Auto Monitor - 2 July 2012

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 ns Tur w No

ly k e We

Vol. 12 No. 19

2 July 2012

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

32 Pages

FOCUS

` 50

STUDY

TESTING

INDIAN CV INDUSTRY: STARING AT A SLOWDOWN Pg 14

Pg 17

GM aboard new Cruze to Sail across rough tide Nabeel A Khan New Delhi

G

M India is looking to sustain the excitement in the premium car segment and has recently launched the all-new diesel Chevrolet Cruze and a new diesel variant of Chevrolet Captiva. The company also plans to phase out its Aveo and AveoUVA range by September this year and launch new Sail hatchback and sedan versions.

“In order to create excitement in the market, we will launch the Sail in both hatchback and sedan versions in the next few months, which will replace the Aveo U-VA hatchback and Aveo sedan,” said President & Managing Director, GM India, Lowell Paddock. It will also foray into the light com-

mercial vehicle segment (truck) under the Enjoy badge in the third quarter of this fiscal. The truck will be produced from Halol, Gujarat plant.

Changing Preferences The carmakers’ decision is in keeping with the change in the enhanced demand of the diesel vehicles, as both the above models of vehicles launched, both have a diesel powertrain. “We would be targeting the premium hatchback and small sedan market with the Sail brand and bringing both diesel and petrol offerings to cater to a larger group of customers,” Paddock added.

On asking if the government accepts the recent recommendation for levying additional excise duty on diesel vehicle, Vice President GM India, P Balendran

GM Launched The New Chevrolet Cruze In New Delhi

New Cruze The Cruz comes with a new two-litre diesel engine in three variants with seven exterior colours options—the LT and LTZ with GM’s next-generation six-speed manual transmission and the LTZ with an automatic transmission. The car has been priced between `12.5 and `15.05 lakh (ex-showroom Delhi).

The new Cruze is powered by new FAM Z two-litre diesel engine. It features a common rail fuel injection system and advanced electronically controlled Variable Geometry Turbocharger (VGT) with an intercooler. According to the company, the engine provides maximum low-speed boost for high torque and power density with higher elasticity across the RPM range. The company claims that 16-valve DOHC

engine generates peak power of 166 ps at 3,800 RPM and peak torque of 380 nm at 2,000 RPM, enabling the Cruze to accelerate from 0 to 100 kmh in less than nine seconds. A two-piece oil pan with an acoustic metal lower section and a Balance Shaft Module (BSM) with twin counter-rotating balance shafts in the oil sump reduce noise, vibration and harshness.

“We expect the newest member of the Cruze family to continue to exceed the expectations of car buyers and stand out against the competition in its segment,” President & Managing Director, GM India, Lowell Paddock said. The car will be produced at Halol facility in Gujarat, which has an installed capacity of 85,000 units annually.

Chevrolet Captiva GM Ind ia lau nched Chevrolet Captiva with 2.2 litre engine mated to an automatic transmission for `24.59 lakh. It comes with 5 + 2 Flexi Seating arrangement, which can comfortably accommodate seven adults and can be transformed into a adaptable luggage carrier.

Its fold-flat seating arrangement provides up to 1,565 litre of cargo volume. Other amenities include cruise control,

third-row heating, ventilation and air-conditioning system, an electric parking brake, rainsensing wipers and a sunroof.

Additionally, it is equipped with a level ride suspension system, which automatically maintains nominal ride height under differing load conditions—a feature that offers assured road clearance as well as optimal ride quality for passengers.

Avtec-Assag gear-up for technology solutions

DATA MONITOR Top 5 CV Makers Company

told Auto Monitor that “We don’t see any likelihood of `1.7 lakh additional duty being levied and even if it happens, the demand for the diesel car will not stagnate.”

The demand for both Aveo and UVA has fallen in the last few months as these two cars were available only in petrol variants. To avoid any inventory build-up amid the current slowdown in the domestic automobile market, it will adjust production by having no production days at its factories like many other car makers.

Commenting on the Spark, the company officials said that it may relaunch the vehicle with some new design features around the festive month to spike up the sales. The carmaker’s smallest car (Spark) offered in India experienced a steep fall in sales to the tune of 78 percent to 1,541 units in the first two (April-May) months of the fiscal compared to the same period the previous fiscal. While GM India’s total sales dropped 24 percent to 13,978 cars in the like period.

The carmaker also feels that the falling rupee might force it to pass on the burden to the customers. “We expect that if the rupee continues to devaluate, then in the next few months the carmakers will have to announce some price hikes as the declining rupee is causing an increase in the price of vehicles,” Balendran said.

May-11

May-12

Change

TML

34,044

34,505 1.35%

M&M

8,694

10,930

25.72%

ALL

5,082

7,717

51.85%

VECV EICHER

3,206

3,432

7.05%

FML

1,658

1,991

20.08%

Top 5 CV Exporters Company

May-11

May-12

Change

TML

6,287

3,709

-41.01%

M&M

1,283

3,055

138.11%

ALL

643

930

44.63%

VECV Eicher

309

155

-49.84%

SML Isuzu

64

10

-84.38%

* Source: SIAM/ ** Excluding exports/ *** all sub segments considered/ ^ excluding MRPL

Nabeel A Khan New Delhi

A

vtec, a CK Birla Group company, involved in powertrain manufacturing, and Assag, Switzerland have entered into a strategic partnership agreement recently. Assag is a face gear technology provider with several patents to its credit and a solution provider for high precision and high quality gears. The know-how of Assag and the capabilities of Avtec will complement each other and create synergies.

In an exclusive tele-call with Auto Monitor from Switzerland during the event in progress, MD,

facility in Netherlands, which together offers the perfect synergy to Avtec.” He continued, “Our clients include Audi, Porche among automobiles and Varian Medical Systems among other companies. Assag is known for its innovaton and high technology products in Europe and Avtec shall greatly benefit from the tie-up.”

Stefan Schoen shall Prabhakar Kadapa, MD, Avtec continue to lead the Avtec, P Kadapa stated, “Assag’s organisation along with S design and development centre Muralidhar, an experienced is based in Switzerland, and it manufacturing management has a proto build manufacturing professional, who will be joining

him in due course.

Chairman, Avtec Ltd, CK Birla said, “I am highly delighted with the value added synergy, which will transform both the organisations, offer end-to-end solutions to the customers and provide knowledge enrichment and greater career progression opportunities to the employees.”

“This partnership shall reinforce Avtec’s commitment to customers as a one-stop solution from concept to design, prototyping and series production.

It would bring to the customers better technology, world class quality, on time delivery at competitive prices,” the company said in a release.

A to Z product range as per Customer’s designs, applications, sizes and Internationals Standards

EDITORIAL Reduce levies for petrol vehicles

A

t last, after a couple of weeks of speculation, the oil marketing companies have reduced the petrol prices by up to `three, which is the second reduction in a month. The downward revision of prices will vary from `2.46 per litre up to `3.22 per litre depending up the levies of different states. However, it is not signiďŹ cant when compared with the record hike of up to `seven per litre on 24 May this year. Crude prices have been dropping for some weeks and this may be a good sign to expect further reduction. However, the weakening rupee is a cause of concern as it will offset the beneďŹ ts accrued by the falling crude prices.

In the meantime, the price differential of diesel and petrol crossing more than `30 has propelled the demand for diesel cars. In fact, many vehicle manufacturers have temporarily shut down their plants due to lack of demand, except for those manufacturing diesel versions. However, the recent petrol price reduction and the proposed hike in diesel prices will nullify the imbalance only to some extent. There are already talks about increasing the price of diesel by `three per litre. However, the political circles are not happy about increasing to anything more than `one per litre. And ďŹ nally the government will have its say in the pricing, as usual, and may not increase the price at all.

Though the petrol price reduction is a relief for the commuters using petrol vehicles, especially passenger cars, it may not work in the long-term as the petrol price had been

“deregulatedâ€? a couple of years ago. Though the government will have its say in pricing, it may not be as strong as it used to be for the pricing of diesel. This is not because diesel has not been regulated but because the repercussion on the already trailing economy can be disastrous. Industry experts feel that the demand for diesel cars may reduce in the coming months, but the consumers are conďŹ dent that the price differential between the two fuels cannot be less than `20 and so their choice for the diesel option is ďŹ rm.

