Auto Monitor - 1-31 January 2013

I N D I A ’ S N O . 1 M A G A Z I N E F O R A U T O M O T I V E N E W S , V I E W S & A N A LY S I S

www.amonline.in1 - 31 January 2013Vol. 13 No. 01 136 Pages `50

Automotive Dealership Excellence AwardsADEA

122-123Page Nos

Twelve long years. 12 in 2013.

Any anniversary issue of a magazine is created with plen-ty of apprehension. And we were no different. Especially when the magazine is published at the end or beginning of a calendar year. While it is pretty common for magazines to print industry views or outlook for the forthcoming year, we have refrained from doing so. We decided that since we have a strong team with excellent contacts in the industry, we would exploit it to the hilt. And so it was with no or little trepidation that we set out to deliver this content.

At a time when few people are knowledgeable about most sectors, it makes us happy to gather content that focuses on the larger sections of the automotive industry. And we have plenty to offer in that line.

And here it is. Please write in your feedback.

Sparks, SparksHaving said that, we at Auto Monitor are not resting on our

laurels. And even while you are reading this, we are already working on the next big project the automobile industry (for dealers, mainly) has ever seen. ADEA or Automotive Dealership Excellence Awards is round the corner. And while much of the groundwork has been done, we are keen to offer a glimpse into what’s coming your way or the deal-ers’ way.

For beginnings, we have just finished receiving the nom-inations. And our team is scanning through them. The awards will seek to identify two top performing dealers in four key vehicle categories: two wheelers, three wheelers, passenger cars and commercial vehicles. There will be six additional awards for top dealers based on below mentioned parameters. Thus a total of fourteen awards will be present-

ed to dealers across vehicle categories.The jury will adjudge the winners going by strict scrutiny,

validation and a one-on-one presentation. The parameters on which dealers will be rated include:-

a) Sales satisfaction indexb) Service satisfaction indexc) HR Practices & employee satisfaction indexd) Corporate social responsibility indexe) Green initiatives index f) Safety Initiatives index Though we have tweaked the validation process to make it

more transparent, it only makes the entire process delightful.And our tie-up with FADA is on a wave. So within a matter of weeks, we would be delighted to host

you (please mark the date on your calendar: March 9, 2013) at one of Mumbai’s prestigious hotels.

Till then, take care.

PS: Besides Facebook, you can now follow us on Twitter

@automonitor18.

Do send in your feedback, views, and opinions to [email protected]

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Auto Monitor

EDITORIAL

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Joshua Navalkar

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PRODUCTION TEAM

Surekha Karmarkar Sanjay Shelar, Ravikumar Potdar, Ravi Salian

GROUP CEO, NETWORK 18B. Sai Kumar

CEO-NETWORK 18 PUBLISHINGSandeep Khosla

EVP-HUMAN RESOURCESSanjeev Kumar Singh

ASSOCIATE VICE PRESIDENTSudhanva Jategaonkar

ADVERTISING SALESShashin Bhagat (Ahmedabad)[email protected]

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Inder Dhingra (Ludhiana)[email protected]

Surajit Bhattacharjee (Ludhiana)[email protected]

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Vipul Modha (Rajkot)[email protected]

Chirag Pathak (Vadodara)[email protected]

MARKETING TEAMGanesh Mahale, Akshaya Jadhav

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CONTENTS

21Cashing In Ramesh Iyer, MD, Mahindra & Mahindra Financial Services, has reasons to understand the changing landscape in rural auto finance.

Wheels Of Mixed Fortune Banks/finance companies catering to CVs are worried. The low sales in CVs is reflecting on sagging lending.

Time To Engage Sudhir Khanna, Head – CVs and Tractor Division, Kotak Mahindra Bank, explains the sagging scenario in the CV financing business.

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HYBRID VEHICLESNational Mission Is Welcome Sandeep Singh, Dy. MD (Marketing), Toyota Kirloskar Motor, sees a solid future for hybrid/electric vehicles.

An Electric Future BMW is innovating fiercely to make electric cars a viable reality, from reducing body weight to a dual accelerator/decelerator pedal.

Going Electric Even the PM of India is exuberant at the NEMMP-20 Plan and is hoping for the best.

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GLOBAL MARKETSTariff Troubles High import duties are straining Indian manufacturing, and FTAs seem to only put the foreign partner at an advantage.

Manufacturing Gets A Boost Shashank Srivastava of Maruti Suzuki says that developments have allowed India to emerge as an auto manufacturing hub.

The Last Course India’s achievements needs to be spruced further with local product development and R&D, says Rakesh Batra of Ernst & Young.

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INFRASTRUCTUREA Big Mismatch? Dr. Subhamay Gangopadhyay, Director of CRRI reasons the steps that could be taken to save our automobiles from bad roads.

