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. 12 No. 03
16 - 29 February 2012
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INTERVIEW CANADIAN COMPONENT MAKERS NEED TO LOOK AT UNCONVENTIONAL MARKETS Steve Rodgers, President, APMA, Canada
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Schaeffler to launch innovative products
NEWS IN BRIEF Maruti Suzuki clocks `10 million sales mark Our Bureau Mumbai
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aruti Suzuki India recently crossed the 10 million cumulative domestic sales mark, becoming the only automobile company in India to cross the milestone.
The company, which had rolled out its first car in December 1983, attained domestic sales of `five million in February 2006. The next ` ve million in sales have been achieved in six years. The 10 millionth vehicle, a Red Swift Vxi, was dispatched to Coimbatore from the company’s Manesar plant. While Maruti 800 and Omni powered sales for almost two decades, the success of WagonR and Swift has accelerated the company’s progress towards the `10 million mark. To mark the occasion, Maruti Suzuki unveiled a celebration edition of its SX4 sedan, which features body graphics.
DATA MONITOR Domestic Sales Sector
Dec-10
Dec-11
Change
PV
190,464
207,316
8.85%
CV
63,048
72,192
14.50%
3W
43,715
42,219
-3.42%
2W
1,006,289
1,091,982
8.52%
TOTAL
1,303,516
1,413,709
8.45%
Exports Sector
Dec-10
Dec-11
Change
PV
39,927
38,864
-2.66%
CV
7,763
9,099
17.21%
3W
22,001
28,554
29.79%
2W
128,557
153,030
19.04%
TOTAL
198,248
229,547
15.79%
* Source: SIAM/ ** all sub segments considered
56 Pages
STUDY TRANSFORM BUSINESS WITH VERSION 6
Shambhavi Anand & T Murrali New Delhi
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uided by mega trends it has observed worldwide, Schaeffler Group, the supplier of a host of automotive components including clutches, torque converters, hydraulic and transmission systems, plans to introduce innovative products for the powertrain to the Indian market in order to optimise reduction of friction. It sells products under three brands—Luk, INA and FAG. “We are discussing products with our customers, which can enable automation of transmission. We also make intelligent sensors for the stop-and-start technology, which can help in reducing the consumption of fuel,” President, Schaeffler Automotive Asia-Pacific, Zink Matthias told Auto Monitor. The two mega trends which guide Schaeff ler’s strategies are, first the downsizing of the engine with an intention of reducing friction and light weighting while either increasing its power and torque or at least keeping it the same. The
can be operated electronically. It employs sensors for the stopand-start technology which can detect the position of the clutch and start and stop the engine. “In order to optimise fuel consumption either one needs an automatic transmission or a much disciplined driver. In India, the drivers are not so disciplined and the automatic transmission is expensive. In addition, the drivers Zink Matthias, President, are in habit of shifting Schaeffler Automotive Asia Pacific the gear or may even second mega trend is the desire like doing it,” Matthias said. for increasing degree of automaSo the system of making clutch tion in transmission. electronically operated and letBoth these trends pose huge ting the gear shift be manual may challenges on the clutch. In line suit the Indian market. The cost with them and based on their would also be competitive when assumption that till 2020 up to the reduction of fuel consump90 percent engines used will be tion is also taken into account. combustion engines, the Group Also, a display in the cockpit has brought in innovative solurecommending the driver on tions for the clutch system. Using shifting of gears is an option and its technology, one can retain helps in reducing fuel consumpthe gearshift while the clutch tion significantly.
While on the one hand, it is working on modifying the existing driveline and optimising the performance of the combustion engine, the Group is also gearing up for the future. It has clutches for hybrids and mild hybrids, which it thinks are the immediate future after the combustion engine. It is also working on developing solutions for electric vehicles. In the Indian market the company, by increasing its market share, content per vehicle and bringing in new products and technologies, hopes to achieve a growth rate of double digits. It also intends to add 1,200 more to its team in the next five years. It currently has three plants— in Hosur for clutches, in Pune for engines and Vadodara for bearings. It also plans to start a new plant in Gujarat for bearings. The new plant is already under construction and will commence production by 2012. In Hosur, it is adding capacity, which will help it in meeting the growing demand and also introduce new products. It plans to launch hydraulic release system this year, which will be manufactured in Hosur.
Auto component suppliers to curtail capex: CRISIL Our Bureau Mumbai
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utomotive component suppliers are looking to curtailing their capital expenditure plans by around 35 percent to counter the slowdown in demand and pressure on margins, according to CRISIL. Such proactive measures are likely to help players manage business pressures better than during the previous downturn in 2008-09, and ease pressure on their credit risk profi le. These measures appear to be in addition to conventional measures of pruning costs and prudent working capital management, according to the Mumbai based rating agency in its recent study. Rising interest rates, a weaker economic environment, and high fuel costs have caused a significant slowdown in demand for medium and heavy commercial vehicles (M&HCVs) and passen-
ger cars in 2011-12. “Demand recovery in the M&HCV and passenger car segments is likely to be gradual, due to limited flexibility of the government to stimulate demand. Around 80 percent of CRISIL-rated component suppliers had ‘Stable’ rating outlooks as on 31 December , 2011,” stated Head, CRISIL Ratings, Anuj Sethi. The increasingly uncertain business environment in Europe could also hurt export growth in the near term, according to the release. Other concerns include labour and input price increases and volatility in foreign exchange rates. An analysis of listed companies in CRISIL’s rated portfolio of 275 suppliers revealed that their average profitability margins have been impacted by almost 200 basis points in the second quarter of 2011-12, as compared with the corresponding period in 2010-11. During such a challenging scenario, key component suppliers
rated by CRISIL are continuing their focus on improving cost efficiencies and managing working capital. The emphasis is on enhancing labour productivity, accessing relatively low-cost power sources, including renewable energy, and avoiding stretch in debtor and inventory levels. “Despite these measures, which were initiated during the previous slowdown, companies are unlikely to benefit materially,” pointed out Director, CRISIL Ratings, Nagarajan Narasimhan. Industry players have indicated that they also plan to prune capital spending for the next 15 months by around 35 percent, notwithstanding requests from OEMs to continue with capacity additions. Comparatively, capex spending by these players was pruned by only around 10 per cent during the slowdown in 2008-09. The capex pruning is expected to ease the strain on their credit risk profi les.
Around 80 percent of CRISILrated component suppliers had ‘stable’ rating outlooks as on 31 December, 2011; also, just three percent had their ratings revised downwards or their outlooks revised to ‘negative’ between April and December, 2011. In comparison, 28 percent of CRISIL-rated auto component suppliers were downgraded or had their outlooks revised to ‘negative’ during the slowdown in 2008-09, corroborating that component suppliers are managing business pressures better this time around. CRISIL is one of the largest credit rating agencies in India. It is a market leader with the largest number of rated entities and rating products. Its rating experience covers more than 46,496 entities, including 23,500 small and medium enterprises (SMEs). As on 31 December, 2011, they had over 15,643 ratings (including over 8,000 SMEs) outstanding.