Vehicle-scrapping policy may not roll out until after 2019 polls

Source: The Hindu Business Line, Aug 12, 2018

New Delhi: The 2019 general elections seem to have cast a shadow over the much-talked-about new scrapping policy for commercial vehicles.

The proposal, which was to be sent to the Union Cabinet, is seeing fresh round of discussions.

The Road Ministry is engaging with States to make the policy more effective, sources in the know said adding that the Ministry is also considering offering interest rate subvention for buying new vehicles. “Bringing such a policy in an election year is difficult,” a senior official told BusinessLine.

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Auto industry raises concerns over proposed changes in import regulations

Source: Financial Express, Aug 12, 2018

The automobile industry is concerned over a proposal by the government to allow imports of up to 2,500 units without the need for adapting to Indian regulations, according to sources in the sector. The Ministry of Road Transport and Highways in June had sought feedback from stakeholders to amend the Central Motor Vehicles Rules for allowing import of right-hand drive vehicles with compliance certificate from the country of origin.

The move would allow import of maximum of 2,500 completely-built units or semi-knocked down kits each year. The vehicles could be shipped in by the manufacturers or their authorised representatives.

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Boom in automobile sales drives tyre industry’s growth into high-speed lane

Source: Business Standard, Aug 07, 2018

Chennai: The boom in automobile sales is responsible for a higher proportion of the tyre industry’s growth.

In the past, the latter was mostly driven by replacement market demand, still the lion’s share of total tyre sales. However, the share of sales to automobile makers, also termed Original Equipment Manufacturer (OEM) sales, is moving up for tyre makers.

“With bullishness in the economy and the automobile industry, the tyre industry was also on an upward march (in FY18). Our own estimates indicate the growth has been led by the OE sales, more than by the sales in the replacement market,” leading tyre maker Apollo noted in its FY18 annual report.

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Italian bike-maker Benelli signs MoU for plant in Telangana

download (1)Source: IBEF.org, Aug 07, 2018

Hyderabad: Italian motorcycle-maker Benelli today signed an MoU with Telangana government and Adishwar Auto Ride International (AARI), a subsidiary of Mahavir Group, for setting a manufacturing facility here.

The group company would initially start assembling CKD (completely knocked down) kits of the bike here for Benelli and the partnership entitles Adishwar to assemble, manufacture bikes and import exclusive range of the bikes from Italy and SouthEast Asian regions, managing director of Benelli India Vikas Jhabakh said in a press conference.

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Auto parts makers report highest sales in 6 years on robust demand

Source: LiveMint.com, Aug 06, 2018

New Delhi: Auto parts makers in India posted the highest sales in six years buoyed by robust demand for cars, trucks and motorcycles in the world’s fourth-largest automobile market.

Cumulative sales rose 18% to more than ₹3.45 trillion in the financial year ended 31 March, the Automotive Component Manufacturers Association of India (ACMA) said on Monday.

It is the highest growth in industry sales as well as percentage growth since 2012-13.The parts makers recorded sales of ₹2.92 trillion in the previous year, ACMA said in a presentation to reporters.

Automobile sales weakened after the government banned high-value currency notes in November 2016.

Sales began to revive as companies launched new models and banks offered easier financing.

Passenger vehicle sales touched the three-million mark for the first time last year.

Truck and bus sales surged 20% to 856,453 vehicles, while two-wheeler sales touched a record 20.19 million units, according to data issued by the Society of Indian Automobile Manufacturers (Siam).

Exports of auto parts from India also carried on the growth path amid a recovery in global economy and auto makers’ drive to cut costs and boost profitability by sourcing from low-cost regions such as India.

Exports surged 24% in the last financial year to ₹90,571 crore—the highest in five years, the industry body said.

Imports, however, jumped 18% to ₹1.06 trillion, rebounding from a flat growth in the previous year, due to a surge in imports of Chinese parts.

Chinese parts comprised almost 27% of total imports last year.Nirmal K. Minda, president of ACMA, said higher sales helped the auto parts industry improve its average capacity utilization rate to 95% last year, boosting profitability.

“The performance of the tier-II and tier-III component manufactures has also improved a lot and that gives us a lot of strength since they operate on very thin margins,” Minda said.

He said the industry body is concerned with the increasing imports of Chinese parts “especially in the aftermarket since there are no specified standards”.