To boost the sales of petrol vehicles, the industry bodies should reiterate the government on its intent to reduce levies for petrol vehicles. This, to some extent can provide some relief to the vehicle manufacturers as well as the end users, while also minimising the losses on diesel.

Wishing you much pleasure reading. Do send us your feedback.

T. Murrali t.murrali@infomedia18.in

QUOTES Martin Winterkorn, CEO, Volkswagen on Porsche and Volkswagen integration

“All parties concerned would benefit from a swift combination of Volkswagen and Porsche. We want to complete the integrated automotive group at viable conditions as quickly as possible�

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K Srinivas, Bajaj Auto, President, Motorcycle Business

“Definitely we are seeing a pressure on raw materials, because raw materials are usually corrected to the dollar rate. Some cost increases or price increases may be around the corner�

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CONTENTS TESTING Moog to equip NATRiP with control systems

14

Moog will supply latest shaker tables to NATRiP enable OEMs and component makers to have test facilities to meet international standards and significantly reduce the development time

14

GLOBAL WATCH Nissan reveals details of NV400 minibus

24

Nissan reveals specifications for its new range of NV400 conversions, including a six and nine seat minibus, a crew van and both single and double cab dropside and tipper onversions

CORPORATE 3W cargo sales eclipsed by SCVs; exports long-term growth driver: ICRA 10

24

ICRA expects the long-term sales growth to be the highest in the exports segment, followed by that in the passenger carrier segment and the lowest in the goods carrier segment

08

ZF wins supplier awards from Chrysler, Ford

24

ZF Friedrichshafen AG recently bagged two prizes for its automatic passenger car transmissions from Chrysler and Ford

How could INEL’s innovation offer cost benefits to Kawazaki?

08

Kawazaki has introduced SmartRR developed by INEL in its sports bike KLX 125 and is now looking at introducing it in the new two-wheelers market in Europe

24 16

Major improvements for new Kia Sorento

28

Kia is looking to offer re-engineered bodyshell, enhanced powertrains, improved ride, handling and refinement and a fresh, new look for the exterior to Sorento SUV

Indian CV industry: Staring at a slowdown ICRA report points out that demand for M&HCVs is coming down and there is visible slowdown especially in the higher tonnage segments

16

EUCAR calls for targeted support for initiatives in Horizon 2020 European Council for Automotive R&D calls for a number of priority automotive R&I initiatives in Horizon 2020 to support competitive and sustainable road transport

28

Delightful rides Now a part of every schoolchild's life

STARBUS ULTRA

Presenting Starbus Ultra Skool from Tata Motors The new Starbus Ultra Skool, with its contemporary aerodynamic design, reflects care that goes beyond what you'd expect from an ordinary school bus. Rest assured, it has all the superior safety and comfort features that are Government-mandated, and also additional ones we considered necessary.

Go beyond your world to discover Starbus Ultra Skool. Enjoy peace of mind while your child travels in complete safety and security.

For details, call toll-free 1800 209 7979; write to businfo@tatamotors.com or visit www.buses.tatamotors.com

Power & performance from best-in-class technology • Aesthetics, comfort & safety way beyond the ordinary

2 JULY 2012

Auto Monitor

8

How could INEL’s innovation T Murrali Chennai

O

EMs are unable to embrace new technologies even though they maybe path-breaking, unless they offer immense benefits in terms of costs, ease of operation, lower cost of ownership and convenience for end customers. Many a times, even the path-breaking technologies face the risk of going unnoticed by vehicle manufacturers as they want to avoid taking risks.

However, these products do pick up in the market after some company steps up to take the initiative that also includes the risks. On these lines the global two-wheeler major, Kawazaki has introduced SmartRR—the Smart Regulator Rectifier developed by the Hosur-based India Nippon Electricals Ltd (INEL)— in its sports bike KLX 125 and is now looking at introducing it in

the new two-wheelers market in Europe.

Kawazaki deployed the SmartRR in KLX 125 as it helped to save substantial costs while also accruing several non-tangible benefits including improved fuel economy and longer battery life. So the question is, ‘What is so special about the technology that compelled the global two-wheeler maker to incorporate the same in its new offering’?

The Engineering Head of INEL, R Umashankar said that the company has developed SmartRR originally targeting three-wheelers as the power requirement for these kinds of vehicles, especially by the headlamps, are high. Most of the three-wheelers, be it passenger or cargo version, come with twin headlamps that directly draws power from the battery, though the power is generated through permanent magnet alternators like in the case of two-wheelers.

Most of the end-users of threewheelers replace the OE fitted

battery with the one with higher ampere-hour, with a belief that the power requirements

SmartRR By INEL

The company sees huge potential in the domestic market with the three-wheeler OEMs beginning to look at the Smart Regulator Rectifier.

The trigger point is that the OEMs can manage with single phase or three-phase generator, while reducing the size of batteries

could be met without any glitch.

However, many of them ended up only in increasing the amperage of battery and seldom saw many benefits. Understanding the plight, INEL took on the challenge to work on a regulator that will not only regulate the power but also manage by conserving energy whenever possible.

Elaborating on the technology, he said the microcontroller in the SmartRR gets information on engine speed, battery voltage and other user-defined parameters such as acceleration, and dynamically controlled load and battery charging. For example, if the vehicle is idling, say in a traffic signal, the control algorithm slowly dims the headlamp so that battery discharge is contained, thus saving energy. If the battery

is fully charged at low speed, the generator power is diverted to the headlamp, thus improving low speed performance.

Currently there are three types of conventional regulators used by the vehicle manufacturers—full DC system, AC+ DC system and AC/DC system. The full DC system offers best performance but is expensive. The AC+DC system is comparatively less expensive but has a poor low speed performance, while the AC/DC system is cost effective, however, output at low speeds and effect of battery loading are poor (Refer to chart above).

Accord i ng to IN EL’s Operations Head, Subhasis Dey, a threshold RPM is arrived depending on the application in the conventional electrical system

2 JULY 2012

Auto Monitor

C O R P O R AT E

9

offer cost benefits to Kawazaki?

(L-R) R Umashankar, Engineering Head and Subhasis Dey, Operations Head of INEL

based on which, the generator develops the desired output. This is usually close to idling RPM— the lower the threshold RPM, the higher is the cost of the generator. The desired configuration in the three types of conventional systems is selected with the understanding of cost-performance compromises.

INEL’s Answer In the case of SmartRR, the threshold RPM is arrived at based on the driving cycle of the vehicle, said Umashankar.

Accordingly, the generator will develop the desired output. The specialty is that the threshold RPM is comparatively higher, which eventually reduces the

The advantages of the technology, its benefits and flexibility in application compelled Kokusan Deni—the joint venture partner of INEL—to recommend the system to Kawasaki when the vehicle manufacture wanted to develop a regulator rectifier for its new sports bike cost of the generator. Besides, the unit offers tremendous flexibility to the designer for judicial costperformance trade-off, while optimising the system.

The advantages of t he technolog y, its benefits and flexibility in application compelled Kokusan Deni—t he joint venture partner of INEL— to recommend the system to Kawasaki when the vehicle manufacture wanted to develop a regulator rectifier for its new sports bike. The SmartRR helped the two-wheeler maker to manage with single-phase permanent magnet generator against its original plan of going in for a three-phase generator, which would have escalated the cost of the bike further.

INEL is a joint venture in between Lucas Indian Service Limited (a wholly-owned subsidiary of Lucas-TVS Limited) Holding and Kokusan Denki

Split Integral Unit

Yet another innovation from INEL’s stable is the ‘Split IU (Integral Unit) with detachable secondary winding assembly,’ addressing to reduce the cost of ownership of two-wheeler manufacturers. The major issue with the conventional ignition system is the high-voltage internal arcing, since the primary and secondary windings are in the same unit. INEL designed a system with separate primary and secondary windings, thereby eliminating the risk Company Limited, Japan—a group company of Hitachi. The company sees huge potential in the domestic market with the three-wheeler OEMs beginning to look at the smart regulator rectifier. The trigger point is that the OEMs can manage with single phase or three-phase generator, while reducing the size

of internal arcing. According to the company the failure rate has been reduced up to 60 percent with this technology.

