Auto Monitor 12 August 2013

I N D I A ’ 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

Auto Monitor

Vol. 13 No. 29

www.a mo nl i ne.i n

12 August 2013

ANALYSIS

Pg 08

24 Pages

INTERVIEW

Pre-owned car market

Oil tech growing fastest in India

There is a sheer lack of supply of used cars as owners delay purchasing decisions.

Nitin Prasad, Country Head, Shell Lubricants, has big plans for India.

on product development and IPR, it will soon be edged out by other nations. The industry should utilize this period of adversity for introspection and re-invent itself.”

Pujari said, “The recently announced Foreign Trade Policy has several measures for promoting component exports. Should there be need for additional intervention from the government, it

shall not be lacking. The industry needs to focus on R&D, better engineering capabilities and unique products valued by customers in international markets.”

Mitra said, “There is an urgent for a national strategy to navigate through the downturn in the auto component industry. The export product basket must be redefined and broadened to add non-con-

institutions to forward loans for first time business owners.

We are bracing up for tougher business environment,” pointed out C Ramakrishnan, Chief Financial Officer, Tata Motors during an interaction with analysts after announcing the Q1 results last week.

Company officials said that the CVs inventory with the company, dealers and vehiclesin-transit comprised around 3-4 weeks of stock and close monitoring should prompt them to proactively move in case of any spike in demand.

Tata Motors’ standalone revenue (net of excise) for the quarter ended June 30, 2013 stood at Rs 9,105 crore, as compared to Rs 10,586 crore for the corresponding quarter last fiscal. Operating margin was 2.3 percent for last quarter as compared to 7.3 percent in the corresponding quarter last year. PBT and PAT for last quarter was Rs 753 crore (after considering dividend from JLR and other subsidiaries amounting to Rs 1,537 crore) and Rs 703 crore, respectively, against the PBT and PAT of Rs 237 crore and Rs 205 crore, respectively, for the corresponding quarter last year.

The company reported consolidated revenues (net of excise) of Rs 46,785 crore for last quarter, a growth of eight percent over Rs 43,324 crore for the corresponding quarter of the previous year.

The consolidated PBT for the quarter was Rs 2,927 crore, as compared to Rs 3,183 crore for the corresponding quarter last fiscal and the consolidated profit (after tax and post minority interest and profit/loss (net) in respect of associate companies) for the quarter was Rs 1,726 crore as compared to Rs 2,245 crore for the corresponding quarter of the previous year.

Sales (including exports) of commercial and passenger vehicles for last quarter stood at 154,352 units, a decline of 19 percent as compared to the corresponding quarter last year.

Company officials pointed out that strong operating cash flow at JLR division are sufficient to support capital expenditure and product development plans of around £2.75 billion this fiscal. This capex plan could be increased further after evaluating the market scenario.

JLR wholesales and retails for the quarter ended June 30, 2013, grew nine percent and 10 percent

over corresponding period last year to 90,620 units and 94,719 units respectively. Jaguar wholesale and retail volumes grew 58 percent and 28 percent to 18,577 units and 17,459 units respectively compared to 11,774 units and 13,638 units, respectively, in the corresponding quarter last year. Land Rover wholesale and retail volumes stood at 72,043 units and 77,260 units, a growth of 0.5 percent and 7 percent over corresponding quarter last year.

Jaguar XF contributed the largest share to the growth in the total sales (around three thousand units) in the first quarter this fiscal at 10 percent (compared to eight percent in the same period last year) followed

by XJ type at 4 percent whereas Range Rover Evoque was the largest contributor to the growth of around 5 thousand units in the Land Rover range comprising around 27 percent of the total volumes in the last quarter.

The growth in Jaguar sales reflected the recent launch of new F-Type globally and new allwheel drive and smaller engine options made available for the XF, the XJ and the XF Sportbrake models, according to a company presentation.

A shore thing

R

ecently, Auto Component Manufacturers Association (ACMA) hosted a National Conference on Accelerating Export Growth: Leveraging Market Dimension, in New Delhi. The theme of the conference was ways to accelerate the export growth for the Indian auto components industry in markets across the globe.

The conference was addressed by noted experts from the Indian auto component industry, the government and experts who shared insights on the challenges and opportunities in the global market including addressing regulatory challenges faced by the industry.

The conference was inaugurated by the Chief Guest S.R. Rao,

Secretary, Dept of Commerce, Ministry of Commerce & Industry.

Dr. Anup Pujari, DG, Directorate General of Foreign Trade and Dr. Surajit Mitra, Director, IIFT were the guests of honour. Stalwarts from ACMA who presided were Deep Kapuria, Past President, ACMA and Chairman Hi-Tech Gears; Dr. Surinder Kapur, Past President ACMA and Chairman, Sona Group; and Harish Lakshman, Vice President, ACMA. Inaugurating the conference, Rao said, “The government is working closely with the auto component industry and will take measures to promote exports.

The current 20 percent depreciation in Indian currency should encourage exports. Further, in an era of global competition, unless the component industry moves up the value chain through focus

Hemmed in The dismal market conditions reflect on Tata Motors’s quarterly results.

T

ata Motors is bracing up for tougher environment in the wake of softening sales in LCVs and growing liabilities due to labour unrest at JLR facilities in UK. Company officials point out that the demand environment for passenger and commercial vehi-

cles has been weak with no signs of visible improvement.

“Demand for heav y trucks and passenger cars in the domestic market have worsened last few months. Sales of the Ace light truck has also softened last quarter due to perceived reluctance of banks and financial

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ventional mechanical goods like electrical and electronic items.

Giv ing a perspective, Lakshman said, “The auto component industry today works on a ‘build-to-print’ model and needs to graduate to what is termed as ‘art-to-part’. To overcome the high volatility in the environment, it is imperative that we increase the geographical spread of exports to non-conventional but India-like markets such as Africa, SouthAsia, Russia, etc. We also hope that impending reforms by the Government like those of GST, readdressal of issues such as those of inverted duty structure due to FTAs etc. will improve the export performance. Lastly, incentives are needed to mitigate challenges of high cost of doing business in India and the cost of infrastructural deficit for Indian exports to be competitive.”

Experts also deliberated upon potential markets based on the global market dynamics.

Opportunities and challenges in NAFTA, Brazil, Central Europe, CIS, Africa and ASEAN and China were discussed at length.

AUTO COMPONENTS EXPORTS:

Our Bureau New Delhi

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Pg 10

(L-R) Dr. Surinder Kapur (Chairman, Sona Koyo Steering Systems Ltd), Dr. Surajit Mitra (Director, Indian Institute), Shri S.R. Rao ( Secretary [Dept. of Commerce] Ministry of Commerce & Industry), Deep Kapuria (Past President & Chairman, ACMA), Harish Lakshman (Vice President, ACMA), Dr. Anup Pujari (DGFT).

EDITORIAL Moving higher

f you have been reading the stories on various car companies, one point stands out well. The increase in R&D spend. More automobile companies are spending

I

will pull in customers. Whether it’s Nissan’s new Micra Active

higher percentage of revenue on R&D than earlier.

were hitherto unavailable in that range of cars.

Gone are the days when you thought that the less money you

Even though the OEM may not get the desired numbers in

spend on a car, the less car you should expect. Auto companies have realised that buyers of smaller (and cheaper) cars have the

terms of sales, they have at least caught the eye of the customer.

same kind of expectations that others too have. Not everyone

or the Datsun, or the Grand i10 that is coming soon – all have one point in common. They will come packed with features that

And they too will come.

who buys a small car can be deemed plain middle- or lowermiddle class. It also explains why there are a large number of cars at the bottom of the price ladder that offer fancy interiors, navigation systems and turbocharged engines. Even if you denude the options, some of the popular economy cars on the dealer’s lot will give you air-conditioning, power windows and power locks — features that, in many parts of the world, would qualify a car as a luxury model.