For A Rainy Day Disasters are everywhere. Sudam Maitra of Maruti Suzuki reveals the SRM initiatives undertaken by his company.

Sound Unsound Vehicular vibrations are not an enjoyable experience. Akhtar Nasim of CRRI explains how they can be curtailed.

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NEWS

Buying Out!

SMG Zeroes In On Two European Cos

Audi Q5 Tiptronic

Lurching Into The Fast Lane Shripad Ranade of TSMG says that small scale auto components manufacturers have many challenges staring them in the face.

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1 - 31 JANUARY 2013

Cover Illustration: Chaitanya Surpur Cover Design: Varuna Naik

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The Other SideSK Krishnan, Vice-President (Demand Chain Management), Mahindra & Mahindra (Automotive Division).

R&DLeather Matters Automotive leathers are now being processed in India, and with wide acceptance by OEMs.

The Better Option The technology of producing bioethanol, biodiesel, is pursued in India. However its economic viability has to be gathered, says Prof. L M Das.

Start The Engines ARAI has undertaken newer projects. It wants to enhance its capabilities and work jointly with partners says Shrikant Marathe, Director, ARAI.

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TRACTORSA Gradual Process Despite the uncertainty for tractor demand, the industry is hopeful, avers Bishwambhar Mishra, CEO, Farm Equipment Sector, M&M.

With A Stronger Will Not only slowdown but bad policies too. BCS Iyengar, ED, VST Tractors & Tillers is hopeful of a consistent policy for subsidy disbursal mechanism.

Tractoring On The southern region may outpace the overall tractor market growth in coming months.

The Pain Of Suspension Tiller manufacturers have made a representation to the Central government for streamlining subsidies.

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TWO-WHEELERSReturn With A Whole New Approach Viren Popli, EVP - Strategy and Market Development, Mahindra 2 Wheelers, is back with a roar with two considerably better products.

Piece By Piece Unlike carmakers, motorcycle mfrs are hesitant to assemble larger capacity bikes in India. But there's a big market waiting.

Korean Invasion DSK Hyosung’s Shirish Kulkarni has great plans for India.

Back To Basics Mahindra 2 Wheelers gets back to what Mahindra does well: Building homegrown vehicles for the masses.

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MANUFACTURINGExhaust Effect Borg Warner India’s emission systems division is looking forward to stringent norms, says Sudhir Kumar Chawla.

Millions For New Technologies No manufacturing policy for the auto industry can operate effectively in the absence of a national initiative for technology development.

Turning The Page After seeing the highs and lows of the auto industry, the company is going through a lull before a new-gen of Tata vehicles hit the market.

Driving Cost Efficiency Inflation and a stagnant market has sent mfrs on a cost cutting drive. Rajiv Singh of PwC offers solutions for improving the bottom line.

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1 - 31 JANUARY 2013

67

CONTENTS

To create a two-mode hybridpowertrain, engineers at GMused models to continuously verify their design, test prototypes,and automatically generate the embedded code.The result: a breakthrough HEV, delivered on time. To learn more, visit www.mathworks.in/mbd

©2012 The MathWorks, Inc.

POWERED WITH ELECTRICITY, GAS,

AND AUTOMATICALLY-GENERATED CODE.

THAT’S MODEL-BASED DESIGN.

MathWorks INDIAREGISTER NOW TO ATTEND FREEMATHWORKS AUTOMOTIVE EVENTSAutomotive Webinar - February 21, 2012To register, visit www.mathworks.in/event_autowebinar

Automotive Seminar Series - April 2012To register, visit www.mathworks.in/event_autoseminars

Auto Monitor

N E W S101 - 31 JANUARY 2013

India automobile major Mahindra & Mahindra is readying to acquire a 100 percent stake in its joint ven-

tures (JV) with US-based Navistar Group: Mahindra Navistar Automotives Limited (MNAL) and Mahindra Navistar Engines Private Limited (MNEPL). The Indian vehicle maker has cited financial issues as the reason for the acquisition. According to company sources, the JV has already been suffering significant losses, requiring crucial invest-ments which Navistar was unable to support, Navistar’s priority being its own domestic market in the US. The acquisition will help Mahindra make independent strategic decisions and product plans, and help position the com-pany better. The deal is expected to be signed on January 31, 2013.

The company took the decision at a time when the com-mercial vehicle (CV) segment is going through its toughest time. In this fiscal, the segment shrunk by 20 percent compared to the previous fiscal, and situation is expected to prevail till the last quarter of FY13.