Besides, the secondary coil, which breaks if at all there is a failure, can alone be replaced, eventually containing the cost of ownership for the end user.

The unique design has helped in reducing costs, consuming low energy, reducing lead time while improving durability, reliability, productivity and enhanced machine utilisation during manufacturing process. of batteries. The unit will help vehicle manufacturers to reduce the battery size in terms of ampere-hour, by 25 percent, while in the case of two-wheelers it will help optimise the magneto by 10 percent. It w ill also reduce the cost of ownership for the end user significantly.

Auto Monitor

2 JULY 2012

STUDY

10

Indian three-wheeler industry 3W cargo sales eclipsed by SCVs; Exports remain a key long-term growth driver

D

espite near-term headwinds, we expect the 3W industry to report a moderate volume CAGR of seven-eight percent over the next five years. The domestic 3W passenger segment is expected to benefit from product up-gradation (two-stroke to four-stroke, petrol/diesel to CNG) and opening of fresh permits by the state governments.

The domestic 3W goods segment, despite stiff competition from 4W Small Commercial Vehicles (SCVs), continues to benefit from its favourable operating economics for First Time Users (FTUs).

Lastly, 3W exports are expected to remain the main growth driver for the industry due to rapid economic growth, rising disposable incomes, evolving travel & consumption patterns, improving road infrastructure, increasing demand for motorised transportation and inadequate public transport systems in target emerging markets. Overall, we expect the long-term sales growth to be the highest in the exports segment, followed by that in the passenger carrier segment and the lowest in the goods carrier segment (due to intense competition from the SCV segment).

India is the world’s foremost producer, consumer and exporter of three-wheelers (3Ws) with domestic sales of ~5.13 lakh units and exports of ~3.63 lakh units in the financial year ending March 31, 2012 (Source: SIAM). 3Ws are widely used in India as an affordable means of short-to-medium distance public transportation and last mile connectivity for goods transportation. Apart from the domestic demand, India has also emerged as important export hub for 3Ws with presence in some of the South Asian, African and Latin American markets that are replicating Indian 3W story with rising disposable incomes but inadequate public transport systems. Overall, the 3W industry has witnessed relatively healthy 15 percent CAGR volume growth over the last decade driven by moderate domestic growth (~10 percent CAGR) and robust exports growth (~38 percent CAGR).

However, the successful launch of four-wheeled Small Commercial Vehicles (mainly Tata Ace in 2005-06) has altered the industry dynamics—especially for the cargo segment, considerably over the last five years. While high tonnage (0.75T and above)

3W cargo segment has already made way for 4W SCVs that provide higher stability, safety, speed, space and style; SCVs are gaining popularity even in the lower tonnage (0.5T) Cargo and Passenger segments with introduction of some of the recently introduced smaller vehicles by CV OEMs. While domestic 3W goods segment has degrown at nine percent CAGR, SCVs have reported robust 21 percent CAGR growth over the last five years. Besides, slowing economic growth, moderating consumer goods consumption, high inflation, increase in financing costs, rising fuel prices, absence of fresh permits by the state governments and overall high base has impacted domestic 3W passenger sales in FY12.

Four-wheeler SCVs have eclipsed growth rate of the domestic three-wheeler goods segment, Competition likely to intensify in the passenger segment going forward The launch of ‘Tata Ace’ (Sub 1T, 4W LCV) in 2005-06 has completely altered the industry dynamics, with 4W SCVs increasingly replacing 3Ws due to rising aspiration levels and social prestige attached with owning four-wheelers. 4W SCVs provide higher comfort and superior driving experience due to car like driving, stylish looks, larger cabin space, more balanced structure, higher speed, higher stability / safety and lower emissions. As shown in the graph besides, the 4W SCVs have considerably outperformed 3W sales consistently over the last six-seven years; the contribution of 3Ws sales have reduced steeply from ~71 percent in FY05 to ~23 percent in FY12.

The strong growth and increasing market share of 4W SCVs has prompted several leading 3W manufacturers such as M&M (Gio, Maxx, Maxximo), Piaggio (Apé Truck, Mini) and Force Motors (Trump 15 and 40) to enter this segment over that last two-three years. The leading domestic M&HCV player Ashok Leyland too has recently entered the segment (through its JV with Nissan) by launching its 1.25T SCV ‘Dost’. On the other side, the market leader Tata Motors too has been proactive in terms of product innovations by launching newer variants like ‘Super Ace (1.25T)’ & ‘Ace Zip (0.6T)’.

We expect competition to further intensify in the SCV segment over the medium term as existing players ramp-up their product offerings and new local players (like Atul Auto, JS Auto) / Chinese players enter the market.

With higher tonnage 3W segment already eliminated, the competition is now intensifying in lower tonnage (0.5T) segment with launch of products like ‘Tata Ace

Zip’, ‘M&M Gio’ and ‘Piaggio Apé - Mini Truk’.

Moreover, the SCV manufacturers are increasingly setting their eyes on the 3W passenger segment. Tata Motors has already launched passenger variants (‘Tata Magic’ - a passenger-variant of Tata Ace, ‘Tata Iris’—a passenger variant of Ace Zip, ‘Tata Winger’) that have evoked encouraging response and are increasingly replacing 3Ws used for longer distance inter-city transports. With rising tides, Bajaj Auto—that dominates 3W auto-rickshaw segment—too has been prudent enough to envisage an upgrade to 4Ws and has recently unveiled its first 4W passenger variant ‘RE60’. Benefiting from higher mileage (35 kmpl) and lower emissions (60 g/km of CO2), RE60 aims to capitalise on growing demand for safe, environment-friendly and fuelefficient means of urban public transport that could eventually replace the 3W auto-rickshaws.

Overall, the entry of bigger OEMs with deep understanding of the Indian automobile industry and strong brands, established product portfolios, solid supplier/ vendor base and wider dealer network/distribution reach could further cannibalise the domestic 3W sales going forward.

Passenger segment competition remains restricted by permit regulations, cargo segments gives in to SCV competition, Exports remain the key growth driver for the industry. Over the years, the Indian three-wheeler industry has traversed a high growth trajectory and evolved from being an import-dependent industry before 1960s to becoming the world’s foremost producer, consumer and exporter. The industry is characterised by two segments: Passenger carrier and Goods carrier. These can be further classified according to mass of the vehicles, seating capacity (3+1 / 4+1 / 6+1), payload capacity (0.35T / 0.50T / 0.75T / >0.75 T), engine type (two-stroke/fourstroke, 150cc/175cc/200cc/400cc, front-engine/rear-engine) and fuel consumption (Diesel/Petrol/ CNG/LPG).

The domestic 3W passenger vehicle segment has recorded healthy 10 percent CAGR volume growth over the last decade as it has emerged as a vital link for last mile connectivity in urban markets where public transport is regulated through issue to permits by the state governments / local RTOs and the entry of large commercial vehicles are increasingly restricted to avoid traffic congestion. Besides, with improving road infrastructure and increasing proliferation of the hubn-spoke model of goods transportation, the demand for 3W goods vehicles

had surged during the first half (~32 percent CAGR) of the last decade; although the same has been severely impacted during FY0709 (~50 percent de-growth) due to economic slowdown and successful entry of 4W SCVs. However, demand for domestic 3W goods segment has revived again and has grown at ~10 percent CAGR during FY10-12 owing to healthy suburban demand due to substantial initial price differential between 3Ws and 4Ws. The contribution from goods segment to total domestic 3W sales had increased rapidly from ~27 percent in FY03 to ~41 percent in FY07, then declined steeply to ~21 percent in FY10 and has stabilised near that levels since last two-three years.

