in metros where it’s mandatory to be BS4 certified, the company will use our systems. So it is basically need-based. When this need increases, we will be ready to cater to that demand.

The technology that Borg Warner has in India right now is only for diesel vehicles, but globally, it is working on petrol cars too.

You supply EGR systems only for diesel vehicles in India as of now. Are there any plans for petrol cars too? The technolog y that Borg Warner has in India right now is only for diesel vehicles, but globally, we are working on petrol cars too. It is too early for India to work on petrol systems. But we have products for petrol vehicles too. The advantage Borg Warner has in India is that we already have products that work well for Euro 5 and Euro 6 norms. If a customer wants a solution for present and future export plans, we are able

to meet that from here. Any other product that you plan to add to your portfolio in the near future? Every product that we manufacture globally can be brought to India. It must be justiﬁed by volumes, that’s all. Do you also supply to CVs? We have the products but right now, the norms are at BS3 level. We are waiting for them to be raised to BS4 compliance. They will use our products in volumes only when the norms are forcing them to.

Auto Monitor

1 - 31 JANUARY 2013

F E AT U R E

108

Back To Basics Mahindra 2 Wheelers gets back to what Mahindra does well: Building homegrown vehicles for the masses. Anand Mohan

hen you fail, you learn from the mistakes you made and it motivates you to work even harder. More important are the lessons gleaned from failures that egg you to ensure that you do not commit them again. And that’s what Mahindra 2 Wheelers seem to have focused on. Meanwhile, the company at its R&D facility in Pune, together with a band of 200 engineers, is working meticulously on a range of products that it expects to launch in the Indian market in the coming year. The company has come a long way from the time when it launched its ﬁrst commuter motorcycle in 2010. The Stallio was then unveiled with much fanfare and plenty of hype. Alongside the Stallio stood the Mojo, Mahindra 2 Wheelers’ brand builder with a 300cc heart and a lot of muscle, which at the time wasn’t too common a sight in the Indian market. But when the Stallio hit the road, it was like waking up from a bad dream. A commuter bike, most of all, has to be hassle free. Something you don’t have to care too much about while it ferries you about town. Gearbox problems, quality issues and an overall poorly engineered bike made it a complete failure to the point that Mahindra had to recall the bike from its showrooms, stop production and

trudge back to the drawing board. The issues with the Stallio were many. For starters, the Chinese engine powering the Stallio was sub-standard, the parts were ﬂimsy and it was overall a half cooked attempt at penetrating the most important two-wheeler segment in India. Indeed, the motorcycle needed a complete rethink. “We realized that we need to do everything ourselves. First and foremost, we decided to set up our own research and development facility. And the second point was our decision to spend a lot of time and effort on building a strong manufacturing capability,” explains Viren Popli, Executive Vice President - Strategy and Market Development, Mahindra Two Wheelers. Acting on these steps, the company opened a R&D centre in Pune in July, 2012. It modernized its facility at Pithampur and went to work on re-engineering the Stallio. The new bike has now been rechristened the Pantero. PS Ashok, Senior Vice-President and Head of R&D, Mahindra 2 Wheelers, who has been instrumental in its resurrection says, “Except for the styling, for which we got a positive response, the motorcycle is completely new.” Going through the details, he emphasizes, “The

engine is all new, and the thermodynamics and the valve-train too are new. We have done a lot of CFD on the engine exhaust system. The frame has been completely reworked by us and, in the process we have dropped about 1.2kg.” The company has also utilized its other readily available facility, the Mahindra Research Valley in Chennai to test the NVH of the Pantero and the Centuro. The motor jointly developed by Engines Engineering, Mahindra and a Chinese company was axed. It was replaced by an engine developed completely in-house by Mahindra called

the MCI-5 for Micro Chip Ignited, 5-curves. This 4-stroke 106.7cc four cylinder powerplant is more powerful than its predecessor and Mahindra claims that the Pantero has better performance and is more fuel efﬁcient than the segment benchmark, the Hero Passion Pro. The Pantero has got an ARAI certiﬁed mileage of 79.4kpl.

Both the Pantero and the Centuro are essentially the same bikes with minor tweaks done for different positioning. The Centuro is a more ‘upmarket’ offering. The engine gets minor tweaks to its tuning that separates the two. Apart from this, the Centuro gets a few extra premium features like a digital instrument cluster with white backlighting, an economy and power riding mode indicator, a trip counter, a service due reminder, an odometer and a clock. An interesting feature is a car-like theft deterrent system with a LED torch equipped ﬂip open key. The company thinks that these premium features will position it higher than the rest in its segment. Mahindra 2 Wheelers is also looking at introducing a disc brake variant in the near future although it feels that this segment does not require it and price sensitivity is very high here. These two motorcycles will be launched in the coming weeks. It will be interesting to see how these products fare in the market but one thing is for sure, the offerings are far more competent than they initially were. Following the two commuter bikes will be another offering coming this year that Mahindra is tight lipped about. We assume it’s the Mojo that’s currently under testing since that is the only other motorcycle displayed to date. It has a DOHC liquid cooled fourvalve 292cc engine, something that’s new to the Indian market. It will be a crucial motorcycle for Mahindra as it’s their ﬁrst attempt at making it aspirational. Ideally, most manufacturers would prefer a top-down approach while entering a new market but Mahindra is going the other way round. The company believes that it is best at offering value products since that’s what it is known by.

With a good product in place, next come sales. The company is going to launch the two motorcycles in phases instead of a pan-India launch. With 600 touch points, it will be a wide enough network to cater to its customers. The target, like most Mahindra products have been, is the rural and semi-urban population where the Mahindra group is a household name. The motorcycle arm is expecting the positive brand image of the company’s other verticals will brush off on them for that initial penetration into the motorcycle market. At present, the Pithampur facility has a capacity of about one million units. Enough in the beginning for the entire Mahindra portfolio but the management believes that if the response is overwhelming and production needs to be ramped up, the current facility can be optimized to produce approximately three million units. In the commuter motorcycle segment, about six lakh units are sold on an average every month. There is a big enough pie to share of which Hero MotoCorp is hogging about half of it. Since the split with Honda, this share is falling and all other manufacturers are queuing up to grab a larger bite. Honda and Bajaj are already claiming stake at larger shares with new launches so Mahindra must be optimistic that there is enough room to co-exist in this segment. There is only one basic formula to get it right in the commuter segment. Build homegrown motorcycles that ﬁt like a glove to Indian tastes and sell it under an established brand. Mahindra 2 Wheelers has got the ﬁrst bit right, and for the latter, one can only hope that the company can leverage the respect and image earned by the Mahindra group.

Auto Monitor

1 - 31 JANUARY 2013

COLUMN

110

“Governments Are Spending Billions To Help Industry Develop Future Technologies” Vishnu Mathur

he automotive sector is one of the few success stories in Indian manufacturing, a fact which does us proud. Supported by a conducive and stable policy environment over the last decade, and driven by spirited Indian entrepreneurship, this sector has marched onward relentlessly to carve a niche for itself in the global arena. The last 15 years – not very long by industry standards – have seen the Indian automotive industry transform from an inward-looking and introverted approach to today’s unabashed displays of ambition and aspirations of becoming a signiﬁcant world player. However, today the industry is challenged by a slowing domestic as well as international market, rapidly evolving technology, and growing concerns about the environment, passenger safety, and energy security. If we have to sustain the shining progress made by the industry over the last decade and half, the industry structure as well as manufacturing policy will need to be ﬁne-tuned to respond to these challenges.

Building The Infrastructure Many of these challenges are linked to each other. Concerns about the environment, safety, and energy security pave the way for new and cleaner fuels, renewable energy sources, as well as technology to minimize and economise the use of traditional fuels. Safety considerations, on the other hand, often tend to work against the principles of fuel economy and reduced emissions. Changing customer preferences also result in shorter model life and frequent vehicle makeovers, which in turn affect manufacturing scales, and ultimately, proﬁtability. Our ability to address these challenges will determine how competitive our manufacturing remains in the coming decades. No manufacturing policy for the automotive industry can operate effectively in the absence of a national initiative for technology development. Governments all over the world are spending billions of dollars to help industry develop future technologies – electrics, hybrids, hydrogen fuel cells, etc. This is followed by support to make these technologies affordable to consumers through schemes which are more in the nature of investments for the future, and not just plain subsidies. Japan has committed over US $1.7 billion, USA $5 billion, France more than 3.5 billion euros, and China over US $20 billion. All these initiatives aim at developing appropriate electric technologies and a sizeable market, which only can establish the necessary economies of scale to make commercial manufacturing viable. India, although a latecomer in this area, has made a serious beginning in this respect with the

Frequent changes in policy, especially those which have been operating effectively, can disturb the rules of the game and the operation of companies. formation of the National Electric Mobility Mission by the Ministry of Heavy Industries and Public Enterprises. This Mission can become the springboard for ushering in sustainable mobility solutions based on electric and hybrid technologies for the people of India. The success of this national mission will depend on how effectively we can support technology development initiatives, local value addition, creation of the necessary infrastructure, and most importantly, making these new technologies affordable to the cost-sensitive Indian customer. This calls for the allocation of necessary funds and concerted action by all stakeholders, including industry and government. For the small and mediumsized enterprises (SMEs) in the auto-component supply chain, development of product and process technologies is critical for sustaining competitive advantage. Such technologies can either be developed inhouse or acquired. Most SMEs and even many large companies may not have the resources to develop state-of-the-art technologies in-house. For them, acquiring such technologies or outsourcing research and development (R&D) work may be the most viable option. The government should consider creating a technology development and acquisition fund to assist Indian companies in this regard. For companies which choose to outsource R&D, the beneﬁts of weighted tax deduction on R&D expenditure should be extended to outsourced R&D, irrespective of whether such R&D is carried out in India or abroad. The objective should be to assist Indian companies to build and own intellectual property rights (IPR), without constraining our R&D to the limits of domestic capability alone. Any manufacturing policy needs to clearly differentiate between local assembly and local manufacturing. To achieve the latter, which will create new investments and employment opportunities, the policy needs to holistically embrace and impact the entire supply chain, so that real value addition and employment takes place domestically. This is one of the most challenging tasks, since local value addition cannot be mandated by policy but has to be encouraged by leveraging local competitive advantage, especially in the SME sector, which will largely cover the auto component Tier 2 and 3 suppliers. The role of a prudent ﬁscal and taxation policy which

Vishnu Mathur, Director General, SIAM

favours local investments, manufacturing, and value addition is also critical. In the automotive sector, India has followed a very clear policy of allowing free market access, but through the route of “investment” rather than “trade”. We are perhaps the only developing country in the world with serious ambitions in automotive manufacturing which has allowed 100% FDI on an automatic basis in vehicle and component manufactur-

No manufacturing policy for the automotive industry can operate effectively in the absence of a national initiative for technology development. ing, while staying away from the concept of free trade. Most other developing countries require local partners as a mandatory requirement. This policy has reaped good dividends and has allowed large investments in automotive manufacturing to ﬂow into the country. Allowing free market access through the trade route at this stage could undo a lot of the good that has been achieved over the last decade, as it could create needless disparities in the domestic com-

petitive scenario and therefore discourage new investments in automotive manufacturing.

Building The Skills Direct employment in the automotive industry is 18 million. Shortage of skills and skilled manpower is already being felt in the automotive sector. The long automotive supply chain, starting from component manufacturing and ending with sales and after-sales service, requires diverse skills at each stage of the chain. This demand is further complemented by the support sectors like insurance, banking, logistics, etc. The Automotive Mission Plan estimates that the requirement of direct and indirect manpower till 2016 will be an additional 25 million. The National Skill Development Corporation (NSDC) is a great and timely initiative. The government and the industry, in their own interests, need to support the NSDC by setting up Sectoral Skill Development Councils. The Automotive sector has been ﬁrst off the mark with the setting up of the Automotive Skills Development Council (ASDC), which is a joint initiative of ACMA, FADA and SIAM. The sentiment in manufacturing is impacted by the stability of conducive policies, particularly trade, investment, and ﬁscal policies. Frequent changes in policy, especially those which have been operating effectively,

can disturb the rules of the game and the operation of companies. Some recent decisions and discussions in respect of excise duty valuation, additional taxes and duties on diesel technology, etc., tend to vitiate the atmosphere for manufacturing. No business can invest conﬁdently if the basic rules of the game are not consistently followed. Investments will normally ﬂow to the most investment friendly destination. Hence, the trade, investment and fiscal policy environment needs to remain conducive to the business of manufacturing on a sustained basis. Periodic benchmarking of our policy environment with other countries competing for the same investments may be worth considering. The National Manufacturing Policy announced by the Ministry of Industry and Commerce in 2011 augurs well for Indian manufacturing as a whole. It holistically recognizes and addresses most of the above issues. The manufacturing sector, particularly the automotive industry, looks forward to seeing this policy being made operational on the ground as soon as possible, and to develop synergies between the National Manufacturing Policy and the Automotive Mission Plan 2016, as well as the National Mission on Electric and Hybrid Mobility, for a robust and healthy future growth of the automotive sector.

1 - 31 JANUARY 2013

Auto Monitor

F E AT U R E

113

Turning The Page That’s what Tata Motors is doing now. After seeing the highs and lows of the automotive industry in their decade and a half as a car manufacturer, the company is going through a lull before a new generation of Tata vehicles hit the market. Anand Mohan

ata trucks have plied our roads since 1954 and that’s what Tata Motors were known for till the early 90s, when the company launched their ﬁrst passenger car, the Sierra. It was still a small operation, but after the Indica turned their fortunes, there was no looking back. At least, that’s what it felt like back then. From the glory of the new millennium to the present, it’s been an eventful journey. Eventful to the point that at present the model range has nothing exciting to boast about, and mid-cycle refreshes are forced onto the market to keep the brand fresh in customer minds. So what brought Tata Motors to

ber one on the list, followed by a CNG and diesel versions.” It’s a bit of an irony for Tata Motors. When the company bought out Jaguar Land Rover (JLR) in June 2008, the British carmaker was in serious debt. Tata Motors took a Rs 2,400 crore loan to turn JLR around. Now, it’s the British carmaker who is leading the group’s proﬁts and masking the underperforming Indian passenger car operations.