All this is mainly due to the fact that OEMs are working out ways to offer more features at an affordable price and one that

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QUOTABLE QUOTES Ted Cannis, CEO, Ford Sollers

Bob Lee, VP - Engine and Electrified Propulsion, Chrysler Group LLC and Head of Global Powertrain Coordination, Fiat-Chrysler on acceptance of electric cars

Depending what happens with Europe, I would say demand will be above Germany’s in 20152017.

Customers want to reduce CO2, but they aren’t willing to change their lifestyle or pay the cost -yet. That might not happen for another decade.

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CONTENTS 08

WHAT’S INSIDE

Supply it and they might come

08

“Oil technology in India is growing fastest”

10

Service Seva

11

Mahindra CIE may shape as exports hub to Europe

13

Bosch Ltd registers 5.2 pc growth in Q2 2013

14

Continental, Cisco offer glimpse into connected vehicles

15

Ethernet way forward for Connected Cars: F&S

16

Will incompatible standards slow down electric cars?

20

The problem in the pre-owned car market is the lack of vehicles supply to pre-owned dealerships and not the demand as owners are retaining their vehicles longer.

The company is planning to introduce a version of Shell Lubricants’ GTL in India by next year, according to Nitin Prasad, country head, Shell.

To retain its existing customer base, AMW is offering individual attention to address the specific aftersales needs of its customers.

10

11

Indian operations of the newly formed Mahindra CIE may emerge as an export hub for the group and its combined revenue would be in the vicinity of around Rs 5,000 crore.

Bosch Limited has registered a growth of 5.2 percent on net sales and income from operations in the second quarter of 2013 over the same period last year at Rs 2,269 crore in India.

The future vehicle will need to communicate with the outside world via seamless access to the Internet over wireless networks.

With the paradigm shift toward connected cars and connected location based services, there is an ever-increasing need for higher data transfer bandwidths.

15

Competing standards for the fast-charging of electric cars could put continued growth at risk, according to a report in Scientific American.

OTHER SIDE

22

20 M Balasubramanian, VP, Aftermarket & PMG, AMW Motors

Balasubramanian has more than three decades of experience in the auto industry across functions & domains and has been instrumental in bringing key changes in the aftermarket business of AMW.

Auto Monitor

8

12 AUGUST 2013

A N A LYS I S

Supply it and they might come

The problem is the lack of vehicles supply to pre-owned dealerships and not demand as owners are retaining their vehicles longer.

Pradeb Biswas Mumbai

T

here’s a general consensus in the auto industry that when the market for new cars are flat, one needs to look elsewhere in terms of sales. But even the pre-owned car market has been unable to fill in.

A year ago, the pre-owned car dealerships were used to seeing 40-50 footfalls regularly. Dealers now consider it a good sign if even 10 customers walk in to enquire about pre-owned cars.

What seems to irk them is that none of the numerous schemes to lure buyers seem to be working. From offering 100 percent finance to vehicle exchange option and bonus to low interest rate, not to forget free RTO transfer and six months warranty, have all proved futile.

“There seems to be a general lull in the overall market. And this has only encouraged prospective buyers to defer buying decisions. The monsoon season is

The monsoon season is also acting as a deterrent. The poor road condition does not augur well for auto sales.

also acting as a deterrent. The poor road condition does not augur well for auto sales. Usually, entry level vehicles witness a sales boom during monsoon but even this has failed to take off. We expect the slowdown to last till the end of mon-

soon,” says Harpreet Singh Suri, owner of Navi Mumbai-based Suri Motors, a multibrand pre-owned vehicle dealership.

“During a downturn, buyers are more aggressive about getting a good deal.

Currently, the D-segment cars like the

Civic, Corolla, Accord, and Octavia are generating interest from potential buyers. Most of these vehicles also have a higher cost of ownership, so in times like these buying a well-maintained pre-owned car makes for a good deal. About a year ago, we were selling around 70 vehicles on a monthly basis, but that has dropped to 40. Customer walk-ins and enquiries have also reduced substantially,” says Mahadev, Sales Manager at Vashi-based Deep Motors.

An automobile analyst requesting anonymity says, “The pre-owned vehicle market is seeing a slowdown because current vehicle owners are hanging on to their cars longer. Pre-owned vehicle buyers comprise first time buyers and those on the lookout for a second car. Their purchase decisions depend on their financial situation and not just the market. Owing to the current state of the economy, which has affected employees across sectors, it is obvious that people are deferring purchase decisions.”

Some dealers are of the view that with the increasing popularity of CNG conversions, Toyota, Honda and Maruti Suzuki makes for popular choice in the pre-owned market. The analyst says that with CNG facilities available in selected cities, people tend to buy petrol vehicles for conversions. The urban buyer prefers a Honda or Toyota pre-owned car, while those in rural areas would rather go in for a Tata or Mahindra. A reason why Maruti Suzuki is popular in the pre-owned market is because of their wide availability as a used buy.

Seconding this, Nagendra Palle, CEO, Mahindra First Choice Wheels, says that vehicle popularity in the pre-owned market follows the new car trend.

Vehicles that are popular in the new car market find demand in pre-owned also. With a three stage process of evaluation, refurbishment and certification, Mahindra First Choice Wheels is confident of attracting customers to its pre-owned vehicle dealerships.

“The car holding period which saw a steady decline from FY-07 to FY-12 has risen again. This has caused less supply of used cars to the market.

One can imply that the growth is further constricted more by supply factors, although demand continues to be tepid. At Mahindra First Choice we see a higher demand for sedans as compared to hatchbacks, which is unlike the new car market. We grew by 35 percent in Q1 of FY14 on a year-on-year basis,” says Palle.

He adds, “According to Crisil estimates, the preowned car market is expected to grow at a rate of 24 percent and reach close to eight million units by FY17. Even at this size, in India it would still be only 1.8 times the new car market. This is still lower than the ratio of three used cars sold for every new car sold in US and Europe. Considering the head room available we are confident of the buoyancy in the used car market in India,” added Palle.

Dealers say that buyers don’t need any education in terms of the market for used cars. Potential buyers carry out all their research online before visiting a pre-owned vehicle dealership. They make a decision upon seeing the actual car.

Another trend, according to dealers, is the popularity of petrol cars in the pre-owned market. The recent price rise in diesel has narrowed down the price difference between petrol and diesel. Dealers claim that buyer veer towards petrol vehicles as they can be converted to run on CNG and utilized as economical runabouts.

Auto Monitor

INTERVIEW

10

12 AUGUST 2013

“Oil technology in India is growing fastest” Shell Lubricants has invested $20 billion in Gas-to-Liquid (GTL) in Qatar last year. The company is planning to introduce a version of GTL in India by next year. Nitin Prasad, country head shares the company’s plans with Nabeel A Khan.

Does the slowdown deter your plans?

The general view in the media and in the industry is that there is a slowdown along the way. But we have been growing well over the last five years. It is a double digit growth and better than others.

Could you share the CAGR for the last few years?

We don’t share specific numbers. In profitability and volume. Going back to the question whether the slowdown is impacting our investment and outlook, the answer is – No. We have the prospective for the market for the next 10 to 20 years and India remains an important part. We make investments for the long term and don’t change due to short term events.

New foreign vehicle manufacturers in CVs have come, and car and bike markets have also been maturing.

How does this augur for you?

There is a different way to look at this. There are a couple of other underlying trends in terms of technology. In general, the industry is moving towards more advanced oil, looking for better capability from oil solutions. Whether it is higher efficiency level or

Dispense RTVs and Grease with Ease

Will you introduce GTL in India on a large scale?

The launch of the oil also requires preparedness from OEMs. We are testing the oil with several OEMs. We have launched one or two versions of it and in the new Maruti Alto. We will bring the base oil of GTL from Qatar and manufacture the finished product in India within the next year at Taloja.