“The problem is real-ly only with the medium and heavy vehicle segment. The light commercial vehicle seg-ment is sustaining the market. Obviously, there is an oppor-tunity in the market and this acquisition will help Mahindra establish itself in the commer-cial vehicle segment,” says Abdul

Majeed, Partner Automotive, PricewaterhouseCoopers.

In November 2012, MNAL had only a two percent market share in the segments where its prod-ucts were available. It reported a cumulative loss of `690 crore in 2011-12, net revenue for the peri-od being `1,350 crore. Between April and December of this finan-cial year, MNAL sold 8,535 units, which is a decline of 10.2 percent over sales in the corresponding period in FY12. The JV accumu-lated an outstanding loan of `450 crore, and Navistar was not keen on pumping in more money into its nascent Indian business.

MNAL made some decisions in terms of product position-ing and pricing which were not suitable for a market like India, the pricing being higher than prevailing market rates. And contrary to current trends, the company offered built-in cabins for its trucks, something which

leading players like Tata Motors and Ashok Leyland do not pro-vide. In some cases, the engines have also reported issues.

Along with the purchase, the company has also discussed plans for new product launches. It will invest around `250 crore over the next three years to maintain and upgrade the products it developed with its erstwhile partner. It will also launch a new brand identity with a new company name once the deal is completed.

“With 100 percent acqui-sition, we will launch a new product strategy and branding for the commercial vehicle seg-ment and for our business, in the next three months. The truck industry has periodic down-turns, and we are hoping that it will bounce back”, says Pawan Goenka, President, Mahindra & Mahindra, Automotive & Farm Business.

Customer references seem to work very well for the Samvardhana Mot herson Group

(SMG). And these references are pretty unusual. The customer references which come to SMG are requests for acquisitions! And so, India’s leading auto ancillary manufacturer is now in talks with two European com-panies for a takeover. “We have undertaken due diligence for two companies. We are hopeful of the prospects. The requests c a me f rom carmaker com-panies who are also our cus-tomers,” says V C Sehgal, Chairman of the SMG group.

The size of the acquisitions on the radar are between 250 and 300 million Euros. SMG has appointed two teams to work on the acquisition process, and an announcement to the effect can be expected in February. However, Mr Sehgal is wary of revealing the names of the com-panies, and will only say that they have operations at multi-ple locations, including the US, Germany, and China.

The components manufac-turer, who earned 80 percent of their business from India in 1999-2000, earned only 23 per-cent of its revenues from India in 2011-12. The rest came from abroad. This is in tune with their

vision to be a “preferred global solution provider”.

“I think a particular point to be noted here is that everyone looks at percentages, but no one looks at the size of the pie. In 1999-2000, we were a `100 crore company, and at that time about 80 percent of our business came from India. So people now ask me the reason for dropping the business from India. I keep saying that they are missing the larger picture. The picture is that in 2011-12 we were $4.14 billion and 22 percent of that was in India, which is around `5,500 crore,” Sehgal added.

In terms of acquisitions, this would be t he g roup’s t h i rd one. The company acquired cri-

sis-ridden UK-based Visiocorp Group in 2009, which was as big as the group itself in terms of revenues. However, in the last three years the turnover of the new subsidiary formed after the acquisition - Samvardhana Motherson Visicorp Solutions Ltd (SMVSL), has almost dou-bled. With this, the group became the largest rear-view mirror systems provider global-ly. However, its return on capital employed (ROCE) went down to 22 percent post acquisition, but rebounding 27 percent in FY11. Then in 2011 the group made another acquisition: Germany’s Peguform. Established in 1959, Peguform has more than 7,000 employees at its 17 factories and five module centres.

Nabeel A Khan New Delhi


Contd. on Pg 12

Buying Out! SMG Zeroes In On Two European CosM&M is taking a 100 pc stake in its JV, Mahindra Navistar

The acquisition will help Mahindra make independent strategic decisions and product plans, and help position the company better.

Read Interview on Pg 11

Auto Monitor

I N T E R V I E W 111 - 31 JANUARY 2013

You have emerged a winner at a time when the industry is facing a slowdown. You acquired Visiocorp in 2008-9, and in 2011 bought over Peguform. What strategy do you follow?

The Motherson Group doesn’t wake up all of a sudden and say that the bad time faced by the industry is a good time for us to take over a company. One must understand that it is not an easy task taking over a company. It’s a double-edged sword and can cut both ways. It is important for us to gain the confidence of the customer. The reason why our acquisitions are pretty stable is because we assured our cus-tomers that the company would continue to function well. This makes a big difference. During troubled times, everyone tries to operate more efficiently and stay in control of our compa-nies. During tough times, when a customer asks you to take over a company, it does make you glad that the customer has confidence in you. You are simultaneously talking about the people in the system who are hit by the slow-down. You are thinking of ways to bring them around, find out a strategy, and ways to make it happen. We are always looking at opportunities which custom-ers ask us to take. Believe me, on our own we have never taken over a company, but it has always been at the behest of the customer.