Sales A Concern Except for the Ace, Magic, and the Sumo Gold, every model is selling less than it did. Not a single Aria was produced in December, while Nano’s production is running at a meagre 26 percent of the 2.5 lakh capacity at the Sanand plant. Indica and Indigo CS sales have fallen by about 20 percent,

Nothing has caused Tata Motors as much heartache in recent times as the initial failure of the Nano. this state? President of Tata Motors Passenger Car unit, Ranjit Yadav, agrees that the passenger car market has been challenging for Tata Motors. Much of the growth in the market has come from new models. “We realize that, and that is why we are going to have two new models this quarter to realize their beneﬁts.”

The Nano Scope Nothing has caused Tata Motors as much heartache in recent times as the initial failure of the Nano, not even the single-digit sales of its most premium product, the Aria. Initial failure because unlike any other auto product in India, the Nano has a long shelf life. There is no other four-wheeler in the market at this price point, and there will possibly never be one, so the Nano is going to be around for a long time. The company has a brilliant product but a weak strategy. It is beginning to reach its target customers only now, but the cost of petrol and a small fuel tank (thus a small range) are keeping it back. Nano owners do not want to visit a fuel station and refuel as often as they are currently required to. That’s Tata Motors’ nearest goal: making the Nano more affordable than it already is. And here is where the company begins a new chapter in the passenger car business. Tata Motors top management aren’t giving any indications on the launch of CNG and diesel versions of the Nano, but there has been plenty of buzz in the industry of a launch sometime this year. This could be a signiﬁcant model for the passenger car business. We revealed in the October issue of Auto Monitor how Tata Motors were developing two new sub four-metre cars, a mini-Aria and a mini Sumo Gold. These vehicles are still some time away, if they make it to production, and an all-new product is at least a year away from production. The Megapixel concept showcased at the Geneva Motor Show last March looks close to a production version. Geneva being one of Tata’s pet locations, expect something exciting this year too, probably a next generation Indica, Nano, or something else in the family design language.

Back To Square One But despite a lot of speculation about new products from Tata Motors, the focus will remain on the Nano till an all-new vehicle is launched. Tata Motors is acting on customer feedback to improve the Nano and deliver what they want. “If a customer needs something, we have to provide it”, says Neeraj Garg, VP. Out of the top three customer demands from the Nano, Garg said, “Power steering is num-

and only 110 Indigos and Manzas were sold last month. That said, in the ﬁrst three quarters of the year, Tata Motors was still the third largest passenger car manufacturer in India, with a narrow lead over Mahindra. Mahindra sales, though, have grown by about 31 percent, while Tata sales fell by four percent.

Gearing Up After the Aria, no all-new Tata has been launched. Unlike manufacturers who can introduce international models into India with a few tweaks to suit our conditions, Tata Motors does not have that luxury. All new models have to be developed in-house. That is why the company needs to plan its future for the coming decade or so by developing a strong team for its next

generation of models. Former GM head, Karl Slym, joined the company last year. Tata then roped in Ranjit Yadav as the president of the passenger car unit. Yadav was the country head for Samsung India, and knows a thing or two about building a strong brand and portfolio. Then there’s their VP Neeraj Garg, who has done toplevel marketing and sales stints at VW and Nissan India. Backstage, there’s Tim Leverton, the head of research and development, instrumental in creating new products for the Tata stable. Leverton, who has headed R&D at BMW AG, revealed last month that Tata Motors is developing a mini SUV on the Vista platform. The way Mahindra is performing right now, Tata Motors

Tata Motors needs to plan its future for the coming decade by developing a strong team for its next gen models. will concede the lead sooner rather than later. The question is, when signs of a weak model portfolio were already starting to show by 2010, why didn’t the company act sooner? Tata Motors is holding its cards close to the chest. There have been no announcements, and nothing major expected in the near future. There’s a sense that the market is getting impatient. Maybe it is time you showed us your hand, Tata Motors!

Auto Monitor

114

1 - 31 JANUARY 2013

COLUMN

Driving Cost Efﬁciency Inﬂation combined with a stagnant market has sent Indian automobile manufacturers on a cost cutting drive. Rajiv Singh of PricewaterhouseCoopers offers innovative methods for reducing raw material cost and improving the bottom line.

Rajeev Singh, Executive Director - Operations Consulting, PwC India

he Indian automobile industr y is currently going through one of its toughest phases, and has been hit on multiple fronts at the same time – the market size is not growing, prices are almost stagnant, high inf lation is leading to increase in input costs, competition is increasing every day, interest rates are high, overall market sentiment continues to remain low, consumers are becoming very choosy and are demanding new products and offerings. The CEO has many battles to fight! This article is about one such battle – the battle against cost. While every OEM has many cost heads, raw material is one of the largest cost bases, and constitutes almost two-thirds of the sales revenue. Hence any battle against cost will have to be predominantly focused around raw material. While I have been lucky to have co-led a number of holistic cost reduction initiatives as a consultant across different industries including automobiles, focusing on all cost heads, this article is about the innovative ways in which OEMs are driving raw material cost reduction, and some of the elements on the softer side which are critical for the success of such initiatives.

While every OEM has many cost heads, raw material is one of the largest cost bases, and constitutes almost two-thirds of the sales revenue. Procurement Efficiency & Design Efficiency Traditionally in any OEM, raw material cost is considered to be the responsibility of the materials function. This function faces the dilemma of sourcing material at the lowest cost, while ensuring a high service level for the manufacturing munction, to ensure zero stoppages on the line. OEMs found a solution by breaking this function into two separate cells: the strategic sourcing cell, which focuses on identifying the right source and fixing the prices, and the procurement cell, which focuses on placing the daily/week ly schedules and chasing the material. Cost thus became the responsibility of the strategic sourcing cell, and this has led to multiple gains and helped OEMs in cutting down costs. The strategic

sourcing cell focused on opportunities for low-cost sourcing, rationalizing the supplier base, consolidating the demand, changing the share of business, discovering the true price by applying principles of first principle costing/zero-based costing, getting into third party agreements with the supplier’s supplier and so on. These initiatives led to real gains and helped reduce material cost by 4-6 percent year-on-year. This is what I call improving procurement efficiency. But over time, OEMs are finding it tough to sustain this year-on-year cost reduction. They seem to have exhausted all the levers available to them for improving procurement efficiency. This is where some of the leading organizations have begun to focus on what I call design efficiency. A large part of the cost is actually hidden in the way the product is designed, configured, and manufactured. While the strategic sourcing cell focuses on reducing the cost at the parts level and improves procurement efficiency, design efficiency is improved through focus on the aggregate level. This thus calls for a very different way of working.

Contd. on Pg 116

Auto Monitor

COLUMN

116

Driving Cost......... Contd. from Pg 114 Traditionally, design has been considered the responsibility of R&D, and once the new product is launched the R&D team moves on to the next new product. However, the need of the hour is to split the R&D team into two cells: while one cell focuses on designing new products, the other cell focuses on reducing the cost of existing products by improving design efﬁciency. However, this cell will have to be far more crossfunctional in nature. It will have to have members from not only the R&D team, but also from the strategic sourcing cell, quality assurance, manufacturing, and marketing. While one may argue and

A large part of the cost is actually hidden in the way the product is designed, configured, and manufactured.

1 - 31 JANUARY 2013

would want to design the product right the first time, the reality is that in the new product development phase, the focus is to get the development done in the right time. Further, there are many improvements happening at a far more rapid pace in manufacturing technology and metallurgy, thus forcing OEMs to reconsider what was designed even a couple of years previously. This is the only way the OEM will be able to keep the price of the end-product constant, despite inflation, till the end of the product life-cycle. Interestingly, while Procurement Efficiency gave a benefit of 4-6 percent reduction in cost, Design Efficiency holds a potential of reducing raw material cost by 8-10 percent. This would have a significant impact on the bottom line. However, achieving a 10% reduction in raw material cost is not easy!

The Vicious Circle of Poor Performance Whenever the task of reducing raw material cost by 10

percent is given to the team, the ﬁrst reaction is one of disbelief. The team comes up with all kinds of assumptions beginning with the original rationale for a particular design, high redevelopment time, little control on the suppliers, non-acceptance by the market, fear of failure, risk of increasing warranty costs, etc. Soon these assumptions give way to a self-fulﬁlling prophecy and there is no action taken to reduce the costs. Since cost is not reduced, the pressure on the bottom line continues, and the organization gets drawn into a vicious circle of poor performance. The only way to break this vicious circle is by rigorously identifying cost reduction opportunities. Today organizations are struggling to identify opportunities, but once they know the opportunities then effort is put in, people are engaged in improvement teams, and results are accomplished. The organization is thus able to break the vicious circle and gain cost leadership. However, the beginning happens with the rigour. Rigour can be bought in by using the right tools and techniques for driving design

efficiency. Rigour is required to improve design efficiency of parts designed not only by the OEMs but also the ones designed by some of the key Tier 1 suppliers supplying what are known as proprietary parts. In a typical automobile, while almost 50 percent of the raw material is designed by OEMs, there is another 50 percent for which the design is owned by the proprietary part manufacturers. This adds to the complexity of driving design efficiency across the entire spend base. The two spend bases need to be dealt with differently, and innovative approaches are required. Thus raw material cost reduction is no longer only about procurement efficiency improvement but also design efficiency improvement.

Cost Efficiency = Procurement Efficiency X Design Efficiency W hile achieving 8-10 percent cost reduction calls for i n novat ive met hodolog ies, and different tools and techniques, it’s not only about the science. Making these initiatives successful is an art. That’s the reason why multiple

While procurement efficiency gave a benefit of 4-6 percent reduction in cost, design efficiency holds a potential of reducing raw material cost by 8-10 percent. organizations undertake these initiatives. However, only a few of them are successful in driving costs down. While driving these initiatives, the leadership needs to focus on other aspects such as rewards and recognition, linkage with the Key Result A reas (K R As), governa nce mechanism, designing crossfunctional team structures, and creating an environment where members feel comfortable to come up with innovative ideas. To summarize, although the Indian automobile industry is going through a tough time, these tough times have also taught the industry to become more cost-efﬁcient. And that will go a long way in helping it stay competitive in the future.

India Automation Technology Fair 2013

he India Automation Technology Fair (IATF) 2013 is scheduled to take place from 1-3 February 2013 at Bombay Exhibition Centre, Mumbai, India. The event will witness participation from over 50 companies, and over 7,000 business professionals comprising CEOs, plant heads, CIOs, engineering and quality heads, process and safety heads, and senior technical professionals. Some of the key exhibitors who will showcase their latest technologies include Siemens, Larsen & Toubro, Emerson, Rockwell, B & R Automation, Hitachi, Kuka, Turck, Chemtrols, Forbes Marshall, Baumer and Mitsubishi. Companies will showcase emerging technologies in electrical automation, mechanical automation, robotics, machine vision, assembly and material handling systems, sensors, controllers, actuators, communication devices, HMI, software simulation, training, and a host of interface and supporting sub-systems that will enhance the effectiveness of automation investment. Concurrent activities at the event include a novel “Innovation Exchange” and a Technical Workshop that will be conducted by Foundation Fieldbus India Committee, Proﬁbus & Proﬁnet Association, India Smart Grid Forum and high powered CEO Round Tables, covering various industry verticals. The Innovation Exchange, touted as one of the highlights of IATF 2013, will be a platform for technical discussions, expert talks, and company presentations. The event is jointly organized by Automation Industry Association (AIA) and Messe München International India (MMI India). “Through IATF we intend to ignite the passion for continuous innovation amongst the various stakeholders of the automation sector. The event will showcase state-of-the-art automation technologies and provide a networking platform for visitors, especially small and medium enterprises, to experience world-class automation solutions, acting like a catalyst to encourage innovation, boost productivity and enhance global competitiveness,” says Mr. Nandakumar, President, AIA. For more details and to register, see the IATF website -- www.iatf.in.

Intergrated INNOVATION QUALITY

DELIVERY

TESTING

DEVELOPMENT

Manufacturing DESIGN

SATISFACTION

DURABILITY

COST

APPLICATIONS Three Wheelers Passenger Cars Light Commercial Vehicles Heavy Commercial Vehicles Buses

Auto Monitor

1 - 31 JANUARY 2013

COLUMN

120

Output vs Development New product development can turn into a nightmare with narrow lead times, concurrent work, resource switch, and pressure from the OEMs, who in turn have their own targets to meet. Satyashri Mohanty of Vector Consulting offers his insights into the problem, and suggests solutions.

he number of households with two-wheeler and four-wheeler ownership has doubled in the last decade, and is growing – an indication of the importance of the Indian auto market. Consequently, many original equipment manufacturers (OEMs) have entered the Indian market. With growing competition, OEMs have found that introducing new models is key to drawing trafﬁc to their showrooms. And so, faster rollout of new models and variants is on the agenda of most OEMs.

The OEMs’ Approach While there is mounting pressure to reduce lead time and improve output of new product development projects, the delivery and lead times of critical tooling and equipment vendors has not improved. Where lead time capability has remained the same, and there is a need to reduce it, most OEMs try to compensate by including “concurrent working” in their projects. Most concurrent working is left unplanned in order to make up for delays in previous stages. At times, the design may not have been ﬁnalized, but vendor work would have started, leading to rework. Since most new product development requires stages of integration of work across vendors, the level of rework cascades to multiple components and their associated tooling and supporting machines. The problem is aggravated when resources are shared across projects. When there is incomplete handover (unplanned concurrency) and resource switch across projects, there is information loss as resources lose track of pending work, creating more rework. Some OEMs have been able to limit the problem using dedicated cross-functional teams for a project.