Its fuel efficiency is defined by OEMs and we work in conjunction with them to develop the oil. In my opinion you can see an improvement of around five percent in fuel efficiency. The technology has been launched in China, Germany, and US.

The 736HP-NV high-pressure dispense valve applies uniform amounts of thick materials like greases and silicones at pressures up to 2500 psi (172 bar).

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You operate in over 100 countries and have R&D centers at three locations, one of them being Bangalore. How efficient and capable is this centre?

The R&D centre in Bangalore is one of the three in the world and does mainly research. This covers all the application including the one coming to India. You cannot have any distinctness from the rest of globe. In some cases, the other centres are advanced and in some cases they use the technology from Bangalore. We work very closely with the Bangalore centre.

What kind of advantage GTL is going to offer in comparison to the other technology?

See, all the oil is centered on better fuel efficiency, cleaner burning and engine reliability. If you do the right formulation GTL can be much cleaner and give better fuel efficiency as this allows more to extract from the engine.

These durable bulk unloaders provide superior flow properties and ease of operation.

RS

Could you give us a sense of the kind of technology Shell Lubricants is going to adopt for India, looking at the cost factor?

The Indian consumer is discerning and is ready to pay high for premium quality. This helps them reduce total cost of ownership. What we expect to see in terms of technology trend is to shift portfolio more aggressively going forward. Historically the market is run on 20W kind of oil, we see it going very quickly to 15W and 5W, and in fact many OEMs are now talking about 5W and 0W. So the pace of technology adoption is faster. My sense is the pace of the technology adoption here in India is faster than other countries. It will take some time to catch up but it will happen. The trend is going towards synthetic, semi synthetic to fully synthetic. These are solutions we are offering to OEMS. We offer completely synthetic also but that depends on the application. Synthetic and better oil always help in terms of fuel efficiency, drive quality and engine life. In India, good oil becomes crucial because of the varied weather conditions and bad road conditions.

What is next level of technology in India?

The next level of technology is already in India.

One of the things that we have done is Gas-toliquid (GTL). We have made huge investments in GTL and $20 billion in a plant in Qatar and this generation of oil is the one of the cleanest.

Nordson EFD’s 736HPA-NV high-pressure valve and the Rhino bulk unloader are designed to work together effectively to dispense high-viscosity RTVs, greases and sealants.

A

performance or reliability or the emission control these are the general things people are looking for.

This goes for segments such as tractors, trucks, cars or motorcycles.

Nordson India Pvt. Ltd. 143A, Bommasandra Industrial Area, Bangalore – 560 099 Karnataka, India.

Phone: +91 80 4021 3600 Email: india-sales@nordsonefd.com

How important is India for Shell globally?

We don’t look at the market and break up our numbers. We want India to be among the top five markets for Shell Lubricants globally. Right now India is among top 10 for Shell. Today we have a market share in India of 10 to 15 percent. Going ahead want to be number one or two in the categories we are present in. We see so much growth in India that we have more demand than we can currently service.

You are partner to one of the F1 Ferrari teams. Do you see the 2014 F1 happening in India?

We see the discussion happening. We hope that it happens and we will support. But I think it is up to the organisers to decide.

12 AUGUST 2013

NEWS

Service Seva To retain its existing customer base, AMW is offering individual attention to address the specific aftersales needs of its customers Pradeb Biswas

C

ompetition is not always bad. Sometimes it helps create better things. Apart from offering more options to the end consumer, it also makes each competitor strive for a unique identity. It helps to have a distinct identity as manufacturer especially when buyers are saturated with the regular offerings. With new CV buyers comprising majorly of existing fleet owners who are expanding their fleet, and new entrants comprising a very small minority, AMW has a unique aftersales strategy to ensure they remain the preferred manufacturer for its vehicle owners.

“Retaining customers will be a key focus for the CV industry,” says M. Balasubramanian, Vice President, After Market & PMG, AMW. With over three decades of experience in the CV industry, he says that customer expectations have changed drastically over the years. CV owners now expect service standards and showroom treatment at par with that of passenger vehicle standards. He is confident that the service quality offered by individual manufacturers will be the key differentiator for the CV industry in the future.

“It is the experience of the customer during showroom delivery and servicing that creates a connection between them and the product. Today service needs to be consistent as well as sustainable which creates a value proposition. In terms of service standards the market is now reaching a saturation phase. Earlier branding slogans like ‘customer is always right’ and ‘complete satisfaction assured’ have become stale. CV owners want more than mere brand hype. Relationship marketing and relationship service is of more value and at AMW we completely focus on this,” he adds.

“Generic service even if of excellent quality no longer excites. Service needs to pack some punch. It is important to be honest with the customer in terms of any fault with the vehicle. It helps to reinforce brand value. We need to partner with the customers to make their business successful. Our job is to ensure that the vehicle is ready to bring in the business for them at all times,” he said.

To ensure that CV parts can be delivered in a short time to any location in India, AMW signed an agreement last year with the Indian Railways. This allows supplying parts to remote places in a short span of time. Earlier parts were delivered by trucks which would take 15 days. In 2012, the aftermarket contributed Rs 110 crore to its revenue while AMC (Annual Maintenance Contract) contributed Rs 120 crore. Aftermarket contributes 10 percent to the overall revenue of AMW and is expected to increase to 15 percent this year end.

Balasubramanian explains that providing individualised attention to customers is important. He cites an example of AMW’s on-site support facility for tipper truck owners used for carrying heavy loads in off-road environments. They get used only for such work and lie idle otherwise. Their owners cannot have a breakdown when work is available. If required, AMW service engineers set up a base onsite and stay there during the project duration.

Similarly for haulage vehicles and highway truck operators the requirement is for en-route service.

AMW has partnered with local garages and trained mechanics to deliver first aid and bring the vehicle to the nearest service centre. Such service touch points are present every 100 km and the aim is to have one every 50 km. AMW has more than 1,800 service touch points. It claims to have trained more than 10,000 drivers to operate the trucks safely. It also trains the mechanics of fleet owners who run their own garage for regular fleet maintenance.

The aftermarket division of AMW has been

branded ‘AMW Seva’ which revolves around the brand promises of ‘service delivery’ and ‘service quality’.

Currently there are around 32,000 AMW CVs on road.

Of this, the manufacturer claims that 70 percent return to their workshops for service. There is also a Customer Satisfaction Index which comprises deliverables like Reliability (customer depends on manufacturer to ensure dependability), Assuredness (service staff wins trust of customers), Tangibility (cleanliness and hygienic working conditions), Empathy (care and individual attention), Responsiveness (service is always quick to address customer).

As a part of its ‘AMW Seva’ campaign, the manufacturer organizes service camps across the country. Last year it had organized over 270 such camps and serviced over 8,000 vehicles. This year the target is to organize 600 service camps with the intention of attracting at 16,000 of their vehicles.

In terms of vehicles, the CV market is reaching a saturation level with all major players having more or less the similar engine technology and features on offer.

Owners unhappy with aftersales of a particular brand refrain from making a second purchase. Thus it is crucial to establish unique service standards so that the existing customer base doesn’t switch.

Auto Monitor

11

Auto Monitor

12 AUGUST 2013

COLUMN

12

Export woes

I Nabeel A Khan

t’s been two years since Auto Monitor has been talking about a fall back option for auto component suppliers in exports and aftermarket as we were inching towards a slowdown. We covered numerous companies that had begun charting a new course to counter impending trouble in local markets. The idea was to look for export markets for two reasons: To counter the trade imbalance occurring due to a devaluing rupee, and to continue to grow despite falling local demand.

Though some companies took their plan seriously and saw an increase in revenue from exports, others remained mere plans. In my opinion, on an average most Indian component manufacturers earn 8 to 20 percent revenue from exports. Of course, there are some exceptions.