While the growth rate in the domestic market has been moderate, Indian 3W manufacturers with strong brands & established product portfolios in the passenger segment (>99 percent of exports are for 3W passenger vehicles) have been witnessing robust demand from South Asian, South-East Asian, African and Latin American markets. With these markets having demographics broadly similar to that of India, the key demand is being driven by rising disposable incomes, and the need for lastmile connectivity. As a result, the contribution from exports has increased immensely from ~16 percent in FY03 to ~41 percent of total industry sales in FY12.

Overall, the Indian 3W industry is increasing transforming into an exports driven industry, mainly catering to the passenger transport segment wherever public transport systems are inadequate.

After robust growth in FY10 & FY11, domestic three-wheeler passenger carrier sales slows down due to absence of new state permits, high interest rates and higher fuel costs Over the years, contract carriers have remained the most affordable & convenient means for short-to-medium distance intra-city public transportation because of their easy availability, and reasonable fares.

Besides, they provide quick and effective means of self-employment with relatively low capital investment & adequate availability of finance from the unorganised segment. On the other hand, the stage carriers are commonly used for inter-city transportations to ply passengers between common pick-up points upto 20-35 km apart. While the contract carriers segment is still immune from competitive pressures, the stage carriers segment is expected to face significant competition from passenger variants of four-wheeler SCVs like Tata Magic, Iris and Maxximo mini-van.

The key growth drivers for the

domestic 3W passenger industry have been 1) First Time Users (FTUs) through opening up of fresh permits by the state governments / Road Transport offices (RTOs) and 2) Replacement demands due to technological advancement, increased availability of alternative fuels and stricter environmental emission norms. The semi-urban and rural areas are driving domestic demand as public transportation is either absent or inadequate in these areas.

Besides, the demand from metropolitan areas and major urban cities too remain steady due to traffic congestion and parking problems faced during driving larger personal vehicles.

After robust growth in FY10 (+30 percent) & FY11 (+22 percent), the domestic passenger 3W sales have declined ~four percent in FY12 due to demand slowdown and high base effect. While none of the states had opened up fresh permits during FY12; demand moderated in two key states: 1) Tamil Nadu due to freeze on fresh permits post elections and 2) Andhra Pradesh due to Telangana agitation.

Besides, the macroeconomic headwinds like economic slowdown, high inflation, increase in financing costs and rising fuel expenses have also impacted demand conditions. Moreover, with lower domestic demand, key players like Bajaj Auto & TVS Motors had diverted their capacities to exports markets (+34 percent in FY12), which they were unable to cater otherwise. While states like Karnataka, Delhi, Madhya Pradesh & Maharashtra are expected to open new permits over the medium term, states like Gujarat are doing away with the permit requirements altogether. Besides, healthy replacement demand (two-stroke to four-stroke engine vehicles, front engine to rear-engine vehicles and petrol / diesel to CNG engine vehicles) is expected support growth for the 3W passenger carrier segment over the next five years.

After severe degrowth in FY08-FY09, domestic 3W goods carrier sales had bounced back moderately during FY10-12; however severe de-growth seen over the recent months. The domestic goods carrier market is relatively more dynamic than passenger carriers, as no permit regulation is imposed on the segment. Restrictions on entry of heavy commercial vehicles in major cities has lead to increased acceptance of the hubn-spoke model; wherein heavy trucks transport goods to outskirts of the city and light trucks (three/four-wheelers) redistribute these goods within the city.

Besides, booming modern trade

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and rising consumer goods consumption has increased demand of quick and door-step deliveries, boosting demand of low tonnage (0.5T) 3Ws that serve as one of the most suitable means of last mile connectivity as they are relatively cheaper to purchase/hire and have lower turnaround time as they can be easily manoeuvred across narrow by-lanes to the final destination.

Rapid economic growth, improving road infrastructure and strong growth in the user industries (like FMCG, Consumer Durables, Modern Retail) had resulted in robust 3W goods carrier demand during FY02-07 with sales surging at ~32 percent CAGR during the period. However, the industry witnessed a massive 50 percent de-growth from 1.67 lakh units in FY07 to 0.81 lakh units in FY09 due to the impact of global financial crisis, steep slowdown in domestic economy and intense competition from four-wheeler SCVs (Sub 1 Tonne SCVs, a new segment created with the launch and run-away success of ‘TATA ACE’). The higher tonnage (0.75T and above) 3W goods segment, then dominated by diesel based offerings from Piaggio and Force Motors, seems to have literally vanished from the market place.

2 JULY 2012

The competition is further spicing up with a host of new launches by larger automobile OEMs with strong brands, established product portfolios and wider distribution reach.

Post the steep correction and market re-alignment during FY0709, demand for domestic 3W goods segment has revived again and grown at ~10 percent CAGR during FY10-12 owing to increasing proliferation of hub-n-spoke model of goods transport and continued rural demand for 3W goods carriers due to substantial initial price differential between 3Ws and 4Ws. However, macroeconomic headwinds like slowing economic growth, sluggish industrial production, moderating consumer goods consumption, increase in financing costs and rising fuel expenses have once again started impacting demand conditions over the last six months.

Exports to remain a key longterm growth driver; African markets expected to replicate the Indian 3W growth trajectory; however considerable headwinds expected in the near term 3Ws have the largest exports contribution among all major segments of the Indian automobiles industry.

Three-W exports have grown at robust 38 percent CAGR over the

last decade, thereby increasing its contribution from ~16 percent in FY03 to ~41 percent of total 3W sales in FY12. The key demand drivers include rising disposable incomes, improving road infrastructure and increasing demand for motorized transportation across South Asian, South-East Asian, African and Latin American markets. Indian 3W manufacturers with strong brands and established product portfolios in the passenger segment have been witnessing robust demand from these emerging economies.

While Bajaj Auto dominates 3W exports with ~86 percent share and Piaggio / TVS Motors / M&M are making significant inroads, Indian 3W manufacturers face little international competition in the 3+1 passenger 3W segment .

After a moderate six percent export growth during FY08-FY10, the 3W exports have surged at 55 percent in FY11 and 34 percent in FY12. With the end of ethnic conflicts, Sri Lanka has been in rapid development mode and 3W sales have surged due to strong pentup demand. Besides, Bangladesh, Indonesia and Philippines are migrating from two-stroke petrol to four-stroke vehicles due to increasing environmental awareness. Moreover, Africa (which contributes 45-50 percent of total 3W exports) continues to be a key growth driven for Indian 3W industry due to rising population and complete lack of public transportation systems (motorcycles are often used as taxis due to dearth of affordable alternatives). Overall, African markets provides a promising long-term opportunity as they replicate the same 3W growth trajectory witnessed in India over the past few decades.

Currency fluctuations, price increases due to reduction in export incentives, the recent enhancement in import duties (from 51 percent to 100 percent)

by Sri Lanka and overall high base effect has lead to steep moderation in 3W export growth recently.

Indian 3W manufacturers have increased prices from Oct’2011 as the nine percent DEPB benefit was replaced with 5.5 percent duty drawback and one percent duty credit under Special Focus Market Scheme. However, we

expect the 3W exports growth to remain healthy over the longer term due to large pent-up demand in the target emerging markets.

Bajaj Auto is the clear market leader in the passenger carrier segment with ~66 percent market share, Piaggio is the market leader in the goods carrier segment with ~55 percent market share Bajaj Auto has been the industry pioneer and has remained the leading 3W manufacturer / exporter from India over the last four decades.

The company has an installed capacity of 5.4 lakh units pa at its Waluj plant in Maharashtra and enjoys over 30 percent EBITDA margins in the 3W business. It enjoys near monopoly in the 3W passenger autorickshaw segment, which forms the major chunk of 3W sales in the country. Besides, with well established brands & deeply penetrated distribution network in the major exports markets, the company boosts of ~87 percent market share in 3W exports. Overall, the company is expected to remain the main beneficiary of surging demand from emerging economies.

Piaggio Vehicles Private Limited is a 100 percent subsidiary of Piaggio & C. S.p.A., an Italian Auto major and a global pioneer in the 3W vehicles segment. While the company continues to dominate the Diesel based goods carrier segment, the segment as a whole has been impacted by the increasing popularity of the 4W SCVs. As a result, the Paiggio’s overall market share has declined from ~30 percent to ~23 percent over the last two years. The company has introduced new Apé City Passenger (available in Petrol, Diesel, CNG and LPG versions) in the autorickshaw segment and Apé Truk and Apé Mini in the LCV segment to counter competitive pressures.