Effect On Auto Components Vendors Component vendors usually do not dedicate cross-functional teams for each project. Hence, when they resort to unplanned concurrency, the damage is still bigger. In every new product development (NPD) project of OEMs, there are parts designed by vendors. These designs supplied by vendors need to be integrated by checking the validity of assembly and cost targets. This process involves several iterations to get the combination right. As a result, there are interruptions and variability between phases of development projects, thus resulting in many projects being open at the vendor end. It is not uncommon to have projects that suddenly become urgent, with OEMs putting pressure for expediting. Such requests create havoc on other projects with the com-

Satyashri Mohanty, Founding Director of Vector Consulting Group

With growing competition, OEMs have found that introducing new models is key to drawing traffic to their showrooms. ponent vendor. And priority is often determined by who shouts the loudest! Abundant multitasking, violation of priority, and several simultaneously open projects result in de-synchronization of different parts, thus delaying the completion of a project. This forces OEMs to expedite and change priorities. Towards the end of a project, vendors begin running out of time and initiate work without resolving all the problems related to production and quality. Production takes over components which have not stabilized, potentially wasting production capacity. The vendor also takes a huge risk on warranty costs due to pending production and quality issues in the components supplied to OEMs. Continuous pressure to deliver the next project keeps many such nonstabilized components in the production system, where the project work is still not perfectly completed. Is there a light at the end of the tunnel? At ﬁrst sight, there seems no hope for component suppliers. Does the way the suppliers manage their own projects, under the above circumstances, deteriorate the situation further?

The Things Auto Components Companies Can’t Control Auto components companies cannot inﬂuence the interruption time between the phases of a project. There will also be requests for rework in some phases, which are primarily triggered by the OEMs’ way of working. An auto component vendor should be prepared to meet the urgent requirements of auto OEMs without falling into the trap of frequent priority clashes and associated multitasking.

The Things Auto Components Companies Can Control Auto component vendors can drastically reduce the lead time of independent work packets under their control. They also can cut down the queue of waiting work packets dramatically by improving the flow, and always maintain the queue at that level. The above objectives require an ability to produce more than the current levels with the same set of resources, by eliminating significant wastage of time and capacity in NPD projects. Some of the sources of significant capacity wastage include setup losses and rework caused by frequent switches between several tasks by the resources.

auto component company and from managers in the NPD environment of the OEMs. Therefore, the first step to eliminate the switching cost due to frequent priority changes is to take all open independent work packets and prioritize them in the form of a queue in front of the key resource groups. Based on capacity, we have to limit the number of open work packets at any point in time. All other work packets have to be frozen. Once one work packet is complete, the next one from the frozen list enters the active zone. This will substantially reduce poor multitasking and de-synchronization. The ones outside the active zone can be shuffled for priority issues, but the ones inside have to be finished to take the next one in. A master scheduler has to be appointed to ensure that such queuing is set in place. Every stakeholder of the company has to understand that false priority signals are not generated, and priority is as agreed upon by the entire organization. Once this step is implemented, the output goes up significantly and within no time, the pending load from waiting or the inactive list starts dropping dramatically. As the backlog reduces, the pressure to manage OEMs’ urgency reduces dramatically.

Prioritising Work Packets

The Full-kit Rule

W hen there are frequent priority shifts based on the perceived level of urgency, the unwritten rule for getting the work done also includes managing perceptions. In such an environment, there are many requests with false signals of urgency both from within the

To avoid interruption in active work packets, it is vital to implement a full-kit rule simultaneously, where the resources are allowed to start work on a particular work packet only if the full kit necessary to start and complete that work packet is in place in advance. At the same

time, the criteria to end the work are defined. The concurrency, if any, is predefined and not violated in execution at all. The resources preparing the upcoming work packet should also be separate, so that multitasking does not creep in just for the sake of ensuring a full kit. Maintaining a reduced Work-InProgress (WIP) rule releases the capacity to create a separate preparatory team. Once these two rules are implemented, system chaos reduces drastically and excess capacit y is revea led. The above-mentioned two steps usually yield an output jump of 3–4 times of the original output. The queue of the frozen work packets in front of most of the resources shrinks quickly, followed by the output rate exceeding the inflow rate. The steps require the entire management (marketing, engineering, and top management) of component vendors to set a clear priority signal along with WIP rules. In the transition, this might appear difficult due to the vicious loop of delays and associated expediting and further delays. But once the WIP control and priority rules are set in place, the output expands and lead time shrinks. Further, as the backlog comes down, the delays get eliminated, and so do the expediting requests. Satyashri Mohanty is the founding Director of Vector Consulting Group (www.vectorconsulting.in). Vector Consulting Group is the leader in the Theory of Constraints (TOC) consulting space in India. Satyashri can be reached at: satya@vectorconsulting.in

Auto Monitor

1 - 31 JANUARY 2013

S I A M D ATA

124

PRODUCTION AND SALES FLASH REPORT FOR DECEMBER 2012 Category Segment/Subsegment Manufacturer.

Production For the month of December 2011

2012

Cumulative April-December 11-12

12-13

Source: SIAM

Domestic Sales For the month of Cumulative December April-December 2011

I Passenger Vehicles (PVs) A : Passengers Cars - Upto 5 Seats Micro: Seats Upto-4, Length Normally <3200 mm, Body Style-Hatchback, Engine Displacement Normally upto 0.8 Litre Regular: Tata Motors Ltd (Nano) 8,003 1,339 48,500 49,199 7,466 Total 8,003 1,339 48,500 49,199 7,466 Micro: Seats Upto-5, Length Normally <3600 mm, Body Style-Hatchback, Engine Displacement Normally upto 1.0 Litre Regular: General Motors India Pvt Ltd (Spark) 1,240 505 18,804 5,947 1,365 Hyundai Motors India Ltd(Santro) 13,270 13,220 115,046 107,668 11,138 Maruti Suzuki India Ltd (M800, Alto,Wagon R,A-Star) 51,490 40,957 417,948 362,637 38,593 Total 66,000 54,682 551,798 476,252 51,096 Compact: Seats Upto-5, Length Normally 3600-4000 mm, Body Style-Sedan/Estate/Hatch/Notchback, Engine Displacement Normally upto 1.4 Litre Regular: Fiat India Automobiles Pvt Ltd (Palio, Grande Punto) 252 4 8,510 4,930 270 Ford india Pvt Ltd (Figo ) 7,175 5,324 68,110 68,230 4,114 General Motors India Pvt Ltd (Beat, U-VA) 4,374 2,916 37,068 39,183 4,828 Honda Siel Cars India ltd (Jazz, Brio) 240 2,641 4,430 30,910 327 Hyundai Motors India Ltd(Getz, i10, i20) 29,753 34,124 289,750 296,547 13,723 Maruti Suzuki India Ltd (Swift, Ritz, Estilo) 21,463 22,750 161,040 184,742 20,653 Nissan Motor India Pvt Ltd (Micra) 8,521 7,128 87,932 61,620 1,036 Renault India Pvt Ltd (Pulse) 111 56 111 3,883 0 SkodaAuto india p.ltd ( Fabia ) 958 246 12,999 2,912 1,471 Tata Motors Ltd (Indica,Indica Vista, Indigo CS) 13,135 5,678 121,921 91,694 14,847 Toyota Kirloskar Motor Pvt Ltd (Liva) 4,723 3,590 20,803 30,751 4,399 Volkswagen India Pvt Ltd (Polo) 1,749 2,202 30,098 27,050 2,835 Total 92,454 86,659 842,772 842,452 68,503 Super Compact: Seats Upto-5, Length Normally 4000-4250 mm, Body Style-Sedan/Estate/Hatch/Notchback, Engine Displacement Normally upto 1.6 Litre Regular: Hyundai Motors India Ltd (Accent) 2,187 2,900 27,747 24,537 575 Mahindra & Mahindra Ltd (Verito) 1,033 900 13,213 11,832 1,263 Maruti Suzuki India Ltd (Dzire) 9,587 15,989 70,556 126,504 9,189 Toyota Kirloskar Motor Pvt Ltd (Etios-Sedan) 5,053 2,733 35,829 34,462 5,446 Total 17,860 22,522 147,345 197,335 16,474 Super Compact: Seats Upto-5, Length Normally 4000-4250 mm, Body Style-Sedan/Estate/Hatch/Notchback, Engine Displacement Normally upto 1.6 Litre Specialty: Volkswagen India Pvt Ltd (Beetle) 0 0 0 0 1 Total 0 0 0 0 1 Mid-Size: Seats Upto-5, Length Normally 4250-4500 mm, Body Style-Sedan/Estate/Hatch/Notchback, Engine Displacement Normally upto 1.6 Litre Regular: Ford India Pvt Ltd (Ford ikon,Fiesta Classic) 1,109 1,373 15,939 13,788 1,748 General Motors India Pvt Ltd (Aveo) 0 0 923 18 125 Hindustan Motors Ltd (Lancer) 0 0 259 24 29 Honda Siel Cars India Ltd (City) 559 1,845 20,329 22,141 600 Hyundai Motors India Ltd (Verna) 3,863 3,850 36,932 45,773 4,002 Maruti Suzuki India Ltd (SX4) 720 12 13,433 4,337 843 Nissan Motor India pvt Ltd (Sunny) 915 3,835 4,719 43,664 533 Renault India Pvt Ltd (Scala) 0 28 0 3,423 0 Skoda Auto India pvt Ltd (Rapid) 1,246 1,506 2,551 16,886 1,296 Tata Motors Ltd (Indigo, Manza) 1,367 156 13,666 6,966 1,348 Volkswagen India Pvt Ltd (Vento) 1,011 1,504 27,109 16,666 2,437 Specialty: Hindustan Motors Ltd (Ambassador) 125 267 1,722 1,718 102 Total 10,915 14,376 137,582 175,404 13,063 Executive: Seats Upto-5, Length Normally 4500-4700 mm, Body Style-Sedan/Estate/Hatch/Notchback, Engine Displacement Normally upto 2.0 Litre Regular: Fiat India Automobiles Pvt Ltd (Linea) 141 7 3,284 1,102 231 General Motors India Pvt Ltd (Optra, Cruze) 274 39 8,468 3,605 711 Hindustan Motors Ltd (Cedia sports) 0 1 52 61 1 Honda Siel Cars India Ltd (Civic) 300 0 2,040 420 68 Hyundai Motor India Ltd (Kizashi) 0 350 0 3,508 0 Maruti Suzuki India Ltd (Kizashi) 0 0 0 0 51 Renault India Pvt Ltd (Renault FLUENCE) 81 0 1,212 877 143 Skoda Auto India Pvt Ltd (Laura) 290 70 4,625 2,044 375 Toyota Kirloskar Motor Pvt Ltd (Corolla ) 220 300 6,171 4,405 257 Volkswagen India Pvt Ltd (Jetta) 135 455 1,858 3,310 214 Specialty: Hindustan Motors Ltd(Lancer EVO X) 0 0 4 0 4 Total 1,441 1,222 27,714 19,332 2,055 Premium: Seats Upto-5, Length Normally 4700-5000 mm, Body Style-Sedan/Estate/Hatch/Notchback, Engine Displacement Normally upto 3.0 Litre Regular: Honda Siel Cars India Ltd ( Accord ) 121 150 1,140 210 61 Hyundai Motors India Ltd ( Sonata ) 5 10 106 250 11 Nissan Motor India Pvt Ltd (Teana) 0 0 128 24 9 Skoda Auto India Pvt Ltd (Superb) 66 30 2,832 1,269 470 Toyota Kirloskar Motor Pvt Ltd (Camry ) 0 30 0 303 0 Volkswagen India Pvt Ltd (Passat) 225 0 1,147 955 111 Specialty: Toyota Kirloskar Motor Pvt Ltd (Prius ) 0 0 0 0 1 Total 417 220 5,353 3,011 663 Luxury: Seats Upto-5, Length Normally Over 5000 mm, Body Style-Sedan/Estate/Hatch/Notchback, Engine Displacement Normally upto 5.0 Litre Regular: BMW india pvt Ltd (BMW - All Models) 1,177 0 8,049 5,860 679 Mercedes-Benz India Pvt Ltd ( S-Class Mercedes-Benz All Models) 158 278 5,089 3,883 729 Tata-JLR (Tata-JLR All Models) 0 43 0 516 0 Volkswagen - Audi (A8, Audi-All Models) 0 0 0 0 519 Volkswagen India Pvt Ltd (Phaeton) 0 0 0 8 0 Volkswagen-Porsche (Porche-All Models) 0 0 0 0 0 Total 1,335 321 13,138 10,267 1,927 Coupe: Roadster - 2 Doors; 2/4 seater, retractable/firm roof Regular: Nissan Motor India Pvt Ltd (370Z) 0 0 0 0 0 Total 0 0 0 0 0 Total Passenger Car 198,425 181,341 1,774,202 1,773,252 161,247 B: Utility Vehicles (Uvs) B: Utility Vehicles / Sports Utillty Vehicles; 2x4 or 4x4 offroad capability; Generally ladder on frame; 2 box ; 5 seats or more but upto 10 Seats UV1: Length<4400 mm, Price Upto Rs. 15 Lakh Force Motors Ltd (Trax-GAMA) 37 46 290 237 28 Mahindra & Mahindra Ltd (Bolero, ST) 8,457 13,029 67,753 91,524 8,311 Maruti Suzuki India Ltd (Gypsy, Ertiga) 62 5,426 4,129 59,629 238 Nissan Motor India Pvt Ltd(EVALIA) 0 425 0 1,365 0 Renault India Pvt Ltd (Duster) 0 4,230 0 23,771 0 Tata Motors Ltd (Sumo) 2,944 1,436 15,055 23,181 3,184 Total 11,500 24,592 87,227 199,707 11,761 UV2: Length<4400 - 4700 mm, Price Upto Rs. 15 Lakh General Motors India Pvt Ltd (Tavera) 1,932 930 16,397 15,073 1,917 International Cars & Motors Ltd (Rhino) 30 0 365 259 30 Mahindra & Mahindra Ltd (Scorpio, Bolero, HT, Xuv500, Xylo) 10,008 11,469 80,944 108,932 9,767 Tata Motors Ltd (Sumo Grande, Safari) 1,020 1,178 13,034 9,964 1,212 Toyota Kirloskar Motor Pvt Ltd (Innova) 5,946 7,024 38,580 57,005 5,020 Total 18,936 20,601 149,320 191,233 17,946 UV3: Length>4700 mm, Price Upto Rs. 15 Lakh Force Motors Ltd (Trax, Force One) 482 320 3,129 3,460 413 Tata Motors Ltd (Aria, Xenon) 220 0 2,681 1,138 251 Total 702 320 5,810 4,598 664 UV4: Price Between Rs. 15 to 25Lakh Ford India Pvt Ltd (Endeavour) 75 180 1,980 1,425 117 General Motors India Pvt Ltd (Captiva) 0 0 0 0 47 Hindustan Motors Ltd (Pajero, Outlander) 111 211 1,541 1,355 95 Honda Siel Cars India Ltd (CRV) 0 0 0 0 16 Hyundai Motors India Ltd (Santa Fe) 125 50 1,204 552 67 Mahindra & Mahindra Ltd (Rexton) 0 301 0 572 0 Maruti Suzuki India Ltd (Vitara) 0 0 0 0 0 Nissan Motor India Pvt Ltd (X-Trail) 0 0 0 0 18 Renault India Pvt Ltd (Koleos) 7 1 264 237 39 Skoda Auto India Pvt Ltd (Yeti) 174 34 1,769 466 326 Toyota Kirloskar Motor Pvt Ltd (Fortuner) 850 1,430 7,887 11,608 813 Total 1,342 2,207 14,645 16,215 1,538 UV5: Price > Rs. 25Lakh Hindustan Motors Ltd (Mentero) 2 0 57 15 2 Toyota Kirloskar Motor Pvt Ltd (LC,Prado) 0 0 0 0 12 Volkswagen India Pvt Ltd (Touareg) 0 0 0 0 2 Total 2 0 57 15 16 Total Utillity Vehicles (Uvs) 32,482 47,720 257,059 411,768 31,925 C: Vans; Generally 1 or 1.5 box; seats upto 5 to 10 V1: Hard tops mainly used for personal transport, Price Upto Rs. 10 Lakh Mahindra & Mahindra Ltd (Maxximo Minivan VX) 0 1,202 6 6,883 0 Maruti Suzuki India Ltd (Omini,Ecco) 6,894 1,453 107,742 85,892 7,908 Tata Motors Ltd (Venture) 613 4 5,397 2,358 608 Total 7,507 2,659 113,145 95,133 8,516 V2: Soft tops mainly used as Maxi Cabs, Price Upto Rs. 10 Lakh Force Motors Ltd (Trip) 0 0 100 0 1 Mahindra & Mahindra Ltd (Gio, Maxximo Mini Van) 2,597 1,616 18,855 17,676 2,199 Tata Motors Ltd (Magic, lris) 5,350 10,625 39,334 64,257 5,348 Total 7,947 12,241 58,289 81,933 7,548 Total Vans 15,454 14,900 171,434 177,066 16,064 Total Passenger Vehicles (PVs) 246,361 243,961 2,202,695 2,362,086 209,236 II Commercial Vehicles (CVs) M&HCVs A: Passenger Carriers A1: Max. Mass exceeding 7-5 tonnes but not exceeding 12 tonnes (M3(B1)) (b): No. of seats including driver exceeding 13 (M3(B2)) Ashok Leyland Ltd (Lynx) 179 222 1,670 1,918 157 Mahindra Navistar Automotives Ltd (Tourister32, Tourister 40) 0 0 0 0 0 Mahindra Navistar Automotives Ltd (tourister 32 to ) 0 11 436 584 7 SML Isuzu Ltd (41 Seater, 32 Seater NQR Bus) 57 151 2,172 3,195 392 Tata Motors Ltd (LP1112, LP912, Starbus Ultra) 108 251 4,062 4,605 464 VE CVs - Eicher (10.90, 11.10, 11.12) 134 89 2,233 2,198 134 Total A1 478 724 10,573 12,500 1,154 A2: Max. Mass exceeding 12 but no exceeding 16.2 tonnes (M3(C)) (b): No. of seats including driver exceeding 13 (M3(C2)) Ashok Leyland Ltd (Viking, Cheetah, 12M) 2,721 1,666 15,468 14,471 2,274 SML Isuzu Ltd (LT Bus) 4 0 60 29 1 Tata Motors Ltd (LPO1512,LPO1612, Starbus, Divo) 1,284 547 10,271 8,268 1,416 VE CVs - Eicher (20.15) 103 114 688 1,259 86 Volvo Buses India Pvt Ltd (8400 & 9400 4X2) 16 14 174 178 27 Total A2 4,128 2,341 26,661 24,205 3,804 A3: No. of seats including exceeding 13 and max. mass exceeding 16.2 tonnes (M3(D)) Passenger Carrier (D) Volvo Buses India Pvt Ltd (9400 XL) 45 16 307 345 24 Total A3 45 16 307 345 24 Total M&HCVs(passenger carriers) 4,651 3,081 37,541 37,050 4,982 M&HCVs B: Goods Carriers (c) Max Mass exceeding 7.5 tonnes but not exceeding 10 tons Ashok Leyland Ltd (eComet) 78 32 541 1,148 36 SML Isuzu Ltd (Super Supereme) 323 183 2,457 1,882 300 Tata Motors Ltd (LPT9109) 510 657 5,219 7,402 892 VE CVs - Eicher (10.80, 10.90, 10.95) 1,157 620 9,011 6,406 1,254 Total 2,068 1,492 17,228 16,838 2,482 (d) Max. Mass Exceeding 10 tons but not exceeding 12 tons Ashok Leyland Ltd (eComet) 236 235 2,855 4,192 280 SML Isuzu Ltd (Samrat Super 12) 220 161 1,275 1,461 231 Tata Motors Ltd (LPT1109) 1,156 309 8,976 4,117 2,118 VE CVs - Eicher (11.10, 11.12) 1,278 940 10,128 9,855 1,379 Total 2,890 1,645 23,234 19,625 4,008 Total B 4,958 3,137 40,462 36,463 6,490 B2: Max Mass exceeding 16.2 tonnes (N3(A)) (a) Max. mass exceeding 12 tonnes but not exceeding 16.2 tonnes (N3(A1)) Ashok Leyland Ltd (4x2 Tipper, 4X2 Haulage) 1,703 1,151 16,770 12,928 1,167 Asia Motor Works Ltd (1618 TP) 0 40 0 152 0 SML Isuzu Ltd (IS12T) 0 0 4 2 0 Tata Motors Ltd (LPT1613, LPK1616, SK1613) 5,503 3,390 47,614 31,868 3,587 VE CVs - Eicher (20.16, Terra 16) 525 392 4,045 3,194 547 Total B2 7,731 4,973 68,433 48,144 5,301 B3: Max Mass exceeding 16.2 tonnes-Rigid Vehicles (N3(B1)) (a) Max. mass exceeding 16.2 tonnes but not exceeding 25 tonnes Ashok Leyland Ltd (6X2 Mav, 6X4 Mav, 6X4 Tipper) 1,733 685 12,937 9,914 1,481 Asia Motor Works Ltd (2518HL, 2516 HL, 2518 TP, 2523TP, 2518TM) 278 419 6,700 4,016 504 Mahindra Navistar Automotives Ltd (MN25) 121 54 689 815 152 Tata Motors Ltd (LPT2518, LPK2518) 5,201 1,932 40,029 26,247 4,606 VE CVs - Eicher (30.25, Terra25) 142 71 912 1,313 178 VE CVs - Volvo (fm400) 0 0 0 0 0 Total 7,475 3,161 61,267 42,305 6,921