Some companies that mainly rely on exports are smaller ones and mostly deal in aftermarket.

Some leading OEM suppliers don’t have much exposure to exports because of the agreement they have with their joint venture partners. Some others have their hands full to fulfill local demand and have not looked outside.

Usually, companies that require little use of technology such as foundry and forgings score better in terms of exports.

But with the government levying 2.5 percent duty on import of metal scrap, even this has come under pressure. The apex body representing foundries, Institute of Indian Foundrymen, said the new policy would hurt the domestic industry and result in India losing the market to China

and Thailand. A note to consider here is that Thailand has not imposed import duty on such goods.

Ironically, under the new FTA, finished and semi-finished goods are imported into India from Malaysia and Thailand as duty free. Adding to woes is the falling rupee that is touching a new low each day. The best bet for auto firms is to export and rake in as much foreign currency as possible.

India exports foundries mainly to Europe, which too is reeling under the slowdown. This doesn’t imply an impasse. Manufacturers must try to increase the volume of exports to the same market by adding new products. Find new emerging markets with potential and strive to enter components requiring higher technology.

Setting up an assembly/manufacturing unit in areas that proscribe direct imports must be explored. Emerging and high growth markets like Russia, Brazil and African countries have big potential. Though conducting business in these countries brings its own challenges.

Recently, the apex body of component manufacturers, Automotive Component Manufacturers Association of India (ACMA), took a serious note of this trend and hosted a conference on enhancing exports.

It attracted a never-before-seen response from auto component suppliers.

Most manufacturers are hopeful of entering the exports arena.

Some companies bound under agreements with foreign collaborator and cannot export are

At a recent meeting, ACMA met up with industry persons to analyse the reason why India is lacking in exports.

seeking alternate routes such as private branding or reshuffling the product line in aftermarket.

Companies want to hike exports contribution from 10 percent to 30 percent in the next couple of years. ACMA is sending delegations to potential exports markets such as Russia, Brazil, Indonesia and Africa. The primary focus is after-sales. India should learn not to stick to the traditional thought of following its manufacturers, but enter new markets and build new customers. It takes time and effort.

Some possibilities Russia, which is poised to overtake Germany in terms of purchasing power parity in the next five years, offers a big potential for Indian manufacturers.

The bigger the opportunity, bigger is the challenge. It’s one of the toughest markets to do business in considering their regulations and policies. The country has three leading global vehicle manufacturers and a few local ones.

According to reports, Russia has a market of 2.76 mn cars per year and 69,000 units of buses. The light vehicle segment is expected

to grow at 5 percent and CVs at 4 percent over three years. Russia currently imports around a million vehicles.

Brazil has a lot of affinity with India in terms of socio-economic status. The country offers great opportunity in terms of agricultural and mining equipment.

Mexico too offers access to a good market. There are 54 countries on the African Continent, and is populated by low-cost vehicles.

Most countries are backward and mainly rely on road transportation. In East Africa, Kenya can be an ideal place to set up shop.

Some compa n ies a re already ramping up capacity in Kenya such as Renault and Nissan. Nigeria is also a good potential market and Indian manufacturers, those dealing in farm equipment, are exporting considerable numbers.

All in all, it would not be easy to directly export from India but will require investment and must follow CKD and SKD route.

The author can be reached at nabeel.khan@network18publishing.com.

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13

Mahindra CIE may shape as exports hub to Europe Abhishek Parekh Mumbai

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he Indian operations of the newly formed Mahindra CIE are likely to emerge as an export hub for the group. Both partners in the new entity, M&M and CIE Automotive, may also evaluate shifting or relocating manufacturing facilities in key business areas to India to gain competitive advantage. The combined revenue for the newly formed entity would be in the vicinity of around Rs 5,000 crore.

M&M and Spain’s CIE Automotive SA entered into an agreement last month to form a global automotive component supply network with combined annual sales of approximately Rs 15,000 crore with operations in North America, South America, Europe and Asia held through listed businesses in Spain, Brazil and India.

As part of the transaction, CIE Automotive - through one of its subsidiaries - will acquire from Mahindra Group a stake in its listed and unlisted companies belonging to Systech Automotive Component business and CIE Automotive will contribute its forging businesses in Spain and Lithuania and together consolidate all companies under Mahindra Forgings Ltd which will be rechristened Mahindra CIE. Mahindra CIE will continue to be listed on BSE (Bombay Stock

Exchange) and NSE (National Stock Exchange).

During the recent result announcement, an official said that Mahindra CIE could include all forgings operations of both partners in Europe in addition to Indian operations in business areas such as castings and forging based systems and components as well as transmission parts and systems. These operations comprise three plants under three different companies located in Spain and Lithuania.

The operations in Europe mainly supply forgings for passenger cars including long series forged cranks shafts. The turnover of these three companies is around 150 million and with an EBITDA of around 21 million.

The official said that volumes in Europe are around 75 percent of the levels witnessed in 2008.

CIE Automotive has been working hard in Europe to reduce the breakeven including downsizing or layoffs of white collar employees to enable the Europe operations to increase EBITDA margins in Europe to a level over 15 percent. It would be a while before the volumes come back to the levels seen before 2008 crises.

Mahindra Systech offers a variety of components and services to the automotive and other engineering sector companies.

Its component portfolio includes castings, forgings, stampings, gears, magnetic products and composites. The key entities in the Systech division includes

Hemant Luthra, President – Systech Sector

Mahindra Forgings, Mahindra Ugine Steel Co, Mahindra Composites, Mahindra Hinoday Industries and Mahindra Gears.

CIE Automotive is supplier of components and sub-components for the automobile sector operating in Europe, Brazil, NAFTA and China with sales of Euro 1.65 Billion. CIE develops its entire line of products through seven basic processes or technologies (forging, machin-

ing, aluminum, stamping, plastic, iron casting and painting). With them, CIE manufactures components and sub-assemblies for all parts of vehicles, including engine and powertrain, chassis and steering assembly and exterior and interior of the vehicle. The group has operations in Brazil, Mexico, the US and China constituted under its subsidiary, Autometal, listed on the Sao Paolo stock exchange.

Yamaha Motor launches Special Edition of FZ-S, Fazer

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amaha Motor India Sa les has launched the Special Edition of its popular FZ Series motorcycles - the FZ-S and Fazer to boost sales and create more excitement amongst customers in the light of the upcoming festive season. Both FZ-S & Fazer have undergone changes involving new graphics and paint finishes and will be available in an all new battle green color with highly stylish and aggressive graphics. The new FZ-S will be available at a price of Rs 74,385 while the Fazer will be priced at Rs 79,485.

All these prices are ex-showroom Delhi.

The engine specs of both special edition Yamaha FZ-S as well as the Yamaha Fazer remain unchanged with the same 153cc, air cooled-single cylinder four stroke engine doing duty. The engine generates maximum power of 14 Bhp at 7500 rpm with maximum torque of 13.6 Nm at 6000 rpm. This engine is mated to a 5-speed gearbox.

Roy Kurian, Vice President Sales and Marketing, Yamaha Motor India Sales Pvt. Ltd. said, “Our strategic intent is to provide customers with stylish new variants of the FZ series to match his personal style. These bikes have been instrumental in catapulting our sales to an all new level. ” Upbeat about the launch, the company has put together a strategy and will follow a 360 degree approach covering all the elements of promotion namely TV/ Print/Web etc.

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Ford opens series of dealership outlets in August

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dding one new customer every five minutes, Ford Figo zipped past another milestone – crossing the 300,000 sales mark in the third year of its market launch. Ford India celebrates this milestone with plans to open five new dealerships in tier III cities including Solan, Sri Ganganagar, Gaya, Anand and Sikar. Dealership facilities are also coming up in Faridabad and Kochi.

Together with its success in India, the Figo is being exported to over 37 international markets, reinforcing Ford’s commitment in making India a world-class manufacturing hub, positioning the Figo as one of the best-selling vehicles in India, and across the world.

