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. 04
www. a m o n l i n e.i n
18 February 2013
NEWS
24 Pages
`50
NEWS
Maintaining Competitiveness A Major Challenge
Pg 08
Bridgestone India Opens Chakan Plant Pg 10
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4th Gen Honda CR-V For `19.95 Lakh Takes CKD route; no diesel on offer Jagdev Kalsi New Delhi
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lmost a year after its global debut, Honda has launched the fourth generation of its premium SUV, CR-V in India. Honda has priced the SUV aggressively offering a 2.0 litre manual variant at `19.95 lakhs (ex-showroom Delhi). Honda will assemble locally the CKD kit in Thailand to take advantage of the FTA, thus allowing the company to price the CR-V aggressively. The new CR-V is almost `2 lakh cheaper than the outgoing model, variant by variant. “Since the FTA permits only reduction of duty, we will still need to incur the logistics costs. And having taken that into consideration, we have based the pricing,” said Hironori Kanayama, President & CEO,
Honda Cars India Ltd. He believes that this strategy has enabled Honda to offer both price benefit and additional value to customers this time round. Clarifying that the reduction in prices of the CR-V wasn’t a factor of the FTA he elaborated, “I’m not sure of the percentage but most of the kit is coming from Thailand. However, this is not the main reason for the pricing factor. A lower duty on CKD makes it feasible for us.” Honda seems to have learnt from its previous mistakes of overstocking cars in anticipation of sales that has even forced the company at times to offer discounts to attract buyers. In the last 10 years of CR-V’s stint in India, Honda has sold 13,739 units which is well over 1,000 units per annum, a relatively moderate self-set target for Honda for the 4th generation CR-V in India. Kanayama said, “We are looking
at about 1,000 cars per annum and will make cars as per demand.” While the CR-V in Europe is powered by a 2.2 litre diesel motor, Honda is clear it has no plans to offer a diesel engine with the new CR-Vs. “As per Honda’s market study,” Jnaneshwar Sen Senior VP, Sales and Marketing,
Honda Car India Ltd, believes “that only five percent of the SUV market is powered by petrol engines (going by last year’s data) but aggressive pricing and additional value will be the mantra for CR-V’s success in India.”
Contd. on Pg 16
Hopes Pinned On The Budget The automobile industry is counting on the upcoming Union Budget 2013 to revive flagging sales. Nabeel A Khan New Delhi
DATA MONITOR Top 5 Car Makers Company
Jan-12
Jan-13
Change
Maruti
1,01,047
1,03,026
1.96%
Hyundai
33,900
34,302
1.19%
M&M
22,444
29,334
30.70%
Tata Motors
40,213
23,915
-40.53%
TKM
17,395
13,329
-23.37%
Top 5 Car Exporters Company
Jan-12
Jan-13
Hyundai
16,001
17,722
Change 10.76%
Maruti
14,386
11,179
-22.29% -41.30%
Nissan
14,403
8,454
Toyota
0
1791
#DIV/0!
Ford
1,649
1,053
-36.14%
* Source: SIAM/ ** Excluding exports/ *** all sub segments considered/ ^ excluding MRPL
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s pressure mounts on the automotive industry, the honchos in the business are pinning all hopes on the upcoming union budget. However, the finance minister has a tough task ahead narrowing the fiscal deficit down as well as boosting the mood of the common man, who remains perturbed by the rise in cost of living. The automotive industry expects radical change in policy, which will at least revive some of the severely hurt segments. “We need immediate intervention from the government”, said Sugato Sen, a senior official at Society of Indian Automobile Manufacturers (SIAM). While the government must also make an effort to improve its own sinking popularity, maligned by a
series of scams, giving away too much to the industry may hurt its mission to deal with increasing deficit. The fiscal deficit between April and December 2012 was $76 billion. A recent report from Japanese brokerage firm Nomura has warned that India’s savings rate may dip to a decades’ low 27 percent in FY12-13. According to the same report the domestic savings rate, which touched a high of 36.9 per cent in 2007-2008, fell to 30.8 per cent of GDP in FY 11-12, down from 34 per cent in 2010-11. The report further said that the current account deficit may touch 5 percent in FY12-13. Considering the situation, radical changes in government policy to support the industry seem unlikely. But it will certainly get some respite to help build the long-term environment. The government cannot ignore the automotive industry because
it is one of the frontrunners of the manufacturing sector, and contributes around 22 percent of the country’s manufacturing GDP -although it is a little behind the target of 25 percent of total manufacturing GDP. While the recent policy rate cuts announced by RBI and partial de-regularization of diesel have given reasons for hope, some also feel that sudden fluctuations in policy may put off investors. “We need to have a stable policy. What if a sudden change in the diesel policy proves adverse to those who wanted to invest in diesel engine plants? We need to have a long term policy,” said Mohit Arora of J D Power. The automobile industry is labour-intensive, and is thus one of the major job providers. The government itself, under its Automotive Mission Plan, expects the industry to provide employment to over 25 million people by
2016. The automobile retail industry, which includes unorganized mechanics, dealers, motor insurers, etc., provides employment to over 3.5 million people. The apex body of automobile manufacturers, SIAM, recently handed over a list 16 demands from the union budget which will help the industry. The demands include the long pending introduction of GST across all states, sharing of draft modalities and procedures in advance, and subsuming all indirect tax, R&D cess and octroi in the proposed GST to prevent a cascading effect. Taxation of used vehicles should be covered, and taxes such as road tax should be subsumed under GST. Currently, taxes on cars (including all types) range between 57 percent and 82 percent.
Contd. on Pg 16