Exports For the month of December

Cumulative April-December

2012

11-12

12-13

2011

2012

11-12

12-13

2,202 2,202

47,112 47,112

49,332 49,332

548 548

40 40

2,276 2,276

42 42

740 11,226 32,797 44,763

18,803 81,008 337,423 437,234

5,967 96,134 296,732 398,833

0 2,476 14,042 16,518

10 537 11,250 11,797

54 26,961 78,895 105,910

34 16,383 68,861 85,278

266 4,509 4,155 2,651 12,306 22,482 716 515 219 8,945 2,010 2,096 60,870

7,521 48,925 36,800 5,343 152,761 154,186 12,902 0 12,287 110,546 20,260 28,427 589,958

4,658 47,539 39,484 29,383 135,629 181,407 9,035 4,224 2,772 90,047 19,576 25,640 589,394

18 1,282 30 0 15,287 188 2,211 0 0 42 0 0 19,058

0 4,382 9 422 17,000 31 6,644 0 0 282 1,245 0 30,015

1,042 17,776 153 21 139,176 7,332 70,013 0 0 2,480 0 0 237,993

55 22,851 103 1,345 159,639 5,036 50,600 0 0 3,593 12,342 0 255,564

267 1,026 13,076 2,157 16,526

7,271 12,915 69,976 35,619 125,840

2,229 11,597 114,117 28,216 156,160

1,670 0 92 0 1,762

3,589 0 1,634 1,062 6,285

20,139 0 320 0 20,459

22,795 0 10,589 6,395 39,779

0 0

59 59

1 1

0 0

1,788 1 0 1,442 2,404 329 1,517 820 1,890 110 1,975

15,557 1,179 278 24,431 36,608 12,505 3,663 0 2,253 13,353 25,842

12,610 323 24 20,929 43,537 4,577 19,047 3,172 15,563 7,449 17,597

0 4 0 0 0 204 0 0 0 18 826

0 0 0 0 10 1 2,149 0 0 56 768

640 85 0 9 0 578 0 0 0 381 1,273

421 59 0 52 30 5 21,813 0 0 578 4,209

271 12,547

1,719 137,388

1,718 146,546

0 1,052

0 2,984

0 2,966

0 27,167

103 361 1 70 428 45 68 216 155 293

2,918 8,344 42 1,808 0 387 841 4,121 6,206 2,119

1,266 3,407 71 611 3,052 186 1,159 2,302 4,214 2,159

31 2 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0

273 26 0 0 0 0 0 0 0 0

42 39 0 0 0 0 0 0 0 0

0 1,740

8 26,794

0 18,427

0 33

0 0

0 299

0 81

79 20 2 199 19 96

978 106 86 2,434 140 1,168

369 279 42 1,467 271 785

0 0 0 0 0 0

4 0 0 0 0 0

1 0 0 0 0 0

5 420

7 4,919

11 3,224

0 0

0 4

0 1

0 751 176 1,011 1 76 2,015

7,224 5,289 0 4,534 6 0 17,053

6,129 5,006 1,597 6,901 2 220 19,855

0 0 0 0 0 0 0

0 0 141,083

2 2 1,386,300

0 0 1,381,771

0 0 38,971

0 0 51,121

0 0 369,907

0 0 407,912

36 11,393 5,445 187 4,485 1,449 22,995

279 66,965 4,514 0 0 15,403 87,161

222 87,476 60,641 644 23,731 24,512 197,226

0 21 11 0 0 50 82

0 6 46 0 0 75 127

1 144 141 0 0 286 572

0 106 168 0 0 420 694

1,733 0 10,145 1,376 6,458 19,712

16,293 363 76,667 13,737 37,713 144,773

14,861 260 103,976 9,298 56,081 184,476

10 0 360 10 0 380

0 0 694 5 0 699

70 6 2,866 109 0 3,051

19 48 4,073 94 0 4,234

245 5 250

2,932 2,683 5,615

3,257 850 4,107

0 0 0

0 92 92

0 343 343

220 58 208 0 46 197 2 2 36 52 1,260 2,081

1,985 1,022 1,470 211 1,198 0 20 191 262 1,300 7,872 15,531

1,253 408 1,364 186 589 398 11 57 308 880 11,487 16,941

0 0 0 0 0 0 0 0 0 0 0 0

0 7 4 11 45,049

54 112 6 172 253,252

15 111 45 171 402,921

0 0 0 0 462

0 0 0 0 826

0 0 0 0 3,715

0 0 0 0 5,271

976 7,897 98 8,971

0 105,881 5,091 110,972

6,084 84,504 2,455 93,043

0 149 0 149

0 110 0 110

0 1,203 3 1,206

0 891 0 891

1 1,277 10,484 11,762 20,733 206,865

137 18,381 39,007 57,525 168,497 1,808,049

11 17,573 64,125 81,709 174,752 1,959,444

0 6 1 7 156 39,589

0 0 40 40 150 52,097

0 21 189 210 1,416 375,038

0 45 373 418 1,309 414,492

166 0 16 274 343 135 934

1,748 0 265 2,332 4,344 2,291 10,980

1,978 0 703 2,736 4,863 2,252 12,532

73 4 0 0 55 80 212

74 0 0 0 73 10 157

421 4 0 5 449 118 997

150 0 0 7 255 118 530

1,138 2 822 125 12 2,099

12,000 50 9,670 569 185 22,474

11,138 16 8,451 1,164 180 20,949

352 0 218 45 0 615

266 0 132 0 0 398

3,202 0 1,840 106 0 5,148

3,297 1 1,276 78 3 4,655

21 21 3,054

290 290 33,744

329 329 33,810

0 0 827

0 0 555

0 0 6,145

4 4 5,189

98 265 460 807 1,630

294 2,118 6,978 8,594 17,984

680 1,679 4,448 6,459 13,266

29 60 20 14 123

44 30 144 60 278

75 293 794 156 1,318

363 207 1,096 240 1,906

370 159 1,195 1,239 2,963 4,593

2,429 1,257 15,866 9,690 29,242 47,226

3,628 1,260 12,962 10,262 28,112 41,378

16 0 105 0 121 244

22 2 59 18 101 379

184 3 770 142 1,099 2,417

181 23 524 102 830 2,736

1,079 32 0 2,347 398 3,856

12,106 0 3 28,495 3,440 44,044

11,011 137 21 21,497 2,798 35,464

450 0 0 279 36 765

140 0 0 181 172 493

3,766 0 0 4,445 469 8,680

1,755 0 0 2,133 302 4,190

960 409 62 2,210 153 0 3,794

12,178 6,437 906 36,445 846 0 56,812

9,736 3,890 948 25,378 1,229 0 41,181

68 0 0 119 3 0 190

27 0 0 172 5 0 204

681 0 0 1,742 8 0 2,431

486 0 0 1,675 40 0 2,201

1 - 31 JANUARY 2013

S I A M D ATA

Category Segment/Subsegment Manufacturer.