“The Figo continues to be a gamechanger for Ford in India and has helped position Ford as a significant player. We debuted in the small car segment with the Figo and continue to offer a compelling choice for customers who want a vehicle that offers a quality, safe, fuel efficient and substantial value package. Today, as we celebrate the 300,000

12 AUGUST 2013

IN OTHER NEWS

sales milestone, I thank our customers in India and international markets for making the Figo their product of choice and placing their confidence in the Ford brand,” said Joginder Singh, president and managing director, Ford India.

Ford Figo is known for its best-inclass quality features and value for money proposition. The car’s popularity is strengthened by the fact that 65 percent of its owners in India are firsttime car buyers. Adding to the acclaim, it has been recently rated as India’s most dependable premium compact vehicle in the latest results of the pres-

tigious 2013 J.D. Power Asia Pacific India Vehicle Dependability Study.

Ford India plans several new dealer openings across tier II and III markets to ensure wider reach and enhance the ownership experience. The first new dealer opening is planned in Solan, followed by openings in Sri Ganganagar, Gaya, Anand and Sikar.

Earlier this year, Ford India launched the Figo “Celebration Edition” to celebrate Figo’s third anniversary. To support the growing number of its vehicles on Indian roads, Ford India will expand its dealer network to 265 sales and service outlets in 142 cities across India. In order to reach out to its customers, Ford India plans to increase the number of its sales and service network to 500 by around mid-decade. With an emphasis on lower cost of ownership, the company has also introduced many service initiatives including Mobile Service Vans and Roadside Assistance (RSA) across growing locations.

Bosch registers 5.2 pc growth in Q2 2013

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osch Limited has registered a growth of 5.2 percent on net sales and income from operations in the second quarter of 2013 over the same period last year at Rs 2,269 crores in India. Profit Before Tax (PBT) increased by 7.1 percent and stands at Rs 366 crores for the second quarter as compared to the same period of 2012. Profit after Tax (PAT) is Rs 252 crores, registering a growth of 1.7 percent over the same period of 2012. Exports increased by 14 percent in the second quarter of 2013.

“In the second quarter of this year, we managed to achieve greater than five percent growth despite the overall weak market conditions. The automotive market benefitted from the increase in tractor and 3-wheeler segments, but overall remained weak due to a decline in passenger cars and heavy commercial vehicles,” said Dr Steffen Berns, Managing Director, Bosch Limited, announcing the company’s quarterly results.

The focus on expanding and developing the non-automotive product portfolio has resulted in positive yields. All divisions across the non-automotive segment have registered a double-digit growth. “The positive momentum in Bosch India was mainly driven by the strong growth of our nonautomotive business. Exports have seen a positive trend in this quarter. Overall, we anticipate moderate growth for the next two quarters compared to the weak last half of 2012,” Dr. Berns added.

Registering an overall growth of 0.8 percent at Rs 4,460 crores on net sales and income from operations in the first half of 2013, the company is confident of its growth in the region from a mid and long-term perspective.

Dr. Berns added, “Facing the difficult market environment, we are continuously taking steps to improve our operational efficiency. The rupee depreciation to the USD has put additional burden on our bottom line. However, we will continue to invest for a sustained long-term growth. The overall business environment will remain challenging during 2013.”

Renault-Nissan finds talent in Dalby

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he Renault-Nissan Alliance has appointed Christophe Dalby as Director HR for Renault-Nissan in India. With effect from August 01 2013, Christophe Dalby, currently General Manager Talent Management and Executive Development at Renault will take charge as HR Director Renault-Nissan India.

Dalby will be responsible for all HR operations in India to ensure the best-of-class effectiveness and efficiency of HR delivery and to optimize RenaultNissan HR Synergies for India operations. Dalby will be based in Chennai.

Tata Motors, UCO Bank to finance CVs

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ata Motors has entered into an understanding with UCO Bank for financing its range of commercial vehicles, to provide an added facility of finance to its customers. Though this tie-up, UCO Bank will offer loans of up to 85 percent on a Tata Motors commercial vehicles on-road pricing. At very competitive rates starting at 11.50 percent p.a and tenure of up to 7 years, this facility will be available through all Tata Motors and UCO Bank outlets.

Tata Motors recently doubled warranty to an unbeatable 4 years, on its entire range of heavy trucks, with 25 tonnes and higher GVW (Gross Vehicle Weight). With this, Tata Motors has become the first company in India to offer a standard warranty of 4 years on heavy trucks.

12 AUGUST 2013

Continental, Cisco offer glimpse into connected vehicles

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ehicle manufacturers and suppliers across the globe are looking to put future automotive innovative functions in their vehicle to help enhance the experience of owning and driving a vehicle.

From drivers receiving real time traffic and navigation guidance, to passengers viewing movies via cloud based infotainment, to manufacturers keeping vehicle software updated over-the-air, to automated and driverless automobiles, the future vehicle will need to communicate with the outside world via seamless access to the Internet over wireless networks. Continental and Cisco showcase a proof-of-concept connected vehicle at the Center for Automotive Research Management Briefing Seminars.

This joint proof-of-concept connected vehicle is equipped with the secure and seamless network technology to meet the growing demands for connected vehicles.

Continental lay the foundation for added innovative automobile functions and benefits to passengers to make connectivity to the digital world outside a moving vehicle a secure, reliable and enjoyable experience.

Cisco enterprise-grade, seamless wireless network switching technology is highly secure and will connect passengers to the right network based on their location on the road and their user preference.

Based on this initial proof of concept solution, Continental and Cisco are also planning to work together to develop innovative solutions that leverage ubiquitous connectivity of moving vehicles.

High speed and reliable network connectivity As a vehicle moves it needs to prioritize critical needs of drivers and passengers for network connectivity. The Cisco on-board software solution seamlessly switches between available 3G, 4G and other wireless

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NEWS

networks based on cost and quality of service preferences.

Enhanced security The Cisco and Continental proof of concept car shows how auto manufactures can provide the same amount of network security that is available at home or in the office.

Cisco provides one secure software gateway that delivers Cisco’s core networking capabilities and optimizes all communication links and mobility services to and from the vehicle. Security against cyber attacks will become more important as more connected functions are brought to vehicles.

Elmar Degenhart, CEO, Continental: “At Continental we believe that the internet does not just come into the car, but that the car becomes a part of the internet.

This opens up so many exciting opportunities for shaping the mobility of the future

through innovation and creativity. We think the best way to unlock the opportunities of the connected vehicle is to look for collaborations, where we bring together areas of expertise and allow breakthrough technology to be imagined, developed and brought to market.”

Ralf Lenninger, head of innovation and strategy at Continental’s Interior Division: “Connected vehicles are opening up a vast field of opportunities for services to make driving safer, more efficient and more comfortable. This is why we are looking at ways to connect the moving vehicle in a highly secure, fast and reliable way. By cooperating with Cisco, we can combine their expertise in software and network knowledge, with our knowhow in automotive hardware, embedded software and systems integration in order to create solutions for the connected vehicle of the future.”

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Julie Tolley is VP & GM for Eaton’s CV Clutch Business

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ulie Tolley has been named VP and GM for Eaton Vehicle Group’s Commercial Vehicle Clutch business, effective July 22, 2013.

Based in Galesburg, Michigan, Tolley reports to Tim Sinden, President – North America Truck Operations. She will be responsible for customer interactions and commercial strategies, product development programs, maximizing uptime reliability and strategic initiatives.

“Julie’s success in key roles at Eaton along with her extensive experience in operations, product strategy and marketing within the Vehicle Group makes her the ideal person to lead our Commercial Vehicle Clutch business,” said Sinden.

Tolley most recently served as global segment director – Automotive. Prior to this, Tolley served as GM – (FEPC) from December 2008 until March 2011.