The company has its manufacturing facilities at Baramati in Maharashtra.

M&M is the third largest player with Champion and Alfa brands.

The company was focused primarily on the 0.5T 3W cargo and 0.75 tonne 3W cargo segment.

However, the company also entered the passenger segment with launch of Alpha Diesel, which helped it improve its market share in the domestic 3W passenger

market from ~two percent in FY08 to ~12.3 percent in FY12e. Besides, M&M has wide rural distribution network and is one of the most aggressive player in the SCV segment through its Maxx, Maxximo and Gio range of products.

Besides, Chennai based TVS Motors has gained five-six percent market share in the passenger segment through the launch of ‘TVS King’, Rajkot (Gujarat) based Atul auto has garnered ~12 percent market share in the cargo segment through its rear engine products under ‘Atul Gem’. On the other side, state owned Scooters India has been losing market shares and Force motors has nearly exited the 3W business to concentrate on its LCV business.

Significant near-term headw inds include economic slowdown, high fuel prices, high interest rates, firm raw material prices, increase in excise duties and reduction in export incentives 3W demand remains vulnerable to slowdown in economic growth, real incomes and consumer goods consumption.

In terms of cyclicality, however, the 3W demand is relatively less affected as they are primarily used for short haul transportation of consumer staples as compared to long haul transportations of heavy capital goods & bulky commodities by the M&HCV segment.

After robust growth across segments in FY10-FY11, the industry volume growth has started tapering down again. Overall cost of ownership has increased substantially due to reversal in fiscal incentives (excise duty restored from eight percent in FY10 to 12 percent in FY13) and rising fuel prices (Petrol prices up 51 percent, Diesel prices up 14 percent in last two years) and stricter emission norms (Bharat IV norms for 11 major cities, Bharat III for rest of the country). On the exports front, Indian 3W manufacturers have increase prices from Oct 2011 as the nine percent DEPB benefit was replaced with 5.5 percent duty drawback and one percent additional duty credit under Special Focus Market Scheme.

Overall, slowing economic growth, absence of fresh permits and severe competition from the LCV segment is expected to impact domestic demand over the near term. Moreover, significant currency fluctuations, price increases due to reduction in export incentives and overall high base effect are expected to impacted 3W exports in near term.

However, Long Term Demand Potential Remains Healthy Despite near-term headwinds, we expect the 3W industry to report a healthy volume CAGR of seven-eight percent over the next five years.

Domestic 3W passenger segment is expected to benefit from product up-gradation (two-stroke to fourstroke, Petrol/Diesel to CNG/LPG) and opening of fresh permits by the state governments. Domestic 3W goods segment, although facing stiff competition from 4W SCVs, is expected to benefit from its favourable operating economics for FTUs. Besides, 3W exports are expected to remain the main growth driver for the industry due to rapid economic growth, rising disposable incomes, evolving travel and consumption patterns, improving road infrastructure, increasing demand for motorised transportation and inadequate public transport systems in target emerging markets.

(Courtesy: ICRA)

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Moog to equip NATRiP with new tech Bhargav TS Chennai

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est equipment manufacturer, Moog will supply latest shaker tables to National Automotive Testing and R&D Infrastructure Project (NATRiP).

The NATRiP Project is an initiative of the Indian government and Indian automotive industry to provide testing facilities for automobile manufacturers and component suppliers from India and abroad. The advanced test systems will enable automotive OEMs and component manufacturers to have the latest test facilities to meet international standards and significantly reduce the development time for new vehicles.

Moog will provide the latest control technology to simulate road conditions for automotive components and fully built vehicles. The systems will also reproduce the fatigue experienced by vehicles due to road conditions, extreme temperatures, sunlight and humidity. Moog’s servo hydrau-

lic test equipment includes hydraulic simulation tables, tyre coupled simulation systems, universal test benches and hydraulic power units.

In a recent interaction with Auto Monitor, Moog India’s Managing Director, Anurag Kashyap said, “The automotive markets constantly require new test solutions, high-performance equipment and innovative approaches. We are excited to bring our global resources together to support this project. We are supplying equipments to three centres—Pune, Chennai and Delhi. Out of the equipments we supply to them is the multi-axis shaker tables, is new technology.

These are being used world-wide, but the first such equipment is going to be used at the NATRiP.” Moog has supplied equipment that takes care of fatigue and durability testing, which comprises a four post test system, the multi-axis shaker table and climatic chambers. The four post test system is based on hydraulic test actuators that are used to assess NVH and can prove structural, chassis and suspension

The advanced test systems will enable auto OEMs and component makers to have the most modern test facilities to meet international standards and significantly reduce the development time for new vehicles designs. The multi-axis shaker table is based on the hexapod configuration, which essentially provides six degrees of freedom.

The shaker table is designed in such a way to perform research and development tests.

It requires an appropriate configuration, coupled with a test controller and features a state-ofthe-art digital architecture using the latest hardware and software.

Elaborating on the new test systems, Kashyap said, “Most of the components are tested for vibrations and in this system

Moog’s Shaker Table

we can test it individually. If you look at the engine mountings normally it is tested by attaching accelerometers on the rubber mounts, drive the car on the field and analyse the gathered data back in the lab. This multi-axis shaker table can simulate those readings and it saves you the cost of running the car out in the real world. Even the entire engine

can be placed on this multi-axis shake table and simulation work can be carried out.”

The climatic chamber helps in testing the components and the entire vehicle in a real climatic conditions. It is tested and simulated under hot conditions to study the damages caused to the components, particularly to the rubber components.

Suppliers create technology platform

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uppliers of High Performance Computing (HPC) technologies including Allinea, ARM, Bull, Caps Entreprise, Eurotech, IBM, Intel, ParTec, STMicroelectronics and Xyratex, in association with HPC research centres BSC, CEA, CINECA, Fraunhofer, Forschungszentrum Juelich and LRZ, have created a European Technology Platform for HPC (ETP4HPC) and released the ETP’s Vision document to improve Europe’s position in the domain of HPC technologies.

HPC is an instrument to resolve problems of the highest complexity that require extremely large and efficient computational and storage capabilities for activities such as modelling natural phenomena (ie weather, climate change or epidemics), optimising energy resources, researching new materials, and shortening engineering development cycles fostering innovation across the region.

The European Commission’s communication “High Performance Computing: Europe’s place in a Global Race” perfectly underlines the strategic nature of HPC and sees a European Technology Platform (ETP) playing a major role. The ETP is an industry-led forum open to any organisation performing research in the area of HPC technologies in Europe with the objective to define Europe’s research priorities in developing European technology in all segments of the HPC solution supply chain.

The ETP4HPC can significantly improve Europe’s position in the domain of HPC technologies through a research programme building on mutual strengths, taking advantage of technological disruptions with tangible and sustainable market potential, targeting technologies meeting the needs of important applications, and facilitating the creation of start-ups and the development of the SME sector as well as utilising synergies with other information technology sectors to influence next generation computing.

The resulting benefits of the research programme are a strong HPC technology ecosystem, competitive HPC solutions designed in Europe, and an economically sustainable HPC sector.

The creation of ETP4HPC is an important step in encouraging and strengthening the position of the European HPC industry. The competencies among the members of this initiative indicate that Europe can be at the forefront of the HPC industry in the coming years if an ambitious research and development program is put in place. The ETP will act as a catalyst for such a development resulting in a stronger European HPC industry that creates employment, adds value, and a stimulus for students and academic researchers in the ICT field.