Production For the month of December 2011

2012

(b) Max. mass exceeding 25 tonnes Ashok Leyland Ltd (8X2 Haulage, 8X4 Tipper) 1,258 520 Asia Motor Works Ltd (3118HL, 3118TP) 42 116 Daimler India Commercial Vehicles Pvt Ltd 0 0 Mahindra Navistar Automotives Ltd (MN31) 106 43 Tata Motors Ltd (LPT3118) 4,110 322 VE CVs - Eicher (35.31) 121 37 VE CVs - Volvo (FM400) 11 44 Total 5,648 1,082 Total B3 13,123 4,243 B4: Max. Mass exceeding 16.2 tonnes-Haulage Tractor (Tractor-Semi Traller/Traller)(N3(B2)) (b) Max. mass exceeding 26.4 tonnes but not exceeding 35.2 tonnes Ashok Leyland Ltd (4x2 Tractor 4X4 Tipper) 211 96 Asia Motor Works Ltd (3518 TR) 0 0 Mahindra Navistar Automotives Ltd (MN35) 6 12 Tata Motors Ltd (LPS3518) 2 277 Total 219 385 (c) Mass exceeding 35.2 tonnes but not exceeding 40 tonnes Ashok Leyland Ltd 0 179 Asia Motor Works Ltd 0 0 Mahindra Navistar Automotives Ltd (MN40) 71 14 Total 71 193 (d) Max. mass exceeding 40 tonnes but not exceeding 49 tonnes Ashok Leyland Ltd (4X2 Tractor) 103 43 Asia Motor Works Ltd (4018TR, 4923TR) 14 26 Tata Motors Ltd (LPS4018, LPS4023, LPS4928) 212 225 VE CVs - Eicher (40.40) 13 4 Total 342 298 (e) Max. mass exceeding 49 tonnes and Above Ashok Leyland Ltd (6X4 TRACTOR) 78 14 VE CVs - Volvo (FM400HD, FH520) 13 1 Total 91 15 Total B4 723 891 Total M&HCVs (Goods Carriers) 26,535 13,244 Total M&HCVs 31,186 16,325 LCVs A: Passenger Carriers A1: Max. Mass upto 5 tonnes (a): No. of seats including driver exceeding 13 (M2(A2)) Force Motors Ltd 1,253 565 Mahindra Navistar Automotives Ltd (Tourister15) 2 0 Tata Motors Ltd (SFC407, CityRide) 250 47 Total 1,505 612 A2: Max. Mass exceeding 5 tonnes but not exceeding 7-5 tonnes (M3(A)) (b): No. of seats including driver exceeding 13 (M3(A2)) Ashok Leyland Ltd (Stag) 0 0 Force Motors Ltd 0 48 Mahindra & Mahindra Ltd (Tourister 25) 0 0 Mahindra Navistar Automotives Ltd (Tourister 25) 227 243 SML Isuzu Ltd (20,32,26,24 Seater Bus) 332 102 Tata Motors Ltd (LP709, SFC410, LP410) 593 410 VE CVs - Eicher (10.50, 10.60, 10.75) 93 138 Total A2 1,245 941 B2: Max. Mass upto 5 tonnes (b): No. of seats including driver not exceeding 13 (M2(A1)) Force Motors Ltd( Toofan, Crusier, T1) 497 592 Tata Motors Ltd (Winger Platinum, Winger 10 Seats) 102 370 Total B2 599 962 Total LCVs (Passenger Carriers) 3,349 2,515 LCVs B: Goods Carriers (a) Max. Mass not exceeding 2 tons-Mini Truck Segment Force Motors Ltd (Trump 15 PU) 0 0 Mahindra Navistar Automotives Ltd (Gio, Maxximo) 6,228 2,765 Piaggio Vehicles Pvt.Ltd (Ape Truck, ApeTruck Plus, Ape Mini Truck)) 668 120 Tata Motors Ltd (ACE, ACE Ex, ACE Zip) 22,824 20,010 Total 29,720 22,895 (b) Max. Mass not exceeding 2 but no exceeding 3.5 tons-Pick Ups Ashok Leyland Ltd (Dost) 1,042 2,850 Force Motors Ltd 501 179 Hindustan Motors Ltd 4 27 Mahindra & Mahindra Ltd 8,293 10,924 Tata Motors Ltd (Super ACE, Tata 207, Xenon, WingerDV) 3,008 6,306 Total 12,848 20,286 (a) Max Mass exceeding 3.5 tons but not exceeding 6 tonnes Ashok Leyland Ltd 0 0 Force Motors Ltd 90 91 Mahindra & Mahindra Ltd (DI3200 CRX, Load King CRX) 0 0 Mahindra Navistar Automotives Ltd (DI3200 CRX, Load King CRX) 478 305 SML Isuzu Ltd (Cosmo) 11 9 Tata Motors Ltd (SFC407, LPT407) 3,520 1,151 VE CVs - Eicher (10.50, 10.55) 38 30 Total 4,137 1,586 (b) Max Mass exceeding 6 tons but not exceeding 7.5 tonnes Ashok Leyland Ltd 10 0 Mahindra Navistar Automotives Ltd (Load King CRX Sherpa) 0 74 SML Isuzu Ltd (Sartaj, Prestige Premium) 187 164 Tata Motors Ltd (SFC709, LPT709) 583 848 VE CVs - Eicher (10.59, 10.60, 10.75) 634 451 Total 1,414 1,537 Total LCVs (Goods Carriers) 48,119 46,304 Total LCVs 51,468 48,819 Total Commercial Vehicles 82,654 65,144 IV Two Wheelers A: Scooter/Scooterettee : Wheel size less than or equal to 12” A1: Engine Capacity less than 75cc Mahindra Two Wheelers Ltd (Kine) 233 63 TVS Motor Company Ltd (teenz, Pep) 839 24 Total 1,072 87 A2: Engine Capacity 75cc and less than equal to 90cc TVS Motor Company Ltd (Pep+, Streak) 24,707 17,221 Total 24,707 17,221 A3: Engine Capacity >90 cc and less than equal to 125cc Hero MotoCorp Ltd (HERO PLEASURE, HERO MAESTRO) 43,135 57,669 Honda Motorcycle & Scooter India (Pvt) Ltd (Activa, Dio, Aviator) 109,531 108,240 India Yamaha Motor Pvt Ltd (Ray) 0 12,995 Mahindra Two Wheelers Ltd (Duro/Duro DZ, Rodeo, Flyte) 8,224 5,912 Piaggio Vehicles Pvt.Ltd (Vespa LX125) 0 1,903 Suzuki Motorcycle India Pvt Ltd (Access, Swish) 23,528 27,558 TVS Motor Company Ltd (Wego) 23,231 14,603 Total 207,649 228,880 Total Scooter/Scooterettee 233,428 246,188 B: Motor cycles/Step-Throughs : Big Wheel size more than 12” B2: Engine Capacity 75cc and above but less than 125cc Bajaj Auto Ltd (Boxer CT, Platina, Discover) 131,126 133,698 Hero MotoCorp Ltd 444,208 414,701 Honda Motorcycle & Scooter India (Pvt) Ltd 19,961 34,442 India Yamaha Motor Pvt Ltd (Crux, YBR110) 8,143 671 TVS Motor Company Ltd 41,057 40,908 Total 644,495 624,420 B3: Engine Capacity 110cc and above but less than 125cc Bajaj Auto Ltd (Boxer, Platina, Discover, KTM) 41,043 67,580 Hero MotoCorp Ltd 54,000 70,307 Honda Motorcycle & Scooter India (Pvt) Ltd 41,707 49,191 India Yamaha Motor Pvt Ltd (SS 125, Enticer, YD125) 6,535 201 Suzuki Motorcycle India Pvt Ltd (Hayate, Slingshot) 2,402 7,249 TVS Motor Company Ltd (Victor GLX, Flame, STAR CITY 125) 3,951 8,402 Total 149,638 202,930 B4: Engine capacity > 125 cc but less than equal to 150 cc Bajaj Auto Ltd (Boxer,Discover, Pulsar) 70,998 64,952 Hero MotorCorp Ltd 22,911 19,040 Honda Motorcycle & Scooter India (Pvt) Ltd 14,200 21,300 India Yamaha Motor Pvt Ltd (FZ, Fazer, SZ, R15 32,135 13,919 Suzuki Motorcycle India Pvt Ltd (GS150R) 2,038 291 Total 142,282 119,502 B5: Engine capacity >150cc and less than equal to 200 CC Bajaj Auto Ltd (KTM, Pulsar) 8,561 19,817 TVS Motor Company Ltd (Apache) 16,047 11,508 Total 24,608 31,325 B6: Engine capacity >200cc and less than equal to 250 CC Bajaj Auto Ltd (Pulsar, Avenger, Ninja) 9,525 8,714 Hero MotorCorp Ltd (HERO KARIZMA) 4,654 3,983 Honda Motorcycle & Scooter India (Pvt) Ltd (CBR 250R) 476 657 Total 14,655 13,354 B7: Engine capacity >250cc and less than equal to 350 CC Royal Enfield (Unit of Eicher Ltd) 5,285 10,513 Total 5,285 10,513 B8: Engine capacity >350cc and less than equal to 500 CC Bajaj Auto Ltd (KTM) 0 0 Royal Enfield (Unit of Eicher Ltd) 831 1,497 Total 831 1,497 B9: Engine capacity >500cc and less than equal to 800 CC Bajaj Auto Ltd (Ninja) 1 120 Total 1 120 B10: Engine capacity >1000cc and less than equal to 1600 CC H-D Moto Company Ltd 0 15 Honda Motorcycle & Scooter India (Pvt) Ltd 16 0 India Yamaha Motor Pvt Ltd (R1, FZ1) 0 0 Suzuki Motorcycle India Pvt Ltd (VZ 800, GSX -R-1000) 0 0 Total 16 15 B11: Engine capacity >800cc and less than equal to 1000 CC H-D Moto Company Ltd 0 27 Honda Motorcycle & Scooter India (Pvt) Ltd 1 0 Suzuki Motorcycle India Pvt Ltd (Hayabusa) 0 0 Total 1 27 B12: Engine capacity >1600cc (TW) H-D Motor Company India Pvt Ltd ( Fat Boy, Fat Boy Special) 0 0 Suzuki Motorcycle India Pvt Ltd (Intruder) 0 0 Total 0 0 Total Motor Cycles/Step-Throughs 981,812 1,003,703 C: Mopeds: Engine capacity less than 75cc & with fixed transmission, big wheelsize>12” Engine Capacity<75cc Mopeds TVS Motor Company Ltd (MOPED) 65,403 61,144 Total 65,403 61,144 Total Mopeds 65,403 61,144 Total Two Wheelers 1,280,643 1,311,035 III Three Wheelers A: Passenger Carriers A1:No. of seats including driver not exceeding 4 & Max.Mass not exceeding 1 tonnes Atul Auto Limited 1,348 1,594 Bajaj Auto Ltd 38,593 45,646 Force Motors Ltd 0 0 Mahindra & Mahindra Ltd 5,369 4,884 Piaggio Vehicles Pvt.Ltd 10,943 11,836 Scooters india Ltd 443 434 TVS Motor Company Ltd 2,345 4,413 Total 59,041 68,807 A2: No.of seats including Driver exceeding 4 but not exceeding 7 & Max.Mass exceeding 1.5 tonnes Force Motors Ltd 77 126 Mahindra & Mahindra Ltd 0 0 Scooters india Ltd 376 224 Total 453 350 Total Passenger Carrier 59,494 69,157 B: Goods Carriers B1: Max.mass not exceeding 1 tonnes Atul Auto Limited 1,111 1,367 Bajaj Auto Ltd 440 63 Mahindra & Mahindra Ltd 976 1,778 Piaggio Vehicles Pvt.Ltd 4,736 4,128 Scooters india Ltd 444 527 Total 7,707 7,863 B2: Others Mahindra & Mahindra Ltd 325 200 Piaggio Vehicles Pvt.Ltd 35 0 Scooters india Ltd 369 265 Total 729 465 Total Goods Carrier 8,436 8,328 Total Three Wheelers 67,930 77,485 Grand Total of all Categories 1,677,588 1,697,625