Will you call this a bad time

for the automotive industry? One reason why we don’t

believe this is a bad time is because the automotive industry doesn’t work on a month-to-month result. I don’t know why it has been made to appear like that. If you consider a little history, say around 2008, everyone said cash for clunkers [informal name for the program in the U.S. is the Car Allowance Rebate System (CARS)] have come to pass and since these benefits have come from the European Union it is the reason why the cars are selling. The next year was a record year and then people began saying that since car sales in Europe are doing well…

How can one generalize? It’s not cement, or a commodity. Automobiles have an aspirational value, and people always aspire to buy bigger and better cars. I say look at the high-end cars, medi-um range, and low-end cars and they are all doing well. Of course, this depends on the stage they are in. If the life cycle of a car is five years, in the fourth or fifth year sales of that model will be definitely low as new models are constantly being introduced. So we cannot say that a particu-lar car is not doing well, and so Europe is not doing well. If you consider all points, you will find it’s doing pretty well. Porsche is up 30 percent YoY, BMW and Audi are also up. The American mar-ket is the best performing market

this year. So we should not be bothered if one or two months are down or up, that’s part of life.

So, you are saying there is no

impact on the market currently?No, there is an impact. I am

not trying to tell you there is no problem. There are problems in the world and they are trying to solve them and this is a regular process. One cannot associate global problems with the entire automotive industry. For exam-ple, one doesn’t walk to one’s office, either one takes a taxi or drives down. Nowadays it is the children who decide the model of car that the parents ought to buy; it’s not the parents deciding. This has an aspirational value and is a desire. If you notice, there’s a shift towards bigger cars, so probably the smaller cars are suffering but they will catch up. It’s just a mat-ter of time if you consider figures of the last five years. Number of cars sold is going up. The value content per car is going up and the components industry is not having too bad a time.

You are a global compa-ny. How do compare the Indian market with other emerging and developed markets?

I think India is the market to watch out for. We don’t have the numbers just now, but within the next 5-7 years you will see the numbers coming in and it’s going to be one of the world’s biggest car

markets. Indians, by nature, like to live better. They will always appreciate good products. As long as there are good products coming, I don’t see a problem.

Your major revenue comes from Germany…

Currently, India contributes around 18-20 percent of our global sales and I foresee it grow ing to 35-40 percent in 7-8 years. Germany contributes over 52 percent. The biggest share comes from the three largest carmak-ers – Volkswagen, Daimler, and BMW.

Visiocorp, which is now Sa mva rdha na Mot herson Reflectec (SMR), was almost a sick company when you took over. Can you tell us how you turned the company around?

We acquired this company four years ago. When we took over, its balance sheet said 520 million Euros. It is now expected to cross a billion Euros. And this when everyone is saying Europe is in trouble. You know, we have more than doubled our revenues in 3-4 years time. If you look at the trajectory of sales, we are doing very well. It also depends on the capability of the people at SMR. We spend good money on R&D, new ideas, and new concepts that are close to our customer’s hearts. The designers love that. Last October, we announced 1.32 billion Euros new orders for which we will start supply in 2014-15. There are other orders in the pipe-line too. We believe our five-year plan for SMR is robust.

Contd. on Pg 12

Onwards And Upwards V C Sehgal, Chairman, SMG, is the man who dreamed big and made it big. Under his leadership, Samvardhana Motherson Group (SMG), which had a humble turnover of `100 crore in 1999-2000, has grown phenomenally and realized a turnover of $4.14 billion (over `22,000 crore) in 2011-12. He talks to Nabeel A. Khan about the growth of the acquisitions made in the past few years and the group’s future plans.

Auto Monitor

I N T E R V I E W121 - 31 JANUARY 2013

Whom do you credit for the success of the crisis-ridden com-pany you acquired?

I would love to take credit for it, but I think more than me it is the team that deserves credit. First of all, with any company you are taking over or running, it is necessary that the company perform well, or customers will not stay. Our focus was on ways to ensure that our customers appreciate us. Since the acquisi-tion came at a tough time, during the Lehman Bros crisis, there was a customers’ team of risk manag-ers who were monitoring us on a quarterly basis. It was a three year monitoring programme, and they themselves quit within a year-and-a-half. They said this company is doing well, and gave it a quality ranking for delivery and R&D designing. They worked closely with the customers and made sure that performance of every unit improved. At the end of the day, it’s only performance that matters. How good you are in terms of delivery, quality, and

cost, these are the parameters which matter.

Did your knowledge of the company help you in the acqui-sition process?