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2 JULY 2012

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Indian CV industry: Staring at a slowdown

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n 2011-12, the Indian commercial industry reported a growth of 18.2 percent over the previous year aided by a muted but stable growth of 7.9 percent in Medium & Heavy Commercial Vehicles (M&HCVs) and a strong growth of 27.4 percent in the Light Commercial Vehicles (LCVs). Following the economic downturn in 2008-09, the domestic CV industry has recovered sharply since the beginning of 2009-10 and since then has more than doubled in volumes aided by strong economic growth, stable operating environment for fleet owners (despite headwinds in forms of rising costs) and increasing share of business from Railways. Improving highway infrastructure and implementation of stricter emission & anti-overloading norms are also collectively driving

replacement demand and particularly in favour of higher tonnage trucks that offer superior operating economics.

At the same time, the demand drivers for LCVs have also continued to strengthen with rising demand from consumer driven sectors and proliferation of hubn-spoke model prompting need for last-mile connectivity through Small Commercial Vehicles

M&HCVs, which tend to be more influenced by the macro-economic indicators is likely to register a weaker performance over the near term as against the relatively more stable LCV segment.

The demand for passenger carrier is also unlikely to improve substantially

(SCVs). While we believe that the long-term growth drivers for CVs remain favourable, there are headwinds building up in the near term. The economic indicators have been weakening for some time now and the CV industry is showing initial signs of a downturn. Our interaction with the channel indicates at an overall pessimistic outlook for the near term. This primarily stems from a weakening visibility on cargo volumes, a factor that continued to support fleet operator’s viability in 2011-12 despite almost flat freight rates and increase in operating cost. Further, discounts levels for new vehicles are nearing their peak levels, especially for heavy duty trucks and freight rates have also trending downwards on most of the key routes.

The large fleet operators have also confirmed of lower freight availability from key freight generating sectors such as iron ore, steel, cement, automobiles etc.

Among segments, M&HCVs, which tend to be more influenced by the macro-economic indicators is likely to register a weaker performance over the near term as against the relatively more sta-

ble LCV segment. The demand for passenger carrier is also unlikely to improve substantially as replacement need from STUs may not be sizeable enough in the near term. Given this consideration, we are revising our near term outlook on the sector and expect growth to stabilise at ~five percent for M&HCVs in 2012-13 compared with 7.9 percent in 2011-12 and 10-12 percent for LCVs as against 27.4 percent in the previous year.

In terms of competitive landscape, while we expect new players like Bharat Benz to enter the market in 2012 and other like Volvo Eicher and Mahindra Navistar to further augment their presence with new products and wider market presence, the competitive positioning of incumbents is unlikely to be hurt in the medium term. The competitive pressures in the LCV segment are likely to be pronounced with ALL Nissan JV ramping up their presence.

COMMERCIAL VEHICLES: MEDIUM & HEAVY COMMCIAL VEHICLES Headwinds persists; outlook remains weak: In FY12, the M&HCV grew by a fairly healthy

7.9 percent over the previous year, showing significant resilience to the weakening lead indicators.

However, we believe that while growth rates moderated somewhat in FY12, the outlook appears to weakening given the overall macro-environment.

Our channel check indicates that demand for M&HCVs is coming down and there is visible slowdown especially in the higher tonnage segments. In particular, the enquiries for tractor trailers are low as demand for container traffic; transportation of bulky commodities is weakening.

Passenger Carrier Segment Passenger segment is relatively a stable segment within the industry: With volumes of approximately 100,000 units (in FY12), the passenger carrier segment of the domestic CV sector accounts for 12 percent of the total industry. Over the past ten years, the bus segment has grown at a steady pace of 11 percent (CAGR) aided by strong growth in the light and mediumend of the market. Unlike the truck segment, where demand is influenced by economic and

Channel Check With Dealers s $EMAND FOR NEW VEHICLES ESPECIALLY IN THE heavier segment (ie 25T+) has come down since the beginning of April 2012; drop in cargo volumes, and weak freight rates are forcing transporters to defer their purchases s $ISCOUNTS LEVELS ARE CURRENTLY AT THEIR PEAK with heavier trucks attracting the most discounts; however, OEMs have continued to affect price increases; in April, prices have been revised upwards in the range one-two percent s -OST DEALERS EXPECT WEAKER SALES AT LEAST IN the coming few quarters s !CCORDING TO DEALERS INVENTORY LEVELS HAVE either been maintained or even gone up in heavy segment s !FTER THE RECENT INCREASE IN PETROL PRICES

dealers are fearing that a potential increase in diesel prices could further force transporters to re-think on their fleet addition plans s -OST DEALERS CONlRMED THAT FUNDING AVAILability has not been a constraint; in fact some of the financiers have been aggressive and even offering lower rates than earlier

What The Transporters Had To Say Freight rates have been stable over the past one year but off late there is weakness creeping in; in line with seasonal trends, freight rates from southern region are up owing to mango crop s 4HERE IS A VISIBLE SLOWDOWN IN LOAD AVAILAbility from April onwards, especially from industrial segment; previous quarter was fairly stable s "ARRING AGRICULTURE AND CONSUMER DURABLES

orders from other sectors are either stable/ lower than earlier months s (IKE IN FREIGHT RATES BY RAILWAYS IS HELPING s 6IABILITY FOR LARGE mEET OPERATORS HOWEVER continues to be protected as most contracts allow for fuel pass through; almost all operators confirmed about shortage of drivers especially on longer routes s 4RANSPORTERS ARE ALSO ABLE TO REALIZE BETTER value for used trucks as prices of new ones have gone up by almost 15-20 percent in the last two years s 7HILE THERE IS STRESS ON 3&/S OWING TO SIGnificant increase in vehicle prices, EMIs and operating costs, adequate load availability so far has ensured their fleets remain viable; during times of stress, large operators also tend to support SFOs with working capital s &LEET ADDITION PLANS DIFFER ACROSS TRANSPORT-

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as headwinds gain momentum industrial activities and thus cyclical in nature, the demand drivers for the passenger segment tend to be fairly steady. The market for the passenger carrier segment is almost equally divided between the light (ie up to 7.5t) and M&HCV (7.5-16.2t) segments with user segments being somewhat distinct.

The light-end of the bus segment primarily derives demand from niche segments such as IT/ KPOs (intra-city) and inter-city private carriers. On the other hand, the bigger ones (i.e. M&HCV end of the market) derives demand almost in equal proportion from three user Segments—school & colleges, private carriers (catering to both intra-city traffic and intracity movement) and state transport undertakings (STUs).

Passenger Carrier Segment: Demand From STUs To Remain Muted In The Medium Term Long-term demand drivers however remain favourable: While there may be pressures in the near term, the demand from buses is bound to grow over the longer run given the inferior service stand-

ards of STUs, capacity constraints with railways and improvement on expressways across key routes.

The luxury segment has also been growing steadily and is likely to outpace the underlying industry growth given the increasing preference for comfortable road travel, an alternative to services offered

by STUs or Railways (on shorter distances). In India, bus penetrations rates are also amongst the lower when compared with developing nations.

On the technology front, OEMs have been upgrading their product offerings to compete with some of the advanced and more sophisticated products that are in the market from foreign OEMs; Both Tata Motors and ALL have introduced new products with technology and design support from strategic partners.

While Tata Motors runs a JV with Marcopolo in India (for low floor buses) and owns another bus body design & manufacturing company, Hispano in Spain, ALL acquired a minority (26 percent) stake in Optare plc. a U.K. based bus manufacturer with experience in hybrid and electric vehicles.

Contd. from page 16

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ers; and market-linked fleet availability is adequate; in fact presently, the Northern region has over capacity, while there is shortage of trucks in the Southern region owing to seasonal impact -ANY OF OPERATORS ALSO BOUGHT VEHICLES IN February-March in anticipation of hike in excise duty; partially explains the drop in M&HCV volumes in April 2012 -OST PLAYERS GIVE PREFERENCE TO EITHER 4ATA or Ashok Leyland vehicles citing widespread service network, easier and cheaper serviceability and spares availability as key considerations; preferences also vary across markets and so does re-sale values 3OME OF THE ORGANISED PLAYERS HAVE STARTED adding trucks from new OEMs; there is a positive response about Mahindra Navistar trucks after the initial fuel consumption problems 4HERE IS A MIXED OPINION ABOUT THE ANNUal maintenance services being offered by OEMs; while some operators find it helpful in preventing leakage; others complain of operational issues, delays etc.