* Exports of Ford indicate CKDs

Auto Monitor

125 Domestic Sales

Cumulative April-December 11-12

12-13

For the month of December 2011

Exports

Cumulative April-December

2012

11-12

For the month of December

Cumulative April-December

12-13

2011

2012

9,458 433 120 484 42,098 1,076 367 54,036 115,303

8,642 524 0 573 21,059 1,364 421 32,583 74,888

1,127 43 0 109 3,751 205 100 5,335 12,256

400 104 0 70 1,593 113 89 2,369 6,163

9,282 358 85 737 30,992 1,052 339 42,845 99,657

7,494 503 0 733 20,926 1,278 441 31,375 72,556

0 0 0 0 44 0 0 44 234

0 0 0 0 0 10 0 10 214

11-12 0 0 0 0 171 0 0 171 2,602

12-13 0 0 0 0 95 12 0 107 2,308

1,819 65 13 974 2,871

1,801 60 84 4,078 6,023

198 0 5 565 768

175 0 15 378 568

1,860 38 5 5,696 7,599

1,788 53 81 3,846 5,768

20 0 0 5 25

0 0 0 0 0

114 0 0 7 121

43 0 0 1 44

0 0 354 354

204 0 191 395

0 24 37 61

95 0 40 135

0 24 278 302

96 0 220 316

2 0 0 -2

0 0 0 0

1 0 0 1

1,487 496 4,146 87 6,216

954 312 6,694 123 8,083

113 22 849 9 993

98 30 518 14 660

1,440 472 8,884 90 10,886

1,015 311 6,807 103 8,236

0 0 0 0 0

2 0 14 0 16

0 0 86 0 86

2 0 101 2 105

1,057 163 1,220 10,661 234,859 272,400

406 78 484 14,985 174,480 211,530

110 23 133 1,955 26,002 30,984

76 0 76 1,439 16,051 19,105

1,301 162 1,463 20,250 211,177 244,921

517 34 551 14,871 164,269 198,079

0 0 0 23 1,266 2,093

0 0 0 16 1,102 1,657

0 0 0 207 13,906 20,051

0 0 0 150 9,384 14,573

8,575 1,185 3,855 13,615

8,712 358 2,983 12,053

883 231 327 1,441

673 165 199 1,037

7,791 1,977 3,820 13,588

8,211 1,712 3,353 13,276

42 0 19 61

3 0 2 5

113 0 125 238

111 0 59 170

904 24 0 1,880 2,705 11,065 2,341 18,919

1,129 310 0 2,437 1,869 10,151 3,163 19,059

0 1 0 24 260 925 156 1,366

0 47 0 31 242 648 186 1,154

237 49 0 1,164 2,420 9,454 2,363 15,687

328 209 0 1,181 1,650 9,250 3,061 15,679

0 0 0 0 0 146 51 197

0 0 9 0 0 127 33 169

303 0 9 0 19 2,379 137 2,847

404 0 35 0 45 1,940 285 2,709

4,465 933 5,398 37,932

4,114 3,734 7,848 38,960

371 400 771 3,578

417 372 789 2,980

4,235 2,163 6,398 35,673

3,832 3,160 6,992 35,947

0 0 0 258

3 18 21 195

5 20 25 3,110

3 77 80 2,959

196 44,585 8,865 157,894 211,540

0 33,620 2,664 139,004 175,288

27 4,513 771 17,124 22,435

5 2,789 107 18,679 21,580

173 39,745 8,736 131,273 179,927

41 31,048 2,175 150,057 183,321

0 900 5 3,200 4,105

0 640 0 900 1,540

0 3,932 15 18,116 22,063

0 4,602 424 12,400 17,426

2,793 4,673 132 64,030 23,349 94,977

24,626 2,317 175 88,033 37,237 152,388

1,099 336 15 7,045 2,170 10,665

2,064 195 9 8,664 5,439 16,371

2,700 4,230 118 52,604 15,963 75,615

23,885 2,554 149 72,698 31,244 130,530

0 16 0 1,419 219 1,654

0 4 0 1,535 746 2,285

0 87 0 10,427 3,821 14,335

8 19 0 14,020 7,627 21,674

0 1,083 0 4,283 70 25,531 902 31,869

0 935 0 2,817 132 12,758 611 17,253

0 90 0 455 7 2,727 53 3,332

0 88 0 193 8 1,490 63 1,842

0 1,060 0 4,034 63 21,506 889 27,552

1 957 0 2,664 102 16,110 559 20,393

0 1 0 0 0 469 102 572

0 1 66 0 0 402 39 508

0 16 94 0 0 3,566 201 3,877

0 3 151 0 0 2,319 103 2,576

10 243 1,327 6,107 4,797 12,484 350,870 388,802 661,202

0 357 1,219 9,418 3,831 14,825 359,754 398,714 610,244

0 29 153 479 511 1,172 37,604 41,182 72,166

0 39 166 338 365 908 40,701 43,681 62,786

0 140 924 3,912 3,663 8,639 291,733 327,406 572,327

0 293 1,059 3,893 3,073 8,318 342,562 378,509 576,588

0 0 119 48 208 375 6,706 6,964 9,057

0 0 35 414 87 536 4,869 5,064 6,721

0 0 321 591 1,008 1,920 42,195 45,305 65,356

0 0 109 2,382 547 3,038 44,714 47,673 62,246

3,326 12,318 15,644

1,818 490 2,308

402 714 1,116

80 24 104

4,105 11,969 16,074

1,593 570 2,163

0 0 0

6 0 6

0 0 0

233,179 233,179

202,136 202,136

21,928 21,928

15,180 15,180

222,006 222,006

192,852 192,852

1,613 1,613

612 612

16,128 16,128

7,570 7,570

331,113 868,193 0 111,621 0 195,248 162,664 1,668,839 1,917,662

403,400 1,094,728 42,700 89,202 25,927 247,678 142,901 2,046,536 2,250,980

35,941 110,282 0 5,830 0 23,544 19,728 195,325 218,369

55,502 104,537 7,895 5,112 3,033 27,421 13,559 217,059 232,343

296,580 855,157 0 102,324 0 195,262 151,697 1,601,020 1,839,100

392,924 1,062,838 34,109 83,508 25,641 247,344 136,830 1,983,194 2,178,209

3,293 2,515 0 286 0 44 821 6,959 8,572

2,071 6,715 0 374 0 220 1,018 10,398 11,010

31,221 14,375 0 1,553 0 139 9,735 57,023 73,157

18,081 36,744 12 3,615 4 1,012 5,918 65,386 72,956

1,490,500 3,721,377 140,137 59,433 460,836 5,872,283

1,535,129 3,446,957 260,214 49,398 379,524 5,671,222

73,520 414,662 15,253 6,450 29,511 539,396

85,766 387,569 28,914 2,953 28,497 533,699

867,321 3,613,821 111,541 49,262 365,682 5,007,627

941,411 3,395,488 230,031 40,634 300,403 4,907,967

56,460 10,340 5,085 1,336 10,253 83,474

56,600 6,288 6,505 1,176 9,056 79,625

642,605 88,533 28,835 8,912 103,372 872,257

611,929 73,495 29,946 9,803 83,724 808,897

457,159 376,998 339,741 54,984 32,556 20,721 1,282,159

512,250 516,212 484,827 20,359 66,234 39,530 1,639,412

36,414 48,490 39,747 2,852 1,954 42 129,499

51,648 64,370 46,391 1,095 5,658 9,323 178,485

379,368 360,544 321,449 25,941 31,216 1,140 1,119,658

424,712 494,702 466,746 15,034 63,286 27,349 1,491,829

8,554 2,797 2,773 2,880 88 3,595 20,687

13,455 3,317 1,795 0 132 2,116 20,815

79,685 13,563 18,831 27,067 355 19,871 159,372

90,468 20,358 18,113 5,024 631 23,392 157,986

764,662 229,312 125,977 263,436 11,790 1,395,177

596,171 119,258 192,261 249,128 4,137 1,160,955

45,955 19,128 14,308 23,981 1,041 104,413

42,975 16,276 18,961 13,176 212 91,600

568,726 207,691 106,400 197,076 6,166 1,086,059

391,170 110,590 171,259 175,363 4,098 852,480

23,048 1,892 746 7,470 560 33,716

20,208 2,363 2,910 21,184 88 46,753

196,901 15,553 20,071 54,107 4,884 291,516

215,230 9,501 21,110 84,323 404 330,568

105,393 158,130 263,523

147,149 124,390 271,539

6,605 9,645 16,250

10,374 7,286 17,660

70,335 106,364 176,699

94,349 93,009 187,358

3,156 3,616 6,772

8,413 3,932 12,345

38,710 52,288 90,998

54,156 34,581 88,737

93,859 36,398 14,995 145,252

72,001 30,591 6,258 108,850

6,990 3,701 266 10,957

7,542 3,658 433 11,633

64,375 35,434 14,244 114,053

55,830 30,667 4,179 90,676

2,996 32 346 3,374

1,278 201 350 1,829

29,015 238 536 29,789

17,909 424 2,110 20,443

51,494 51,494

80,625 80,625

3,994 3,994

9,481 9,481

49,963 49,963

78,355 78,355

77 77

55 55

375 375

647 647

0 7,448 7,448

34 10,689 10,723

0 631 631

0 1,347 1,347

0 5,444 5,444

0 8,406 8,406

0 302 302

0 168 168

0 1,874 1,874

0 2,125 2,125

128 128

280 280

1 1

89 89

116 116

244 244

0 0

2 2

0 0

2 2

87 65 0 0 152

504 0 0 0 504

32 1 7 0 40

46 1 4 8 59

109 50 45 1 205

511 58 37 18 624

0 0 0 0 0

11 1 0 12

277 0 0 277

9 0 0 9

30 0 14 44

30 3 4 37

230 12 73 315

0 0 0 0

0 0 0 9,017,628

0 0 0 8,944,387

8 0 8 805,198

16 0 16 844,113

10 2 12 7,559,873

68 21 89 7,618,343

0 0 0 148,402

0 0 0 161,592

0 0 0 1,446,181

0 0 0 1,409,405

576,607 576,607 576,607 11,511,897

580,363 580,363 580,363 11,775,730

65,179 65,179 65,179 1,088,746

60,692 60,692 60,692 1,137,148

570,003 570,003 570,003 9,968,976

580,259 580,259 580,259 10,376,811

1,260 1,260 1,260 158,234

435 435 435 173,037

7,735 7,735 7,735 1,527,073

2,061 2,061 2,061 1,484,422

10,417 381,306 0 39,814 110,404 3,901 34,838 580,680

12,934 346,783 0 37,147 108,365 3,250 33,684 542,163

1,224 15,963 0 4,350 10,219 364 1,200 33,320

1,475 19,385 0 3,596 10,627 380 1,404 36,867

10,109 144,166 9 36,906 96,234 3,520 9,995 300,939

12,816 163,374 1 35,838 100,754 3,389 12,513 328,685

20 25,494 0 122 1,354 0 1,323 28,313

40 26,060 0 24 437 0 3,082 29,643

196 245,494 0 2,538 14,179 0 20,930 283,337

163 192,458 0 981 7,113 0 22,381 223,096

363 0 2,220 2,583 583,263

687 0 2,144 2,831 544,994

0 0 339 339 33,659

0 0 175 175 37,042

0 209 2,382 2,591 303,530

0 0 2,032 2,032 330,717

0 0 0 0 28,313

0 0 0 0 29,643

406 0 0 406 283,743

644 0 0 644 223,740

9,247 5,549 10,976 45,202 4,495 75,469

10,463 2,542 12,704 38,968 3,782 68,459

1,123 534 1,188 4,741 408 7,994

1,312 151 1,496 4,001 419 7,379

9,217 5,576 10,515 44,382 4,165 73,855

10,591 2,678 12,423 37,881 3,940 67,513

0 0 38 167 0 205

8 0 16 210 0 234

26 0 508 794 0 1,328

19 0 677 1,190 0 1,886

3,612 146 2,154 5,912 81,381 664,644 15,040,438

1,843 38 2,249 4,130 72,589 617,583 15,365,643

206 0 365 571 8,565 42,224 1,412,372

117 0 180 297 7,676 44,718 1,451,517

3,484 0 2,262 5,746 79,601 383,131 12,732,483

1,804 0 2,092 3,896 71,409 402,126 13,314,969

0 36 0 36 241 28,554 235,434

0 0 0 0 234 29,877 261,732

0 150 0 150 1,478 285,221 2,252,688

0 48 0 48 1,934 225,674 2,186,834

Auto Monitor

1 - 31 JANUARY 2013

N O R T H A M E R I C A N A S S E M B LY

126

AUTOFACTS Global Automotive Outlook PricewaterhouseCoopers LLP

North America Assembly Tracking 11-2012 (Tracking by Brand & Nameplate) November 2012 Ownership Org/ Brand & Nameplate AutoAlliance International (USA) Ford Mustang Mazda Mazda6 BMW (Germany) BMW X3 BMW X5 BMW X6 Chrysler Group LLC (USA) Chrysler 200 Chrysler 300 Chrysler Town & Country Dodge Avenger Dodge Caliber Dodge Caravan Dodge Challenger Dodge Charger Dodge Dakota Dodge Dart Dodge Durango Dodge Journey Dodge Nitro Fiat 500 Fiat Freemont Jeep Compass Jeep Grand Cherokee Jeep Liberty Jeep Patriot Jeep Wrangler Jeep Wrangler Unlimited Lancia Flavia Lancia Grand Voyager Lancia Thema Chrysler Group LLC (USA) Ram Cargo Van Ram Pickup Volkswagen Routan Daimler AG (Germany) Freightliner Sprinter Mercedes-Benz GL-Class Mercedes-Benz GL-Class AMG Mercedes-Benz M-Class Mercedes-Benz M-Class AMG Mercedes-Benz R-Class Ford Motor Company (USA) Ford C-MAX Ford Crown Victoria Ford Edge Ford Escape Ford E-Series Ford Expedition Ford Explorer Ford Fiesta Ford Flex Ford Focus Ford F-Series Ford Fusion Ford Mustang Ford Ranger Ford Taurus Lincoln Mark LT Lincoln MKS Lincoln MKT Lincoln MKX Lincoln MKZ Lincoln Navigator Ford Motor Company (USA) Lincoln Town Car Mazda Tribute Mercury Grand Marquis Fuji Heavy Industries (Japan) Subaru Legacy Subaru Outback Subaru Tribeca Toyota Camry General Motors Company (USA) Buick Enclave Buick LaCrosse Buick Lucerne Buick Regal Buick Verano Cadillac ATS Cadillac CTS Cadillac DTS Cadillac Escalade Cadillac Escalade ESV Cadillac Escalade EXT Cadillac SRX Cadillac STS Cadillac XTS Chevrolet Avalanche Chevrolet Aveo Chevrolet C2 Chevrolet Camaro