We have had a joint venture with Visiocorp since 1996. We know our business. Our joint venture with them was one of the best performing joint ventures of the whole group. Hence the car-makers asked us to take over.

Did the size of the company not deter you?

Yes, we were aware of the Lehman crisis and the compa-ny was as big as our group. We understand that size has a mean-ing and if it can work for you, then it can also work the other way round. On the whole, it deliv-ers a tremendous amount. So we decided not to be scared by the size, and that we should go ahead with the whole thing because we know the business well. We real-ized that we have known the people there for last 14 years. All

we did was eliminate unneces-sary people, retained the right people, and saw phenomenal growth. I would like to add that the entire business across the 17 locations where it functions was run only by the locals. It’s not a question of culture. People make lots of noise, but we don’t. That’s specifically why we did not bring in Indians; the ones who manage it look at it from the macro level. I think they are as good if not bet-ter than Indians. So we have no issues.

What expectations do you have from the upcoming Budget?

My only expectation from the government is to create a system similar to those run by govern-ments of other countries. It will help India’s case as an invest-ment destination. I think the government’s biggest challenge is to make rules for everyone, and so I don’t grudge them for the sort of rules they are com-ing up with. We understand that it is important to respect the law of the land, and we have to work with the law of the land irrespec-tive of the geography we operate in. Basically we at Motherson don’t have this kind of a thought process where we wait for the

government to give us something before we start manufacturing.

How do you see the differ-ence in regulations in India and other countries where you have plants?

Whenever we go to any part of the world like Mexico, Brazil, or the US, we don’t wait for the government to announce that if we execute this, they will offer us something. Since there’s auto-motive production happening in that particular country, we have decided to set up shop. For exam-ple, when we went to Brazil to set up a new plant, we didn’t have ready orders. It was only after set-ting up the plant that customers began calling us up and placing orders. We make it a point to fol-low the rules of the country and of the particular government. If the rules offer benefits in terms of return on investment, we will of course take it. If the country has carmakers, we will want to be present.

Your share of business in India has been decreasing con-sistently in the last few years. How do you view India as coun-try for your business?

Very important. Everyone

looks at percentages but no one looks at the size of the pie. In 1999-2000, we were a `100 crore company and at that time 80 percent of our business was from India. Now people ask me why our business in India has dropped to 20 percent from 80 percent. I keep telling them that they are missing the big picture. The picture is that in 2011-12 we were $4.14 billion and of that 22 percent was from India, which is around `5,500 crore. When 80 percent of the business came from India, the overall company was `80 crore. I don’t know why percentage is so important. For me the size of the pie matters.

Your vision is to be a $10 bil-lion group by 2015. What is the progress?

We have a vision that by 2015, Motherson will be a $5 billion company and the group will be $10 billion. Currently, we are at `40,000 crore in 2015 (because of the exchange rate) and the bot-tom line, which is ROCE, will be in excess of 40 percent. Currently we achieve 37, 39, then 22 percent of ROCE when we had taken over Visiocorp that year. The current would be 18 or 19 because we have taken over Peguform.

Contd. from Pg 11

Onwards And...

Mahindra has obtained licensing to continue producing engines and trucks using technol-ogy gained from Navistar, which will help in continuation of the business, and ensure that the exit does not hamper business. The license for manufacturing of engines given to the JV will be continued to produce trucks under the Mahindra brand, or the new company to be formed after acquisition, or it can be used for any other opportunity that the company sees. All the Navistar IPRs which had been licensed to the JV will be available to the new company. Navistar has not laid down any constraints on this, and these will prove useful when Mahindra devises a turnaround strategy for the CV business.

The other important thing for Mahindra is that Navistar is still interested in exporting these trucks from India. These trucks will be sold abroad using Navistar branding in some markets, and under the Mahindra brand in other markets.

As Mahindra strategizes new products and business plans, it should look at filling prod-uct gaps and offering new products as it moves ahead. In line with this, the company is plan-ning to invest around ̀ 250 crore in maintenance and upgradation of existing trucks in the next 2-3 years. Investments will also be made to introduce new products where they don’t yet have any. Currently they only have a 5-tonne, 40-seater bus. There are plans to introduce a full size bus. It will also look at intermediate 9 to 16 tonne vehicles. Currently it has only one six cylinder, 7.2 litre engine, with different vari-ants in terms of power - 260, 207, and 170 horse power. Now a 4.8 litre, four cylinder engine is under development.

M&M’s two JVs with Navistar Intl Corp, marked its entry into the HCV segment, was considered an aggressive deal. It provided the Indian manufacturer much-needed technologi-cal know-how in commercial vehicle production. With an established presence in the four-wheel-er and tractor business, the acquisition helped Mahindra become a full-fledged automobile manufacturer and a global player. The JV also enabled Mahindra to bid for commercial and military truck contracts when the sector opened to private players. The JV has not yielded much returns thus far, and Mahindra will now restruc-ture its board to include only Mahindra members.