Key Takeaways from Channel Check With Financiers s 0OST THE RATE CUT LENDING RATES FOR #6 lNANCing have started showing signs of easing; some of the large fleet operators have indicated a drop in rates being offered s $ESPITE FREIGHT RATES BEING STABLE OPERAtors viability/cash flow generating ability remains comfortable supported by adequate load availability s -OST lNANCIERS INDICATED THAT ASSET QUALITY has remained stable over the past one year; however there were challenges in the mining belt s &INANCING OF NEW - (#6S ESPECIALLY FOR THE organized players remains very competitive Barring few, most lending institutions have maintained their LTVs and tenors over the past one year s )NTEREST RATES FOR NEW - (#6S ARE CURRENTly in the range of 10-12 percent; for LCVs in the 14.5-18 percent range and for pre-owned trucks even higher s /VERALL GROWTH IS EXPECTED TO REMAIN STRONG in some segments—like Tippers may grow faster aided by replacement demand and SCVs would continue to be in favour s 4HERE ARE EXPECTATIONS OF USED ,#6S MOVING to rural areas thus triggering replacement demand in urban areas.

Competitive Landscape Passenger segment also remains forte of Tata Motors and Ashok Leyland: Like the goods carrier segment, the bus segment is also dominated by Tata Motors and Ashok Leyland with the two companies collectively commanding a market share of 63 percent in 2011-12.

Tata Motors is the only full range player which has presence across the spectrum of passenger carriers. Apart from the incumbents, Eicher Motors too has presence in the bus segment has been gaining market share on back of new product introductions. The other two players—Force Motors and SML Isuzu have carved their own niche position in the light-end (ie up to 7.5t) and intermediate (ie five-12t) segment of the market, respectively.

LIGHT CVs Growth momentum likely to continue In line with our expectations, the light commercial vehicle (LCV) segment in the overall CV market has continued to exhibit strong growth in FY12 riding on back of strong

demand for intra-city transportation, growing proliferation of the hub-n-spoke model and increasing acceptability of SCVs over their three-wheeler counterparts. We believe that they are multiple factors that are driving demand for SCV, which now account for almost 90 percent of total cargo LCVs sold in India.

Among the key factors, while demand for transportation of consumer goods within cities is the most prominent one, SCVs are also being preferred as they also offer attractive employment opportunity to FTBs. Like trucks, availability of financing although at higher interest rates and lower LTVs has not been an issue.

With moderate level of initial investment, such vehicles offer attractive pay-back to operators. LCVs offer better operating economics over the bigger variants and higher load carrying capability and benefits like easier maneuverability and driving comfort compared to three wheelers. Apart from attractive returns, the smaller vehicles are also being preferred over the bigger variants given their ability to ply in congested areas. We expect

On the technology front, OEMs have been upgrading their product offerings to compete with some of the advanced and more sophisticated products that are in the market from foreign OEMs; Both Tata Motors and ALL have introduced new products with technology and design support from strategic partners that the demand for LCVs is likely to remain strong and even provide cushion to some of the cyclicality that the CV industry may witness owing to macroheadwinds. We expect the LCV segment to grow by 10-12 percent and register volumes of close to 525,000 units in FY13.

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Indian CV industry.......

In India, the LCV segment is currently dominated by the small commercial vehicles (SCVs), comprising sub one-t trucks and pickup vehicles, where Tata Motors and M&M continue to command a very strong market position owing to their strong product offerings and widespread distribution reach. However, we believe that competitive pressures are likely to increase in the LCV segment and are likely to be more intense compared to M&HCVs.

and Western region where it has been launched initially.

The Logistic Industry

Contd. from page 17

Competitive Landscape In The LCV Segment Is Likely To Be More Intense

2 JULY 2012

In comparison to M&HCVs, the need for a well entrenched service network is not as compelling a requirement for LCVs as their span of commute is limited to a localized area, largely within a 50km range. Thus, we expect competitive pressure to be more intense in the LCV segment.

Moreover, most of the players targeting this segment are Indian players with reasonable market understanding and resource bandwidth. Additionally, ALLNissan’s first product—‘Dost’ has also been well accepted in the market and would continue to make in-roads in the Southern

In India, the road transportation segment is highly fragmented with nearly 85-90 percent of the segment being serviced by un-organized small transporters having less than ten trucks. Most of the large fleet operators tend to either have attached fleet (through vendors at multiple locations) or hire trucks from the market.

However, while the ownership pattern among trucking community isn’t changing rapidly, the organised players have started focusing on providing end-to-end logistics solution to corporate customers. As these players increase their share of business with corporate clients, the share of longer-term contracts is also increases in their business mix.

Consequently, such contracts provide visibility to their business and trigger fleet addition/ replacement at regular intervals than usual. Most often these contracts incorporate timely delivery as a key criterion thus prompting transporters to not indulge in overloading practices to avoid breakdowns.

Although portfolio mix of fleet operator is a function of

the user segments that it caters to and its replacement demand, the gradually increasing share of organized fleet operators is also supporting demand in favour of higher tonnage trucks given their financial wherewithal to invest in high-ticket vehicles. Moreover, as these players expand their presence in higher-value added service segments, the demand for heavy duty trucks naturally gains preference.

Competitive Landscape Competitive pressures unlikely to hurt incumbents in the near term: With volumes of ~810,000 units in FY12, the Indian CV market is among the top 10 in the world. It is also the third largest market for M&HCVs after China and Japan. Having achieved a growth of 17 percent over the past ten years and with favourable long-term prospects, the Indian CV market has been the centre of attraction for several foreign OEMs both in the past as well as recently.

Most of the OEMs that have entered the market recently are trying to break through the duopoly of incumbents. Their product offerings are focused on mass volumes segments, localisation is being given utmost importance to achieve competi-

tive pricing and investments in distribution and service network also form part of their strategy.

Our view primarily stems from the fact that in the trucking business, the decision to purchase a particular vehicle depends on the ‘word-of-mouth’ publicity about its operating economics, its expected re-sale value and easier and cost-effective serviceability where incumbents would continue to command edge for some time to come. For instance, some of the JV players with local partners having knowledge of the domestic market and benefits of an established vendor & distribution network have also found it tough in scaling up volumes as their products are yet to establish brand equity among the trucking community.

Moreover, these OEMs have also been developing advanced truck platforms to compete against the more sophisticated product offerings from international OEMs. Among OEMs entering the Indian markets, players like Bharat Benz is likely to be a serious threat given its leading presence in global CV, experience from other similar markets like Brazil and technological capabilities.

(Courtesy: ICRA)

Long-Term Growth Drivers While the short-to-medium term outlook on the CV sector appears to be grim considering the weakness in the underlying demand indicators, the long-term prospects for CVs in India continues to be supported by expectation of improvement in economic growth going forward, increasing pace of investments in highway & road infrastructure and structural changes supporting demand for the trucking segment. Among these, we believe, a) the gradual traction in market share from railways, b) changing landscape of the logistics industry, and c) stricter implementation of emission & anti-overloading norms would continue to support demand for CVs.

Analysis Of These Factors Indicates That: s 3PEEDY DEVELOPMENT OF ROAD INFRASTRUCTURE is supporting preference for higher tonnage multi-axle vehicles; these vehicles are capable of covering longer distances and offer better operating economics for transporters; this trend along with the changing landscape towards organized logistics industry with focus on plugging inefficiencies in the supply chain is improving competitiveness vis-à-vis railways s !LTHOUGH THERE ARE VARIOUS CHALLENGES IN THE execution cycle but the government’s thrust and a changing environment of more friendly policies is likely to help in faster execution of highway projects going forward s 2OAD TRANSPORTATION IS ALSO GRADUALLY GAINing market share as railways have continued to maintain their focus on bulk cargo segments, a trend visible by its strong and expanding market share for heavy commodities such as coal, iron ore, cement, fertilizers and food grains s #APACITIES CONSTRAINTS AND DELAYS IN MAJOR freight corridor projects have also meant that trucks have gained market share in nonbulk segments

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2 JULY 2012

G L O B A L WAT C H

Nissan reveals details of NV400 minibus

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issan has announced more detailed specifications and prices for its new range of factory built NV400 conversions, including a six and nine seat minibus, a crew van and both single and double cab dropside and tipper conversions. All versions are available to order through the Nissan dealer net-

The Nissan NV400 dropside has a double skinned but light metal body and an integral front ladder rack. Available with a choice of either a single three seat or a double seven seat cab, front or rear wheel drive and a range of payloads up to 1,462 kg, it makes a perfect workman’s vehicle

work with immediate effect.