Tolley joined Eaton in June 2004 as product strategy manager – Torque Control Products Division. She previously worked for Visteon Corporation and before that with Ford Motor Company’s Powertrain operations and General Motors.

Auto Monitor

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NEWS

16

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o date, Schuler has sold about 340 presses with ServoDirect Technology.

Monoblock machines with a welded press structure are particularly popular, and can be delivered in one piece. Now, the smallest machine in this series, the MSD 250 with a press force of 250 metric tons, has been completely revised. This was based on intensive discussions held with customers.

“The new MSD 250 has become much more compact and faster than its predecessor,” said Oliver Beisel, Head of Sales for Stamping and Cutting Systems at Schuler, last month at the Göppingen plant. “This means we have been able to coordinate it more effectively with the market’s requirements.”

For example, the new MSD 250 can be installed directly at floor level and has a height of 4400 mm, making it more than one meter lower than the previous model which was 5430 mm tall. For one thing, this is a consequence of reducing the slide stroke from a maximum of 200 mm to 160 mm at most, which will prove com-

pletely adequate in the majority of cases, while for another thing it is due to the die shut height having been reduced from 600 mm to 550 mm. The height of the bolster plate above floor level has been reduced from 1480 mm to 1200 mm. There is also a positive side-effect: This means the press operator can look into the die much more easily if required.

Greater rigidity and component accuracy In the past, the bolster length at 2500 mm also proved to be highly generously dimensioned in most cases. The new length of the bolster, 2000 mm, combined with retaining the same depth means that not only be height but also the footprint of the new MSD 250 is smaller. Not only does this offer the advantage that the machine can be set up in smaller plant halls, but also it is noticeably easier to transport into position. Although this does mean that the machine is more suited to progressive die rather than transfer die processes, it proved to be the case that 90percent of the previous models were

used in progressive die mode.

Any customers who wish to have a longer stroke and a larger press bolster can still order the previous model from Schuler.

What is more, the compact design has positive effects on the rigidity of the overall system: It is 30 percent higher, and consequently the accuracy of the produced components is greater.

At the same time, die wear and the cutting impact are reduced.

The small servo press can also score points when it comes to speed: Whereas the maximum stroke rate at maximum stroke height used to be 70 strokes per minute, 90 are now possible – even 160 (formerly 140) in pendular stroke mode.

At the presentation in Göppingen, the machine was connected to an 8-roller straightener and a high-performance “Powerfeed” roll feed system from Schuler Automation, and was producing components at 120 strokes per minute. Visitors were able to see for themselves the extremely short overrun travel of the new MSD 250, resulting in high die protection and, consequently, longer service life and availability as well as lower reworking costs. The machine will remain in the Göppingen plant, where it will be available to customers for blanking tests.

Image: Schuler

30 pc lower energy consumption

The small servo press can achieve 20 more strokes per minute, while using about 30% less energy.

Overall, the new MSD 250 is about 40percent more dynamic than the previous model, and with a reduced connected load.

The power consumption in pendular stroke mode is more than 20percent lower – in full stroke mode even more than 30percent – despite the fact that the new development no longer has

Image: Schuler

Schuler launches MSD250

Schuler customers can carry out blanking tests and try out their dies on the machine at the Göppingen plant.

an energy accumulator. It is no longer needed: In the optimum case, the machine only uses 6 watt hours instead of 7, and in contrast to the previous situation, the energy requirement in each press stroke declines continuously in full-stroke mode until the maximum stroke rate is reached. This is due to the significantly reduced masses in motion.

However, the energy accumulator is still available as an option in order to reduce the connected power even further if required.

Visitors to the in-house show at Göppingen were offered more than new press technology, however. There were also various exhibition stands providing information about systems for die monitoring and strip spraying as well as die change concepts and the offer of training courses and consulting. “We regard ourselves as a system supplier, and we do not leave our customers in the lurch after they have purchased a press,” emphasizes the Head of Sales, Oliver Beisel. “Just as we work together with customers in advance to calculate the

Apollo Tyres net profit Ethernet way forward for Connected Cars: F&S surges 19 pc in Q1

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he Board of Directors of Apollo Tyres Ltd have approved the company’s unaudited results for Q1 2013-14.

For the quarter ended June 30, 2013, Apollo Tyres Ltd, on a consolidated level, reported a profit of Rs 166 crores on the net sales of Rs 3,190 crores.

Despite the sluggishness in the automotive sector, the company has managed to hold on to its revenues. Apollo Tyres’ European Operations, continuing its strong performance, registered an increase of 6 percent in revenues in Q1 FY14, as compared to the same period last year.

The net sales for company’s South African operations also grew 13 percent amidst concerns of growing imports of tyres from China.

Onkar S Kanwar, Chairman, Apollo Tyres Ltd said, “It is a challenging time for the automotive industry, with sales slowing for most vehicle makers. However, our leadership in the high-margin truck-bus

radial segment in India, along with an increased focus on the replacement market across geographies, has helped us increase our profitability.”

Q1 Performance Highlights Q1 FY2013-14 (April - June) vs Q1 FY2012-13 * Net sales stood at Rs 31.9 billion (Rs 3190 crore) from Rs 31.6 billion (Rs 3165 crore) * Operating profit was at Rs 4.04 billion (Rs 404 crore) an increase of 12 percent, from Rs 3.6 billion (Rs 361 crore) * Net profit grew 19 percent to Rs 1.66 billion (Rs 166 crore) from Rs 1.39 billion (Rs 139 crore) Kanwar added, “During the last quarter, we announced the acquisition of US-based Cooper Tire and Rubber Company. We remain committed to closing this compelling transaction. Both companies are working towards securing all necessary approvals to close the deal, which is expected to happen by Q3 of this fiscal.”

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he need to integrate mu lt iple consu mer electronic devices into the car offering connected services and maintaining brand identity has led to a situation where OEMs are shifting toward higher connectivity options, which could power prioritised and personalised services, catering to varied consumer needs. With the paradigm shift toward connected cars and associated services such as automotive-app stores and connected location based services, there is an everincreasing need for higher data transfer bandwidths. Ethernet could serve as the backbone to the electronic architecture connecting domains and sub networks that require higher bandwidth and also cater to consumers’ need for connectivity.

Frost & Sullivan estimates that the total number of Ethernet ports globally will reach 300 million by 2020. The number of nodes or ports is expected to range from more than 100 in luxury cars, 50–60 in mass market

segment cars, and less than 10 nodes in entry level cars by 2020.

“Ethernet could be the catalyst for bringing the automotive industry a step closer to connected vehicles,” says Frost & Sullivan’s Research Analyst.

“With its capability to simplify the networking architecture, higher uptake rates are expected in the near future.” Connectivity of sub networks and communication of control units require higher bandwidths. Car networks such as LIN, CAN, and FlexRay are not specified to cover the increasing demands for bandwidth and scalability.

The bandwidth requirement for in-vehicle electronic applications, such as camera-assisted parking with advanced driver assistance systems (ADAS), lane departure warning systems, collision avoidance systems, and traffic light recognition is higher, in the range over 100Mbps. The number of nodes to be connected therefore is also higher. Most importantly, proven IP-based Ethernet technology enables OEMs to use a single-network platform by significantly reducing the connectivity cost and cabling weight. It is scalable and

press force and use of material, as well as for qualifying employees, we also work intensively with them afterwards to identify further possibilities for optimizing the machine.” Employee qualification also plays a part in the overall equipment effectiveness (OEE), he continued.

Convincing price/ performance ratio Thanks to the continuous production line introduced in the Göppingen plant for monoblock servo presses, the new MSD 250 is available within 6 to 8 months.

“The price/performance ratio ought to be convincing for many customers,” says the Head of Sales, Oliver Beisel, with conviction. “Apart from that, there is a range of subsidy programs available at national and regional levels as a means of providing effective financial support for small and medium-sized enterprises who wish to purchase a new, energy-efficient machine of this kind. We will be happy to provide further information about this on request.”

flexible enough to be used in multiple vehicle segments.