Volume 25,478 11,964 9,452 4,062 208,577 13,207 6,939 11,316 9,206 19,382 4,310 9,274 14,101 6,087 12,426 4,260 3,727 8,299 19,394 7,178 5,266 10,121 34 450 2,135 208,577 777 40,688 15,699 774 5,573 28 9,032 45 247 240,507 4,712 18,194 31,079 10,356 5,493 18,270 12,958 2,746 22,267 67,248 28,603 2,629 8,794 90 956 730 4,102 627 653 240,507 22,941 4,499 10,496 343 7,603 282,788 5,091 5,715 2,288 5,052 6,805 1,989 1,579 1,065 237 6,607 4,567 3,780 6,912 10,529

YOY % Chg -100.0% -100.0% -100.0% 3.2% 5.4% -2.1% 10.4% 13.8% 26.7% 12.3% 18.4% 26.1% -100.0% 27.4% 2.7% -9.3% 17.4% 34.7% -100.0% -21.1% -22.3% -10.6% 23.6% -100.0% -12.2% -12.4% 7.7% -48.3% 190.5% 13.8% -8.4% 39.5% -100.0% -6.0% 10.1% 74.2% -19.0% 2.3% -84.6% 6.4% 6.8% 15.3% -7.2% -6.6% 12.5% 9.3% -14.2% 5.8% 10.7% 8.9% -100.0% 32.9% 15.4% -34.6% 13.9% 4.7% -82.9% 1.2%

Last 3 Months

Assembly Share % 1.9% 0.9% 0.7% 0.3% 15.7% 1.0% 0.5% 0.9% 0.7% 1.5% 0.3% 0.7% 1.1% 0.5% 0.9% 0.3% 0.3% 0.6% 1.5% 0.5% 0.4% 0.8% 0.0% 0.0% 0.2% 15.7% 0.1% 3.1% 1.2% 0.1% 0.4% 0.0% 0.7% 0.0% 0.0% 18.1% 0.4% 1.4% 2.3% 0.8% 0.4% 1.4% 1.0% 0.2% 1.7% 5.1% 2.2% 0.2% 0.7% 0.0% 0.1% 0.1% 0.3% 0.0% 0.0% 6.4% -8.2% -4.9% -6.1% -47.9% -9.7% 11.0% 59.3% 8.2% -39.1% 224.5% -66.7% 116.0% 71.2% 48.1% -10.0% 85.6% -2.7% -100.0% 45.2%

YOY Share Chg (-0.9) (-0.5) (-0.5) (-0.2) (-0.1) (-0.1) (-0.0) 0 0.1 (-0.0) 0 0.1 (-0.4) 0.2 (-0.0) (-0.2) 1.1 0 0.1 (-0.2) (-0.1) (-0.1) (-0.2) 0.1 (-0.6) (-0.2) (-0.1) (-0.0) 0 (-0.0) 0.1 0 (-0.0) 0.6 (-0.1) (-0.2) (-0.0) 0.1 0 (-0.3) (-0.0) (-0.1) (-1.2) 0.4 (-0.1) 0 (-0.2) (-0.1) (-0.0) (-0.0) (-0.1) (-0.1) (-0.1) (-0.1) 0.2 (-0.7) 0.1 0 (-0.1) 0 (-0.0) (-0.3) (-0.0) 18.1% 1.7% 0.3% 0.8% 0.0% 0.6% 21.3% 0.4% 0.4% 0.2% 0.4% 0.5% 0.2% 0.1% 0.1% 0.0% 0.5% 0.3% 0.3% 0.5% 0.8%

Volume 80,488 38,041 29,710 12,737 609,730 37,193 19,565 33,857 32,725 54,720 13,190 27,136 37,817 16,439 33,484 21,014 10,513 24,221 56,261 22,837 16,751 33,061 360 1,596 6,020 609,730 1,876 109,094 48,493 2,397 17,016 85 27,987 140 868 765,331 12,391 52,423 98,328 27,543 17,134 58,755 38,887 8,354 74,194 226,407 80,325 21,320 29,673 204 3,683 2,341 10,184 871 2,314 (-1.2) (-0.4) (-0.1) (-0.2) (-0.0) (-0.1) (-0.5) 0.1 (-0.0) (-0.1) 0.2 0.5 (-0.4) 0.1 0 0 (-0.1) 0.3 0.1 (-0.1) (-0.1) 0.2

YOY % Chg -100.0% -100.0% -100.0% 6.5% 10.6% -2.3% 18.5% 18.2% 24.8% 36.7% 23.7% 57.9% -100.0% 31.7% 23.2% 21.7% 29.6% 11.9% -100.0% 28.5% -10.9% 0.4% 10.7% -100.0% 30.4% -3.5% 17.8% -60.5% 87.1% 18.2% 17.6% 18.9% -100.0% -2.5% 10.7% 66.5% -14.2% 12.9% -81.2% 8.9% -100.0% 10.5% 14.4% 4.2% -4.0% 16.9% 7.7% -5.2% 4.5% 14.9% -0.4% -100.0% 35.5% 68.6% 4.7% 23.6% 1.6% -92.4% -6.2% 765,331 71,064 13,596 32,833 1,035 23,600 836,103 13,676 17,225 5,922 16,608 18,697 8,446 4,286 2,978 731 23,166 12,890 9,217 23,275 28,992

Assembly Share % 2.0% 0.9% 0.7% 0.3% 15.2% 0.9% 0.5% 0.8% 0.8% 1.4% 0.3% 0.7% 0.9% 0.4% 0.8% 0.5% 0.3% 0.6% 1.4% 0.6% 0.4% 0.8% 0.0% 0.0% 0.2% 15.2% 0.0% 2.7% 1.2% 0.1% 0.4% 0.0% 0.7% 0.0% 0.0% 19.1% 0.3% 1.3% 2.5% 0.7% 0.4% 1.5% 1.0% 0.2% 1.9% 5.6% 2.0% 0.5% 0.7% 0.0% 0.1% 0.1% 0.3% 0.0% 0.1% 8.9% 1.6% -3.3% -2.6% -46.5% 16.3% 5.8% 0.1% 1.5% -34.0% 756.1% -52.2% 9.1% 48.6% 31.2% 3.1% 60.0% 11.4% -100.0% 25.5%

Year to Date

YOY Share Chg (-0.9) (-0.5) (-0.4) (-0.1) (-0.0) (-0.1) 0 0.8 0.1 0.1 0.1 0.2 (-0.3) 0.2 0 0.1 0.9 0.1 0 (-0.2) 0.1 (-0.1) (-0.1) (-0.0) (-0.6) 0.1 (-0.1) 0 0 (-0.1) 0.1 0.8 0 0.2 (-0.1) (-0.2) (-0.0) 0.1 0 (-0.2) 0 (-0.1) (-0.5) 0.3 (-0.1) (-0.0) 0.1 (-0.1) (-0.1) 0.1 (-0.0) (-0.0) (-0.1) 0.1 (-0.2) 0.5 (-0.7) 0.1 0 (-0.0) 0 (-0.0) (-0.3) (-0.0) 19.1% 1.8% 0.3% 0.8% 0.0% 0.6% 20.9% 0.3% 0.4% 0.1% 0.4% 0.5% 0.2% 0.1% 0.1% 0.0% 0.6% 0.3% 0.2% 0.6% 0.7%

Volume 103,581 66,015 37,566 280,920 140,483 98,779 41,658 2,209,434 140,223 76,202 112,418 104,093 186,443 45,091 90,568 60,707 49,272 119,669 77,686 48,421 99,668 220,006 78,695 87,756 67,882 114,720 2,125 7,112 11,838 2,209,434 9,352 390,825 8,662 179,219 8,571 45,265 124 109,896 551 14,812 2,528,525 16,406 170,063 303,927 125,991 62,591 195,381 129,686 30,531 262,983 771,775 264,451 21,320 93,405 428 13,839 7,622 29,781 19,911 8,434 (-0.5) (-0.2) (-0.1) (-0.1) (-0.0) 0 (-1.2) (-0.0) (-0.0) (-0.1) 0.4 0.5 (-0.3) (-0.0) 0 0 (-0.0) 0.3 0.1 (-0.0) (-0.3) 0.1

YOY % Chg -3.1% -9.4% 10.4% 9.3% 24.5% -4.6% 2.4% 20.6% 24.2% 52.1% 12.3% 50.2% -100.0% 20.6% 11.5% 6.5% -100.0% -27.3% 17.9% -100.0% 48.4% 67.5% 5.0% 38.9% 15.0% 19.6% 19.4% 22.5% 76.1% 267.9% 20.6% 377.6% 26.2% -38.3% 21.0% 12.4% 40.9% 19.8% 146.0% -9.7% 4.9% -100.0% 7.3% 2.2% 2.7% 15.9% 24.1% 11.4% 6.6% 30.4% 16.0% -2.6% -100.0% 29.5% 6.5% 20.5% 45.5% -8.8% -39.5% -8.1% 2,528,525 260,161 47,139 121,782 3,825 87,415 3,040,397 57,448 56,515 19,809 54,853 21,096 45,982 15,401 8,789 2,404 85,029 25,544 26,426 79,186 92,420

Assembly Share % 0.7% 0.5% 0.3% 2.0% 1.0% 0.7% 0.3% 15.4% 1.0% 0.5% 0.8% 0.7% 1.3% 0.3% 0.6% 0.4% 0.3% 0.8% 0.5% 0.3% 0.7% 1.5% 0.5% 0.6% 0.5% 0.8% 0.0% 0.0% 0.1% 15.4% 0.1% 2.7% 0.1% 1.2% 0.1% 0.3% 0.0% 0.8% 0.0% 0.1% 17.6% 0.1% 1.2% 2.1% 0.9% 0.4% 1.4% 0.9% 0.2% 1.8% 5.4% 1.8% 0.1% 0.6% 0.0% 0.1% 0.1% 0.2% 0.1% 0.1% 4.9% -100.0% -100.0% -100.0% 19.0% 11.9% 23.1% -36.6% 22.1% 5.6% -13.4% -6.1% -100.0% -0.5% 2727.5% -22.7% -100.0% -4.0% 20.7% 7.5% 6.6% -100.0% 12.0% 22.1% -100.0% -5.8%

YOY Share Chg (-0.2) (-0.1) (-0.0) (-0.2) 0 (-0.2) (-0.0) 0.2 0 0.1 (-0.0) 0.2 (-0.4) 0 (-0.0) (-0.1) (-0.1) 0.4 (-0.2) (-0.0) (-0.2) 0.1 0.1 (-0.1) 0.2 (-0.0) 0 0 0 0 0 0.1 0.2 0 0.2 (-0.1) 0 (-0.0) 0 0 0 0 (-0.0) (-2.4) 0.1 (-0.5) (-0.1) (-0.3) (-0.1) (-0.0) 0.1 (-0.1) (-0.0) 0.2 (-0.1) (-0.4) 0.1 (-0.8) 0.1 (-0.0) 0 0 (-0.1) (-0.1) (-0.0) 17.6% 1.8% 0.3% 0.8% 0.0% 0.6% 21.1% 0.4% 0.4% 0.1% 0.4% 0.1% 0.3% 0.1% 0.1% 0.0% 0.6% 0.2% 0.2% 0.6% 0.6%

1 - 31 JANUARY 2013

Auto Monitor

N O R T H A M E R I C A N A S S E M B LY November 2012

Ownership Org/ Brand & Nameplate

Volume

Chevrolet Captiva Chevrolet Colorado Chevrolet Corvette Chevrolet Cruze Chevrolet Equinox General Motors Company (USA) Chevrolet Express Chevrolet HHR Chevrolet Impala Chevrolet Malibu Chevrolet Silverado Chevrolet Sonic Chevrolet Suburban Chevrolet Tahoe Chevrolet Traverse Chevrolet Trax Chevrolet Volt GMC Acadia GMC Canyon GMC Savana GMC Sierra Pickups GMC Terrain GMC Yukon GMC Yukon XL Holden Volt Opel-Vauxhall Ampera Saab 9-4X Honda Motor Company (Japan) Acura CSX Acura ILX Acura MDX Acura RDX Acura TL Acura ZDX Honda Accord Honda Civic Honda Crosstour Honda CR-V Honda Motor Company (Japan) Honda Element Honda Odyssey Honda Pilot Honda Ridgeline Hyundai Motor Company (South Korea) Hyundai Elantra/i30 Hyundai Santa Fe Hyundai Santa Fe/ix45 Hyundai Sonata/i40 Kia Optima Kia Sorento Mitsubishi Motors Corp (Japan) Mitsubishi Eclipse Mitsubishi Endeavor Mitsubishi Galant Mitsubishi Outlander Sport Nissan Motor (Japan) Infiniti JX Series Nissan Altima Nissan Armada Nissan Frontier Nissan March Nissan Maxima Nissan NV-Series Nissan Pathfinder Nissan Pickup Nissan Sentra Nissan Tiida Nissan Titan Nissan Tsuru Nissan Versa Nissan Xterra Nissan Motor (Japan) Suzuki Equator Tesla Motors (USA) Tesla Model S Tesla Roadster Toyota Motor Corporation (Japan) Lexus RX Series Toyota Avalon Toyota Camry Toyota Corolla Toyota Highlander Toyota Matrix Toyota RAV4 Toyota Sequoia Toyota Sienna Toyota Tacoma Toyota Tundra Toyota Venza Volkswagen (Germany) Volkswagen Beetle Volkswagen Bora Volkswagen Golf/Jetta Variant Volkswagen Jetta Volkswagen Passat Total Light Vehicle