The JV had an investment of `1,080 crore, of which ̀ 520 crore was contributed by Mahindra & Mahindra, and the rest by Navistar. They began production two years ago with the launch of 25-tonne trucks and later widened the product offering with medium and heavy commercial vehicles in the 16 to 40 tonne range.

Buying Out! Contd. from Pg 10

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N E W S141 - 31 JANUARY 2013

petrol engine, a 2.0 TDI and a 3.0 TDI die-sel engine. In all its variants, the Q5 will be powered by Audi’s Quattro four-wheel drive technology, and the engines get direct fuel injection with turbo charging. The 2013 Q5 is available in two interior trims.

2012 was a good year, with Audi India posting a record 63 percent growth over the previous year, having sold 9,003 units. A diverse portfolio, network expansion, market-ing activities, and after-sales service are seen as the prime drivers of growth. Looking for-ward to a similarly successful 2013, Michael Perschke says, “We look forward to strengthen-ing our growth pillars in 2013, and have plans to open new showrooms in Lucknow, Noida, Mumbai South, and Vadodara, among others.”

Audi Q5: First DriveThe 2013 Audi Q5 gets three engine options,

a 2.0l TFSI petrol engine, and two diesel engines (2.0L TDI and 3.0L TDI). The 2.0l TFSI petrol engine is mated to an 8-speed Tiptronic trans-mission, while the diesel versions are mated to a 7-speed S-tronic transmission. Driven one after the other, the petrol powered Q5 not only feels lighter to drive, but also more refined and eager, thanks to its the maximum torque of 350Nm at just 1500 rpm, against the 2.0l die-sel’s 380Nm which maxes out at 1750 rpm, and also the DSP feature of the 8-speed Tiptronic transmission.

Off the road, the Q5 feels at home wading through water and climbing uphill with fea-tures like hill descent control, and the famous Quattro (four-wheel drive) technology. On con-crete, the SUV handles like a car with precise steering response and satisfactory feedback from the wheel. The SUV’s braking feels sure thanks to a dual circuit brake system with diagonal split that gets ABS/EBD, Electronic Stabilization Control (ESC) and tandem brake booster as assistance.

All the variants of the Q5 meet EU5 emis-sion norms, while the 2.0l TFSI also gets the Automatic Start/Stop feature as standard. While the Q5 feels good to drive both on and off road, the SUV is more driver-oriented and loses out on comfort when it comes to the rear seats. The back of the rear seat is a little too upright for comfort, and the bench could do with more under thigh support.

And while the large side mirrors are a boon for watching the rear, they can get in the way when turning. The SUV also lacks electronic adjustment of the steering wheel, which its counterparts have. On the bright side, the Q5 has a distinct face with a homogenous strip of daytime running LEDs and a sharp sporty pro-file. Audi is also targeting the youth in India, and has got the ingredients right by focusing on a driver oriented cabin, drive, and the exte-rior looks of the SUV.

German luxury car-ma ker Audi has launched the 2013 version of its Q5 SUV

in India. The Q5 features the manumatic 8-speed Tiptronic transmission, and comes with a Dynamic Shift Program (DSP), and a sport program with lower

gear ratios than the previous S-tronic transmission.

While the S-tronic was a 7-speed model with electrohy-draulic controls, the Tiptronic transmission has a hydraulic torque converter with a lock-up clutch, and eight driving ratios. Audi’s technical team confirmed that the transmission is not used for space or weight saving, but for efficiency improvement with

more linear power at its dispos-al. Audi has managed to improve the fuel economy by 15 percent in the 2013 Audi Q5 despite the hike in engine power. The DSP is particularly useful in stop-and-go traffic. DSP selects the optimum driving range by rec-ognizing driving characteristics and shifting according to the conditions. Furthermore, trans-missions with DSP technology are easier to maintain as well.

Another significant change in the 2013 Q5 is electromechani-cal power steering, which is also partly responsible for the increase in fuel efficiency. It now doesn’t require any energy in straight line driving due to the Electronic Stabilization Control (ESC), which detects the compo-sition of the road and adjusts its interventions accordingly. The 2013 Q5 also has restyled head-lights with a homogenous strip of LED lights and revised rear lights.

The 2013 Q5 starts at an ex-showroom price of `43.16 lakhs (ex-showroom Delhi), and has three engine options, a 2.0 TSFI

Audi Q5 Tiptronic Our Bureau

New Delhi

Auto Monitor

N E W S161 - 31 JANUARY 2013

India’s $15.9 bi l l ion Mahindra Group has wel-comed the arrival of the New Year with a new brand iden-

tity which will be reflected across all its businesses globally.