The countless variations of wheelbase length, payload, engine horsepower, front or rear wheel drive, single or double cab and two trim levels, make the NV400 one of the largest LCV model ranges in the UK. The NV400 chassis cab starts life as a mid or long wheelbase variant with either front or rear wheel drive, single and twin rear wheel and is available in a total of 13 versions. Powered by either the 125 HP and 150 HP version of the economical and powerful 2.5dCi diesel, the NV400 chassis cab is now available with the new range of factory built conversions.

The factory built NV400 minibus can accommodate nine people in comfort or combine six people and a generous load space. Two engine power options of 100 HP and 125 HP are available with three point seat belts and anti-lock brakes, just two of the standard safety items.

The NV400 minibus starts at just £26,575.

With large windows and comfortable seats, the Nissan NV400

crew van seats up to seven people while still providing plenty of space in the cargo area. Choose from a wide choice of cargo and payload specs up to 1,398 kg plus front or rear wheel drive for a van that perfectly matches a range of business requirements, all for just £25,565.

The Nissan NV400 dropside has a double skinned but light metal body and an integral front ladder rack. Available with a choice of either a single three seat or a double seven seat cab, front or rear wheel drive and a range of payloads up to 1,462 kg, it makes a perfect workman’s vehicle.

The NV400 dropside starts from £23,365 for a single cab and £25,765 for a double cab.

Hard-working yet comfortable, the Nissan NV400 tipper is available as a three seat single cab for £24,765 or a roomy seven

seat double cab for £27,165 and offers a choice of mid or long wheelbase and a range of payloads up to 1,227 kg. The load deck tilts automatically at 45°for quick, easy unloading.

In addition the Nissan NV400 will be enhanced with a range of Good to Go local conversions, including a box van, Luton and refrigerated van, plus a 14-17

seat minibus option that will be built by handpicked UK converters and sold by Nissan business centres to operators as a complete vehicle.

Nissan’s factory built and Good to Go approach guarantees that operators receive a quality and fully approved conversion complete with a manufacturer warranty.

ZF wins supplier awards from Chrysler, Ford

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F Friedrichshafen AG recently bagged two prizes for its automatic passenger car transmissions from Chrysler and Ford.

At the Annual Supplier Meeting in Detroit, Chrysler praised the platform concept of the eight HP, which enables the application of the automatic transmission among the entire product range and all brands of the Chrysler. The winners of the awards were determined with the help of a comprehensive evaluation system including criteria such as quality, delivery times, warranty processing and general assessment of the Chrysler Group Management. The eight HP is currently in volume production application in the Chrysler 300 and the Dodge Charger and will also be installed in the new model generation of the Ram 1500.

Ford also appreciated ZF’s performances in key areas such as on-time delivery, quality, innovation, sustainability, cost structures, social responsibility, and customer satisfaction. ZF’s Powertrain Technology Division received the Gold award for its well-established six speed automatic transmission, which Ford uses for the Australian models Falcon and Territory. Overall, twelve gold and 24 silver awards were granted.

Besides transmissions, ZF also produces complete axle systems, as well as driveline components, for example, clutch systems or torsion dampers for several Ford models.

ZF is a leading supplier for driveline and chassis technology with 121 production companies in 27 countries. In 2011, the group achieved a sales figure of about Euro 15.5 billion with more than 72,000 employees. In order to continue to be successful with innovative products, ZF annually invests about five percent of its sales in research and development.

ZF Car Transmission

Auto Monitor

2 JULY 2012

G L O B A L WAT C H

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Major improvements for new Kia Sorento

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ia’s Sorento SUV will receive a host of significant improvements when the new upgraded model goes on sale later this year. Significant changes include a re-engineered bodyshell, enhanced powertrains for bestin-class fuel economy with lower emissions, improved ride, handling and refinement, additional convenience and safety features, plus a fresh, new look for the exterior.

“Since its introduction in 2009, the second-generation Kia

Kia has given careful attention to owners’ feedback, and the upgraded Sorento is a major step forward for the SUV Sorento has achieved more than 620,000 sales around the world.

Today, it is manufactured in Korea and the USA, attracting over

130,000 US customers last year to rank as the best-selling Kia model in the States for the second year in a row,” commented Thomas Oh, Kia’s Executive Vice President and Chief Operating Officer of the International Business Division.

“We have given very careful attention to owners’ feedback, and the upgraded Sorento is not just a cosmetic exercise but a major step forward for our popular SUV.” Kia’s designers have created new headlamps with LED positioning lights, a new tailgate with

LED rear combination lamps, new bumpers (front and rear) with vertical-axis fog lights and a larger area of body-colour surface, and an expanded choice of wheels to include larger diameter (19-inch) alloys—depending on market.

Inside the five- or seven-seater cabin, there are more soft-touch surfaces plus a new LCD instrument cluster, new centre stack with seven-inch display screen, and a new console featuring a straight-gate selector with a

leather-booted lever on automatic transmission models—reinforcing the vehicle’s more luxurious character. Offered in black or beige cloth or leather, the interior can be bathed in natural light through a larger panoramic sunroof (depending on version) with no centre cross beam and a powered blind.

New Sorento is due to arrive in the UK in the autumn and full details of UK specification and trim will be available in due course.

EUCAR calls for targeted support for initiatives in Horizon 2020

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he European Council for Automotive R&D (EUCAR) calls for a number of priority automotive R&I initiatives in Horizon 2020 to support competitive and sustainable road transport and for these initiatives to be supported by a substantial budget that reflects the sector’s social and economic contribution to Europe.

Horizon 2020 Chairman of EUCAR, Rémi Bastien, set out the association’s recommendations on Horizon 2020 to an audience of MEPs and stakeholders at a seminar in the European Parliament. Horizon 2020 is the EU’s Framework Programme for Research & Innovation from 2014-2020. Presenting the recommendations, Bastien highlighted the importance of Horizon 2020 for automotive R&I. He called for the proposed Euro 80 bn Horizon 2020 budget to be maintained and for the legislation to be finalised as soon as possible.

Supporting R&I Initiatives To support automotive R&I effectively, a suitable budget for automotive initiatives in Horizon 2020 is necessary. This should reflect the automotive industry’s direct contribution of 6.9 percent to European GDP and road transport’s status as a cornerstone of European society, free movement and economic activity. EUCAR therefore calls for a budget share of Horizon 2020 to be devoted to automotive R&I initiatives, which corresponds to the industry’s direct contribution to the EU economy.

It is essential to support the objectives of smarter, cleaner, safer and more integrated road transport and to support the global competitiveness of the European automotive sector.

Implementing Priorities These initiatives are to be supported by the three pillars of Horizon 2020: Societal Challenges, Industrial Leadership and Excellent Science. In particular, EUCAR supports the broad lines set out in the Commission’s proposals for the programme on “Smart, Green and Integrated Transport” as well as the programmes on energy, climate/raw materials, information and communication technology, advanced materials and advanced manufacturing and processing.

For EUCAR and its partners in automotive R&I, an essential component in implementing the above priorities is the future European Green Vehicles Initiative (EGVI), which succeeds the ongoing European Green Cars Initiative. The EGVI should focus on the efficiency of the vehicle, including electrification, in all vehicle types.

2 JULY 2012

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The leading source for automotive parts, components & accessories.

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Tej Control Systems Pvt Ltd Plot No.329/331, Road No.25, Wagle Industrial Estate, Thane(W) - 400 604.

Tel. +91 22 2583 8191 to 98, Fax: +91 22 25838199 Email: tivs@tejcontrol.com, vision@tejcontrol.com Website: www.tejivs.com

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