4,048 1,404 22,329 24,272 282,788 7,449 12,326 19,976 42,669 14,243 4,255 8,658 10,710 4,365 2,259 2,927 2,231 18,676 10,656 4,561 2,493 46 19 142,053 1,372 5,755 4,443 2,699 60 35,143 31,940 1,917 31,597 142,053 10,863 13,688 2,576 63,108 13,517 9,622 19,083 11,498 9,388 5,206 5,206 112,693 3,199 31,040 1,604 61 6,754 5,643 669 11,047 7,599 16,032 9,103 1,813 3,106 14,487 536 112,693 1,070 1,070 142,018 7,890 6,606 22,083 33,656 10,722 1,137 16,239 2,581 11,820 14,602 8,936 5,746 63,046 9,569 12,533 29,244 11,700 1,325,184

YOY % Chg

11.0% 35.7% -21.3% 5.3% 20.1% 78.5% -29.3% -4.6% 84.4% 11.3% -62.0% -100.0% 2.1% 5.1% -6.8% 13.8% -27.3% -91.4% 67.5% 51.4% 76.4% 35.9% 147.6% 18.5% 53.0% 111.0% 67.5% 9.1% 85.1% 45.6% 14.8% 77.7% -100.0% -6.3% 1.9% -15.9% 183.9% -100.0% 7.7% 5935.8% 8.1% -18.9% -98.9% -7.8% 9.1% -25.4% 244.9% 103.0% 26.7% -35.6% -16.7% -18.2% 10.0% -71.8% 7.7% -100.0% 686.8% -100.0% 11.0% 4.5% 139.3% -28.1% 52.5% 12.0% -1.7% -0.5% 12.4% -0.7% 24.0% 0.4% 97.3% 26.4% 150.9% -100.0% 4.7% 4.7% 91.8% 13.7%

127

Last 3 Months

Assembly Share % -38.0% -100.0% 15.4% 14.3% 5.4% 21.3% 0.6% 0.9% 1.5% 3.2% 1.1% 0.3% 0.7% 0.8% 0.3% 0.2% 0.2% 0.2% 1.4% 0.8% 0.3% 0.2% 0.0% 0.0% 10.7% 0.1% 0.4% 0.3% 0.2% 0.0% 2.7% 2.4% 0.1% 2.4% 10.7% 0.8% 1.0% 0.2% 4.8% 1.0% 0.7% 1.4% 0.9% 0.7% 0.4% 0.4% 8.5% 0.2% 2.3% 0.1% 0.0% 0.5% 0.4% 0.1% 0.8% 0.6% 1.2% 0.7% 0.1% 0.2% 1.1% 0.0% 8.5% 0.1% 0.1% 10.7% 0.6% 0.5% 1.7% 2.5% 0.8% 0.1% 1.2% 0.2% 0.9% 1.1% 0.7% 0.4% 4.8% 0.7% 0.9% 2.2% 0.9% 100.0%

YOY Share Chg 0.3% 0.1% 1.7% 1.8% (-0.5) 0.1 (-0.4) (-0.1) 0.2 0.4 (-0.2) (-0.1) 0.3 0.3 (-0.0) (-0.4) (-0.1) (-0.0) (-0.1) (-0.2) 0 (-0.1) 0 (-0.0) 3.4 0.1 0.1 0.1 0 0 1.4 0.1 0 1.1 3.4 (-0.0) 0.4 0 0 0.4 (-0.4) 0.7 (-0.3) (-0.1) (-0.2) 0.2 (-0.2) 0.4 (-0.5) 0.2 (-0.1) (-0.0) (-0.5) (-0.1) (-0.0) (-0.0) 0.6 0.3 0.1 (-0.5) (-0.0) (-0.1) (-0.0) (-0.1) (-0.5) (-0.0) 0.1 0.1 (-0.0) (-0.3) (-0.1) 0.3 (-1.0) 0.6 (-0.0) (-0.0) (-0.2) (-0.0) (-0.1) 0.1 (-0.1) 0.2 0.5 0.4 (-0.0) (-0.1) (-0.2) 0.4 -

Volume (-0.3) (-0.3) 0 0 (-0.1) 836,103 15,715 40,099 63,020 116,923 44,644 14,987 28,629 30,348 6,654 5,149 10,821 4,104 52,236 32,397 12,957 8,748 80 268 427,851 12,599 16,324 12,900 8,368 184 100,951 89,856 3,726 96,446 427,851 35,132 43,207 8,158 198,512 41,316 30,391 59,435 34,494 32,876 14,991 14,991 325,729 9,846 92,265 4,934 715 20,933 18,239 2,083 23,209 24,481 38,410 28,993 5,566 10,183 45,168 544 325,729 160 1,953 1,953 427,071 22,758 11,473 76,418 98,393 33,988 3,563 46,866 8,197 35,836 48,419 24,425 16,735 200,257 27,475 40,913 95,469 36,400 4,007,573

YOY % Chg 13,752 3,904 73,489 71,070 5.8% -21.1% -8.8% 18.9% -1.6% 92.4% -3.6% 10.9% 8.3% -22.3% -53.9% -100.0% -31.1% -8.6% 5.4% 0.4% -9.5% -70.8% -100.0% 29.8% 17.5% 85.1% -23.8% -80.2% 56.7% 4.6% -31.7% 55.3% 29.8% -13.1% 31.1% 47.7% 19.2% 66.3% -100.0% -4.4% 25.1% -8.7% 204.1% -100.0% -100.0% 1.2% 7904.9% 3.4% -12.1% -95.8% 4.5% 27.7% -14.5% 145.5% 99.1% -2.6% -36.6% -16.8% -16.8% 10.5% -90.6% 1.2% -72.4% 331.1% -100.0% 15.0% 5.8% -5.9% 4.6% 57.3% 13.5% -17.6% 1.2% 25.1% -5.9% 24.6% 5.2% 13.1% 32.8% 112.5% -100.0% 14.4% 14.4% 97.3% 11.9%

Assembly Share % -11.1% -100.0% 22.9% -0.1% 16.2% 20.9% 0.4% 1.0% 1.6% 2.9% 1.1% 0.4% 0.7% 0.8% 0.2% 0.1% 0.3% 0.1% 1.3% 0.8% 0.3% 0.2% 0.0% 0.0% 10.7% 0.3% 0.4% 0.3% 0.2% 0.0% 2.5% 2.2% 0.1% 2.4% 10.7% 0.9% 1.1% 0.2% 5.0% 1.0% 0.8% 1.5% 0.9% 0.8% 0.4% 0.4% 8.1% 0.2% 2.3% 0.1% 0.0% 0.5% 0.5% 0.1% 0.6% 0.6% 1.0% 0.7% 0.1% 0.3% 1.1% 0.0% 8.1% 0.0% 0.0% 0.0% 10.7% 0.6% 0.3% 1.9% 2.5% 0.8% 0.1% 1.2% 0.2% 0.9% 1.2% 0.6% 0.4% 5.0% 0.7% 1.0% 2.4% 0.9% 100.0%

Year to Date

YOY Share Chg 0.3% 0.1% 1.8% 1.8% (-1.2) (-0.2) (-0.2) 0.1 (-0.4) 0.5 (-0.1) (-0.0) (-0.0) 0.2 (-0.1) (-0.4) (-0.1) (-0.1) (-0.3) (-0.0) (-0.0) (-0.1) 0 (-0.0) (-0.0) 1.5 0.3 0 0.1 (-0.1) (-0.0) 0.7 (-0.2) (-0.1) 0.7 1.5 (-0.3) 0.2 0 0.3 0.3 (-0.4) 0.8 (-0.3) 0.1 (-0.2) 0.2 (-0.0) (-0.1) 0.4 (-0.9) 0.2 (-0.2) (-0.0) (-0.5) (-0.0) 0.1 (-0.0) 0.3 0.3 (-0.1) (-0.6) (-0.0) (-0.1) (-0.0) (-0.1) (-0.9) (-0.0) 0 0 (-0.0) 0.3 (-0.0) (-0.1) (-0.1) 0.7 0 (-0.0) (-0.1) 0 (-0.2) 0.1 (-0.0) 0 0.8 0.3 (-0.0) 0 0.1 0.4 -

Volume (-0.1) (-0.3) 0 (-0.2) 0.1 3,040,397 82,850 161,477 227,579 469,267 116,202 56,439 100,829 92,729 6,654 22,528 70,825 7,064 27,000 208,650 112,088 44,415 31,392 80 6,618 1,578,136 29,403 66,061 34,226 36,123 936 371,322 369,013 23,380 333,907 1,578,136 148,587 146,354 18,824 673,039 128,647 48,324 43,297 209,601 120,420 122,750 32,545 14,224 18,321 1,212,785 29,838 307,647 19,538 65,984 67,110 66,792 7,102 52,226 78,195 144,614 136,092 27,589 37,634 150,595 20,359 1,212,785 1,470 2,193 2,193 1,578,580 81,213 36,672 341,580 341,352 123,750 17,411 168,734 25,079 128,998 154,869 103,147 55,775 697,492 95,387 141,087 329,212 131,806 14,377,007

YOY % Chg 54,038 32,266 13,704 267,034 237,767 5.6% 11.7% -100.0% -8.6% 15.3% 2.0% 305.5% 2.2% 5.7% -17.5% 74.3% -15.3% -42.1% 13.9% 6.2% 9.4% -6.4% -5.7% 231.6% -100.0% 58.0% -100.0% 40.5% 94.5% 14.7% -47.7% 77.3% 60.9% 44.2% 68.8% 58.0% -100.0% 25.0% 33.8% 64.7% 18.7% 19.5% -44.2% 0.1% 336.6% -9.6% -7.4% -100.0% -100.0% -18.4% 14.8% 24158.5% 4.5% 1.8% 19.1% 70.6% 10.2% -45.7% 58.7% 78.4% -2.1% 15.7% 12.7% -31.4% 16.3% -7.4% 14.8% -27.6% 27.9% -100.0% 47.8% 36.9% 0.8% 69.9% 80.7% 32.4% 6.8% 48.7% 39.9% 11.0% 48.3% 37.4% 21.9% 38.0% 403.4% -100.0% 2.8% 2.8% 364.3% 19.0%

Assembly Share %

YOY Share Chg

39.8% -15.5% 12.2% -0.8% 10.5% 21.1% 0.6% 1.1% 1.6% 3.3% 0.8% 0.4% 0.7% 0.6% 0.0% 0.2% 0.5% 0.0% 0.2% 1.5% 0.8% 0.3% 0.2% 0.0% 0.0% 11.0% 0.2% 0.5% 0.2% 0.3% 0.0% 2.6% 2.6% 0.2% 2.3% 11.0% 1.0% 1.0% 0.1% 4.7% 0.9% 0.3% 0.3% 1.5% 0.8% 0.9% 0.2% 0.1% 0.1% 8.4% 0.2% 2.1% 0.1% 0.5% 0.5% 0.5% 0.0% 0.4% 0.5% 1.0% 0.9% 0.2% 0.3% 1.0% 0.1% 8.4% 0.0% 0.0% 0.0% 11.0% 0.6% 0.3% 2.4% 2.4% 0.9% 0.1% 1.2% 0.2% 0.9% 1.1% 0.7% 0.4% 4.9% 0.7% 1.0% 2.3% 0.9% 100.0%

0.4% 0.2% 0.1% 1.9% 1.7% (-2.7) (-0.0) (-0.2) (-0.3) (-0.1) (-0.5) 0.6 (-0.1) (-0.1) (-0.3) 0 0 (-0.2) (-0.1) (-0.0) (-0.2) (-0.1) (-0.1) (-0.1) 0 0 (-0.0) 2.7 (-0.0) 0.2 0.1 0.1 (-0.0) (-0.0) 0.8 0.7 0 0.7 2.7 (-0.1) 0 0.1 0 (-0.0) 0 (-0.4) 0.3 (-0.3) 0.6 (-0.3) (-0.1) (-0.1) (-0.1) (-0.0) 0.1 (-0.3) 0.2 (-0.3) (-0.0) 0 0.1 (-0.0) (-0.1) 0.1 0.2 (-0.2) (-0.0) (-0.0) (-0.2) (-0.0) (-0.0) (-0.3) (-0.0) 0 0 (-0.0) 2.1 0.1 (-0.0) 0.7 0.8 0.1 (-0.0) 0.2 0 (-0.1) 0.2 0.1 0 0.7 0.5 (-0.0) (-0.2) (-0.4) 0.7 -

Auto Monitor

128

CLASSIFIEDS

1 - 31 JANUARY 2013

The leading source for automotive parts, components & accessories.

1 - 31 JANUARY 2013

CLASSIFIEDS

Auto Monitor

129

Tej Control Systems Pvt Ltd Plot No.329/331, Road No.25, Wagle Industrial Estate, Thane(W) - 400 604. Tel. +91 22 2583 8191 to 98, Fax: +91 22 25838199 Email: tivs@tejcontrol.com, vision@tejcontrol.com Website: www.tejivs.com

The leading source for automotive parts, components & accessories.

Auto Monitor

130

CLASSIFIEDS

1 - 31 JANUARY 2013

The leading source for automotive parts, components & accessories.

Regn. No. MH/MR/WEST/20/2012-2014. RNI No. MAHENG/2000/11414 Licenced to post at Mumbai patrika channel sorting office G.P.O. Mumbai 400 001. Date Of Mailing: 1st & 2nd Fortnightly Issue. Date Of Publication: 1 -31 January 2013

136