“Just like the domestic tyre industry, the Union government should also try to protect the domestic component industry from imports of low-quality components,” said Vinnie Mehta, director general of ACMA.

Meanwhile, domestic companies are seeking an across-the-board a lower 18% goods and services tax on auto parts.Currently, almost 40% of components especially for two-wheelers and tractors, attract a 28% GST, and customers in both these segments are the most price sensitive, according to ACMA.

Higher tax rates have made it difficult to eradicate grey market operations in the aftermarket, and a lower tax rate would also encourage compliance and grow tax collection, the industry body said.ACMA also wants incentives for its members for research, development and manufacturing of electric vehicle components in the second phase of the Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles (FAME) scheme which is expected to be implemented by October.

Automobile industry planning ₹ 58,000 crore capex in 2 years

download (2).jpgSource: LiveMint.com, Aug 06, 2018

Mumbai: Auto makers in India are set to spend up to ₹58,000 crore in capital expenditure (capex) over the next two years—the highest in a decade—underscoring healthy demand prospects in the local market and impending safety and emission norms.

The figure will mark a 30% jump from the previous two comparative fiscal years, ratings agency Crisil said in a June report. The ratings agency studied investment plans at 18 auto makers, who comprise about 90% of total industry volume. The auto makers are ramping up investments on new products and capacity to tap growing demand. They also need to make their vehicles compliant with new safety and emission norms which will come into force over the next two to three years.India’s automobile industry is one of the most capital-intensive sectors with a big appetite for re-investment in capex and research and development at regular intervals, according to a January report by BNP Paribas India. While other industries such as retail, and oil and gas have an average investment cycle of about two decades, the auto industry has one of the shortest at about four years, it said. To make matters worse, operating profit margins in the auto sector exceed only those of airlines and telecom, the report added, highlighting intense competition among firms.

Mahindra and Mahindra Ltd’s managing director Pawan Goenka said on Tuesday that it is “becoming more and more challenging” for local auto makers to launch products profitably as investments must grow to comply with more regulatory norms while product life cycles concurrently become shorter.

Starting this fiscal, Mahindra intends to spend a record ₹15,000 crore until 2020-21, including ₹10,000 crore on capital expenditure.

The usual practice was to spend ₹ 10,000 crore every three years.

The higher figure signals a robust demand and investment cycle, said V. S. Parthasarathy, chief financial officer of the Mahindra Group, in response to queries from Mint.

Most of Mahindra’s capex would go towards product and technology development, apart from capacity expansion as the sport-utility vehicle and tractor maker prepares to fight rising competition. It will include spending on luxury car brand Automobili Pininfarina, the off-roader Roxor being developed for the US, new tractors, and compliance with Bharat Stage VI emission norms in India, Goenka told reporters in May.

Meanwhile, Maruti Suzuki India Ltd, the largest passenger vehicle maker, intends to spend ₹5,000 crore this fiscal year, nearly 50% more than last year’s ₹3,400 crore.

Bulk of the figure of ₹4,000 crore will go towards product development and capacity expansion, Kenichi Ayukawa, managing director and chief executive at the local unit of Japan’s Suzuki Motor Corp., told reporters in April.

Crisil estimates 70% of the ₹ 58,000 crore to be spent by car and SUV makers as companies try to outdo each other in the fight for market share.

“New model launches and investment in product development, including electric vehicles, will also be necessitated due to intense competition,” said Anuj Sethi, senior director at Crisil.

However, going forward, capex in the passenger vehicle market will be driven more by capacity addition as the top two companies in the passenger vehicle segment—Maruti Suzuki and Hyundai Motor India Ltd—are operating at close to optimal levels and are even resorting to reducing exports to meet robust demand locally, according to Crisil.

Car sales slow in July on high base

Source: LiveMint.com, Aug 01, 2018

Mumbai: Passenger car sales, which had a stellar run since January 2018 on the back of new launches and a recovery in rural demand, saw a slowdown in July because of a high base in the same month last year and a planned inventory reduction by auto makers ahead of the launch of new models and refreshes during the festive season beginning later this month.

A nationwide transporters’ strike in mid-July also impacted production and distribution of vehicles. Auto makers in India consider dispatches to dealerships as sales. Read the rest of this entry »