“The Mahindra Group has grown exponentially over the past decade, with businesses cov-ering a wide range of industries. Hence, we felt the need to refresh our visual identity to better reflect a Mahindra that has evolved over the years and is ready to take on future challenges. Continuity and change have both been integral parts of Mahindra’s growth story. Continuity has given us strength, stability and roots, while our desire for change has driven our growth and enabled us to thrive. Our new word mark clearly reflects both these attributes and is in sync with our Group aspirations, which is to become one of the top 50 most admired global brands within a decade,” said Anand Mahindra, Chairman, Mahindra Group, while commenting on the new brand identity.

“The new word mark and other elements of our refreshed visual identity have been adopted after

extensive research and feedback. We wanted a word mark which would reflect the evolving nature of our organisation, our global outlook and progressive man-agement style. In short, it should reflect the ‘core’ of Mahindra. We also had to ensure that it would have universal appeal across con-sumer and business segments in

urban and rural areas, as well as overseas. We have tried to create a modern futuristic feel, while retaining the dependability, reli-ability, and warmth associated with the Mahindra brand,” said S.P. Shukla, President – Group Strategy and Chief Brand Officer, Mahindra Group, and Member of the Group Executive Board.

Jaguar Land Rover is com-mencing production of the Jaguar XF saloon at its facil-ity in Pune, India. The initial

Pune-built Jaguar XF models will feature the company’s acclaimed 2.2-litre diesel engine, which is coming to the Indian market for the first time. The Jaguars will be built alongside the Land Rover Freelander 2 vehicles, which have been produced in Pune since May 2011.

Rohit Suri, Vice President, Jaguar Land Rover India said, “Our best-selling models in India are the Land Rover Freelander 2 and the Jaguar XF, and this has driven the move to build these products locally. The Jaguar XF has become very popular with our customers due to its sports car performance, outstanding luxury saloon elegance, and con-temporary individual styling. Its

inspired engineering and tech-nological innovation have helped it to win more than 100 awards internationally. So we are now delighted to offer this car as a locally built product with a new engine for this market, which will enable us to provide our cus-tomers with a wider choice of competitively priced models.”

The locally built Jaguar XF 2.2-litre diesel car comes with an array of standard features such as rear view camera, TV Tuner, navigation system, front passen-ger seat away, touch screen, gear shifting paddles, full size spare wheel, electric sunroof, rear screen electric blind, and eight-speed automatic transmission.

Jaguar Land Rover India recently announced a 32% growth in sales in 2012, at 2393 cars compared with 1813 cars in the previous year.

M&M Unveils New Brand Identity JLR Launches Locally-Built Jaguar XF In IndiaTo commence local production of 2.2 diesel engine. Takes the fight to 5 series, E-class and A6.

The Automotive Research Association of India (ARAI) has undertaken a project for designing the superstructure for a lighter weight bus. The project entails

analysis of behaviour and use of aluminium-based structures to understand resistance to constraints, and arrive at solutions which might lead to production versions.

“The behaviour of aluminium-based struc-tures when pressure is applied to their joints, extreme temperature conditions, corrosion, and other qualities is different from that observed in a conventional steel-based structure. We are assessing the practical feasibility of such struc-tures,” said Shrikant Marathe, Director, ARAI.

They is also in the process of simulating design and development of electric and hybrid powertrains, and are hoping to apply the learn-ings gained to the development of vehicle architecture. Additionally, it is in the process of collating data on road conditions around the country, which can help OEMs and tyre mak-ers in assessing the stress and pressure on the wheels.

“Detailed data on road conditions and the kind of stresses a vehicle goes through on the road are not readily available to designers. Such data will aid in creating safer vehicles,” said Marathe. ARAI is gearing up to tackle challenges in electric mobility, safety, and NVH reduction to meet the expectations of the automotive industry.

ARAI is gearing up to cater to solutions for areas like crash testing, safety, light-weighting, and NVH reduction related systems and solu-tions. OEMs are also looking for solutions to enhance fuel efficiency, with most of them being in the areas of electric and hybrid vehicles.

It is in the process of enhancing its tie-ups with academic institutions and research bodies to share resources on self-funded and sponsored projects.

Anand Mahindra, Chairman, Mahindra Group and S.P. Shukla, President – Group Strategy and Chief Brand Officer, Mahindra Group, unveiled the new brand identity of the Mahindra Group.

ARAI Seeks Lighter Bus Technology Abhishek Parekh

Mumbai

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C O L U M N181 - 31 JANUARY 2013

The Indian auto compo-nents manufacturing sector is grappling with multiple challenges.