“OEMs are now working to bring in Ethernet into their future models that will fulfil all kinds of telematics and infotainment demands of end users,” says the analyst. “OEMs can benefit from the use of Ethernet to reduce connectivity cost and weight due to lighter cabling leading to better fuel economy.”

BMW AG, in partnership with Freescale Semiconductor, Inc., will be the first OEM to commercialise the Ethernet for a 360-degree camera parking assist system for its X5, later in 2013. The German carmaker is expected to offer the same for other models in the future.

Hyundai Motor Company is using Broadcom Corporation’s Broad R-Reach Et her net technology to offer next-gen connected infotainment systems.

Fiat Group Automobiles S.P.A has also signed a joint venture with Continental AG for its 500L model to bring in the Continental Infotainment System, which can be used as an advanced multimedia system.

“It is also indicative, that OEMs such as BMW, Hyundai, JLR, GM, are part of the open alliance (One-Pair EtherNet), a SIG to use Ethernet as a solution for infotainment and telematics,” concludes the analyst.

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AUTOPOINT

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“Economic headwinds make ride difficult for PVs” Revati Kasture Head, Industry Research Vishal Srivastav Manager Samay Ganhar Analyst

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he previous two fiscals FY12 and FY13 were one of the most challenging periods for the passenger vehicle (PV) industry in last one decade as the sector managed to pose a modest rise of five percent and two percent respectively. CARE Research believes the scenario to worsen in FY14, as passenger vehicles industry is expected to witness drop in domestic sales, which would be first time since FY01.

CARE Research estimates drop in the domestic sales would be in a range of 3-4 percent in FY14.

Current concerns over slowdown in economy is suppressing jobs creation in the country and thereby straining purchasing power. Moreover, factors like high inflation, increasing fuel prices coupled with firm interest rates has considerably raised ownership cost of the vehicles in past couple of years. However, one of the lowest penetration levels among the key developed and developing countries still presents healthy growth opportunity for the industry in India in long term.

High ownership cost hurting PV sales Ownership cost of vehicles has witnessed a surge in past few years on the back of rising fuel prices and firm interest rates.

Fuel cost constituted around 35 percent of ownership cost in FY10 whereas the same in FY13 stands at around 45 percent. Similarly, repo rates, which were around 4.5 percent in FY10, are hovering around 7.5 percent in FY13, which has thereby increased the interest rates on car loans from around 10-11 percent in FY10 to around 12-13 percent in FY13. The rise in the income levels on the other hand could not keep abreast with rising ownership cost. Weak economic environment due to slump in infrastructure, construction activities combined with slowdown in agricultural production in past couple of years led to drop in income levels. Furthermore, spiralling inflation levels drilled a hole in consumer’s pocket leading to strained purchasing power of urban as well as rural consumers and thereby impacting the consumer confidence levels. High ownership cost coupled with

Outlook of domestic PV industry

Source: CARE Research and Society of Indian Automobile Manufacturers (SIAM) Note: - P: Projected

decline in purchasing power has led to considerable slump in the growth levels of PV demand during last fiscal.

Rupee depreciation problem According to federation of Indian chambers of commerce and industry (FICCI), Indian automotive industry imports around 30 percent of auto components used in the domestic market. Major components imported by PV players are brakes, gears, airbags, fuel tanks, suspension system, steering sys-

With rise in the income levels, the PV penetration has almost doubled from 2001; however penetration still remains lowest when compared to other countries with similar economic stature. tems and seat belts. Thailand and Japan are the main exporters of auto components to India.

Imports by OEMs can be directly or indirectly routed through vendors. In both the cases rupee depreciation with respect to dollar leads to higher input cost which in turn results in depletion in bottom line. In addition to increased input cost, depreciation

of currency also leads to negative impact on bottom line of the players with foreign borrowings and royalty liabilities towards the parent. Input cost fluctuation due to currency movement can be mitigated by increasing level of indigenization; however, increasing localization levels is time consuming and cannot be altered in the short run. Moreover, some cost and technological advantages of foreign vendors makes it beneficial to import irrespective of import duties and currency disadvantages.

While the indigenization level of domestic players is very high, the indigenization level of foreign OEMs is still less than 80 percent. In case of some global OEMs like Toyota Kirloskar, Ford, FIAT, etc CARE Research estimates localization levels is as low as 70 percent. CARE Research expects foreign OEMs to gradually increase level of indigenization from current levels to 80-85 percent in 2-3 years period thereby decreasing their dependence on imports.

However in the short term, CARE Research expects OEMs to hike prices in order to arrest the impact of depreciating currency on bottom line which can cause drop in demand for already slowdown hit passenger vehicle industry. In addition to the above, depreciating rupee is also resulting in rise in fuel prices. Fuel prices being major ownership cost component comprising 40-45 percent of annual cost of owning

Indigenisation levels across key players

Source: CARE Research and Industry Note: - E: Estimates

a vehicle in FY13, high fuel prices would also discourage people from buying vehicles in the short term. Hence depreciating rupee is causing double whammy for OEMs as on the one hand currency depreciation is resulting in increased vehicle prices and on the other hand it is leading to high ownership cost.

Economic revival holds key India’s large pool of young population is a strong fundamental driver for domestic PV demand.

With rise in the income levels in last one decade the PV penetration has almost doubled from 2001 levels; however penetration still remains one of the lowest when compared to other countries with similar economic stature. The low penetration along with high percentage of working population would boost growth for PV industry in the future. However, revival of economy remains pre-requisites for the PV demand growth.

How bright is the future?

After successfully weathering the liquidity crises of FY08 and FY09, the economy again witnessed slowdown in beginning FY12 because of spiralling inflation and high lending rates.

However, the demand drivers like higher working class population, high percentage of literate workforce, low cost of skilled labour, low supply as compared to demand etc; together still make a compelling case for the healthy economic scenario in the future, subject to policy implementation & good governance by the government. CARE Research expects economy to revive after 2014 general elections. Newly elected government would be in a better position to take decisions and take policy stands that would give desired impetus to slowing economy and would attract higher investment. CARE Research expects short-term economic uncertainties to fade away and growth to revive at a healthy level in medium to long-term period that would in turn fuel the rise in income levels and consumer confidence levels.

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FOREIGN VIEWS

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Will incompatible standards slow down electric cars?

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n emerging clash between electric vehicle quick-chargers is the auto industry’s rerun of the VHS versus Betamax videotape battle.

For the electric vehicle owner, there is the Japanese-developed CHAdeMO standard. Then there is the Society of Automotive Engineers’ (SAE) International J1772 Combo standard. Both are direct-current quick-charging systems designed to charge the battery of an electric vehicle to 80 percent in about 20 minutes.

But, like the videotapes, these two systems are designed to be completely incompatible.

DC fast charging is widely seen as a pivotal way to reduce the range anxiety associated with battery electric vehicles (BEVs) and to expand consumer acceptance of zero-emissions cars. The standards war puts potentially billions of dollars in investments at stake and could shape the electric vehicle market for decades to come.

As of July 1, there were 283 publicly available CHAdeMO chargers installed in the United States, according to the software and services company Recargo. Japanese automakers Nissan Motor Co. and Mitsubishi Motors both offer vehicles in the United States today that use the CHAdeMO system -- the Leaf and the i-Miev, respectively. Toyota Motor Co. also supports the CHAdeMO standard but has yet to launch a vehicle with quickcharge capability.

Backers of the SAE Combo standard include auto industry

heavyweights General Motors Co., Ford Motor Co., Volkswagen Group and BMW AG. However, Combo chargers are not yet commercially available, and the first Combo-compatible car, the Chevrolet Spark, only just went on sale.

A plot against Nissan?

The Nissan Leaf was the first next-generation BEV to go on sale in 2010. While more and more automakers are starting to offer all-electric vehicles, Nissan remains the only automaker committed to producing a massmarket zero-emission vehicle in all 50 states (ClimateWire, July 23). With 27,000 Leafs on the road and hundreds of chargers already in the ground, “right now, the de facto standard is CHAdeMO,” said Brendan Jones, director of electric vehicle infrastructure strategy at Nissan North America.

Working with developer AeroVironment Inc., Nissan plans to install at least 600 CHAdeMO quick chargers by March next year. Tesla Motors also plans to roll out hundreds of fast chargers, but they will be exclusively available to the pool of Model S owners.

With Nissan leading the BEV mass market and next to no Combo-compatible cars on the road, some have suggested that efforts to boycott CHAdeMO are part of a ploy to slow Nissan down.

“It makes commercial sense, if you’re a late entry into the market, to try and slow the development of the market by stopping the market leader from gaining greater market share,” said Llewelyn Hughes, an assistant professor of political science and international affairs at George Washington University who focuses on energy issues.

The rival charging standards are likely going to play out in the vehicle marketplace in terms of which company can offer the best car for the best price with the best charging system, he said.

Photograph: wikimedia.org

DOE’s dilemma The Department of Energy’s EV Project, the nation’s largest deployment of charging infrastructure to date, is only installing CHAdeMO systems.

Infrastructure developer ECOtality Inc. is leading the project, with $114.8 million provided by DOE through the American Recovery and A Reinvestment Act and a total budget of $230 million.

The project, now in its final months, will support the installation of 13,000 level 2 chargers for both residential

and commercial use, as well as 200 CHAdeMO fast chargers.

About 80 fast chargers have been installed to date.

But DOE is also sensitive to the fact that a number of major automakers are committed to the Combo standard, Davis added.

DOE has discussed whether to go back and replace some of the cord sets on existing chargers or add Combo chargers to existing stations. It’s unlikely, however, that the department will go back and retrofit all 200 chargers, he said.

Fast charging is not essential. BEV owners will always be able to charge using slower level 1 or level 2 chargers. Still, public fast chargers are an important

“It isn’t as if there weren’t benefits at the time for an early entry market for CHAdeMO to be there, but we are working in an open process where all global automakers are involved,” said Jeanette Clute, manager of global electrification infrastructure strategy at Ford Motor Co.

tool for decreasing range anxiety and making electric vehicle ownership more convenient. If consumers feel they can’t find the infrastructure they need, it will likely discourage sales and prevent electric cars from going mainstream.

“There’s no doubt this isn’t a positive thing for the market or for owners. It’s not what anybody would plan or want if we designed it from scratch as far as a rollout,” Davis said.

and bolster the BEV market. But it will have been an expensive diversion. CHAdeMO charging stations cost between $15,000 and $25,000 plus installation costs, which can bring the total up to $150,000.

“In that sense, this is a little bit different from the VHS versus Betamax story, because everyone could just throw away their Betamax when VHS won,” said Hughes. “Here, you’re going to have the equivalent to gas stations all over the place that cost [tens of thousands] to put into the ground, and a lot of them are probably going to be using obsolete technology. What do you do about that? It’s going to be an expensive problem.”

But some don’t see it as much of a problem at all.

Ultimately, DC quick charging stations could end up like gas stations in the sense that they offer both CHAdeMO and Combo chargers, just like a gas station offers both a gasoline and diesel.

Charging stations with both standards?

While the SAE charger won’t be commercially available for months, with Ford, Volkswagen, GM and BMW committed to it, the Combo standard could one day make CHAdeMO obsolete.

If one standard does prevail, it could streamline resources

Photograph: wikimedia.org

Julia Pyper

Photograph: homepower.com

Competing standards for the fast-charging of electric cars could put continued growth at risk

A collision foreseen by experts Wahid Nawabi, senior vice president and general manager of efficient energy systems at AeroVironment, Nissan’s exclusive cha rg ing-stat ion developer, said his company is standard-agnostic but sees the discrepancy as a setback for the nascent market.

Experts did, after all, see this coming. The CHAdeMO Association -- a partnership between Fuji Heavy Industries, Tokyo Electric Power Co., Toyota, Nissan and Mitsubishi -- has been working on its charger since 2005. The group commissioned the first commercial CHAdeMO charging station in 2009.

When asked at a recent electric vehicle conference why they decided to pursue a separate standard instead of adopting the existing CHAdeMO system, American and European automakers pointed to the collaborative nature of the SAE Combo and its technical advantages.

Big money rides on the outcome At an additional $25,000 a pop that, could still add up to a multimillion-dollar difference. But developers are, indeed, moving forward with dual stations. The NRG Energy subsidiary eVgo, for instance, plans to offer both types of chargers at its “Freedom Stations” once the SAE Combo passes all safety certifications.

“We believe it’s a financially viable sustainable business market,” said Arun Banskota,

president of NRG Energy’s electric vehicle services.

The CHAdeMO organization itself acknowledges that dual charging stations are the best route. “Many charger manufactures will be coming out this year with this dual charger and we are pleased to see that this will help service the full market,” Kiho Ohga, a representative of the CHAdeMO Association, wrote in an email. “Whether it makes business sense to adopt both versus one is not a difficult decision to make by the investor.”

Unfortunately, standards issues for electric vehicles don’t end with fast charging. There are interoperability issues between charger payment systems, which prevent drivers from using all of the available infrastructure.

There are also discrepancies emerging in the wireless-charging space. Tesla’s proprietary Superchargers add yet another layer of complexity to a situation in which millions of dollars are being invested in fast chargers that only a select group of vehicles can use.

“Look at the value chain and how much has already been invested and how many people have so much stake in making [electric vehicles] successful,” said Banskota. “There’s a lot riding on it. There are a lot of people’s success stories riding on it.

So there’s no going back this time around.”

The article was published in Scientific American

12 AUGUST 2013

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OTHER SIDE

Getting Personal with M Balasubramanian, VP, Aftermarket & PMG, AMW Motors If not in the auto industry, where would you be?

I would have been a farmer. I like plants and paddy fields.

What car do you drive? What do you dream of driving?

I drive a Toyota Corolla. I would love to fly an aircraft.

What are you currently reading?

I am reading books on alternate medicines and yoga.

What do you do when not talking auto?

Gardening is my hobby. It’s not possible to have a garden or a piece of land for gardening in Mumbai. So I maintain a small garden in my balcony on the 14th floor.

I read during bed time. Books on different subjects like alternate medicines, astrology, numerology, yoga and so on fill my book shelf.

An outdoor activity you would miss office for…

I would miss office for a visit to a jungle to a wild life sanctuary.

Where did you go for your last holiday?

I spent my last holiday visiting the temples in Kerala and Tamil Nadu.

You get angry when…

A given task is not completed within the time frame.

What is the one thing you would like to change about yourself?

I wish I could learn the art of relaxing when necessary.

The best thing to have happened to you…

I have family members who understand and my colleagues are those who appreciate bosses and peers.

Illustration: Sachin Pandit Compiled by: Pradeb Biswas

12 AUGUST 2013

In Real Life M Balasubramanian, Vice President - Aftermarket & PMG, AMW Motors Ltd. M Balasubramanian heads the Aftermarket & PMG as VP in AMW Motors Ltd. He is a Graduate from CIT (Coimbatore Institute of Technology) and holds an MBA in Marketing from IGNOU. Balasubramanian brings with him over thirty years of experience in automobile industry in the area of Aftermarket, Product Management and Product planning. In an earlier stint, he worked with Ashok Leyland in the Aftermarket & PMG vertical.

In his present role, he has been instrumental in bringing key changes in the aftermarket business. Today about 50 percent of AMW sales is through repeated purchase.

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: 28th of Every Month

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