The cyclical nature of vehicle demand and slowdown in vehi-cle sales, coupled with changing customer requirements and tough competition are strain-ing margins and cash flow, and restrain suppliers from scal-ing up. For SMEs supplying to the Indian 4-wheeler industry, the situation is compounded by fast-changing industry dynam-ics and people issues. The long term prospects are bright, though, and the key is to deploy appropriate strategic options and align the organization to achieve sustainable growth.

Effect of the Slowdown

The global economic outlook, including hitherto fast-growing economies, has deteriorated in the last year. China’s growth has slipped to single digit, while the latest estimates peg India’s GDP at not more than 6 percent in FY13. Western Europe continues to falter and the US is showing only a slight improvement. This economic slump has impact-ed India’s automotive and auto component sector severely. While commercial vehicle pro-duction is more than 7 percent lower in Apr - Dec 2012 com-pared the corresponding period in 2011, passenger vehicle pro-duction has been flat, except for increase in utility vehicles. This has led to widespread shrinkage of order positions for component manufacturers, and resulted in underutilised capacities, margin pressures and locked-in work-ing capital. Small and medium enterprises (SMEs) have been impacted further, due to some additional factors.

Concentration RiskMany SMEs are exposed to

high concentration risk, being overly dependent on a single key 4-wheeler OEM or Tier-1 supplier as customer, or a single product line or sales channel. In such cases, declining market share

of that OEM has a direct, severe impact on the SME. The solution lies in selecting viable new busi-ness opportunities which can be addressed immediately, and with minimal additional invest-ments. Options for immediate growth are:

-nels such as aftermarket and retail sales, to compensate for declining OE sales (e.g. radia-tor parts, electrical fittings).

growing and sizeable export markets, for components ame-nable to such a channel (e.g. small forged components).

outside the automotive sec-tor, with minor tweaks in product design and func-tionality (e.g. sheet metal for off-road equipment).

Changing Priorities Of OEMs

Several SMEs have succeed-ed and grown in the past due to one or more privileged OEM relationship, with a high degree of assurance on orders from the anchor OEM. With increasing competition, established OEMs are willing to consider alternative suppliers to reduce cost, while OEMs entering India are will-ing to bring in suppliers capable of meeting their requirements. SMEs face roadblocks in adapt-ing to these changes, in terms of scale, cost structure and product range. To align with changing procurement priorities, two spe-cific actions can be useful:

-ing to higher reliability and a lower effective cost struc-ture and improved chances of being selected as a long-term, cost-competitive supplier going forward.

-ing sourcing away from China for cost, quality, and localisa-tion. To partake of this, SMEs need to diversify into multiple product lines, either green-field, leveraging current manufacturing competence, or through acquisitions to quickly build scale.

Consumer TrendsConsumer preferences are

changing rapidly across both passenger and commercial vehi-cles in India. This is creating demand for new subsystems and components. In passenger cars, the trend towards increased information intensity will drive demand for dashboard telemat-ics. Similarly, heightened safety awareness necessitates intelli-gent braking systems, improved crash performance is making the case for tailor-welded blanks, and lighter cars will require increased substitution of met-als by plastics and composites. At the same time these trends threaten to depress demand for some older technologies and related assemblies.

Addressing this rapidly shift-ing opportunity and guarding against product substitution risk requires access to relevant technology or process IP, which cannot easily be developed in-house, except where existing competencies can be leveraged (e.g. transfer skills in plastic moulding to composite mould-ing). Beyond investing in product design and prototype development, suppliers have to actively seek collaborations (e.g. for infotainment and safety component design).

Competitive IntensityIndia’s auto component sector

has high competitive intensi-ty, with a large number of SME suppliers competing for similar requirements and responding to cost reduction initiatives by OEMs. Overall revenue for a sample of SME suppliers studied grew at 18 percent annually for four years to FY12; while EBITDA grew at only 16 percent annu-ally. SMEs need to consider multiple strategic options and operational initiatives to main-tain profitability.

Some of the strategic levers mentioned earlier such as aftermarket sales, product diversification, development of process knowledge, and inor-ganic growth, will help in gaining such an edge. In addition, excel-

lence in manufacturing and logistics and participating in strategic sourcing of key inputs such as steel can provide gains.

People ChallengesWhile there are fairly common

people issues faced by the entire auto component sector, small and medium enterprises in par-ticular have several challenges to address.

The well recognised problem of low availability of skilled tech-nical personnel, partly stemming from a disconnect between the skills imparted by ITIs and the education sector vis-à-vis those required in this sector, requires investment in further training. SMEs have a higher challenge in retention of trainees after such investment.

The large scale incidence of temporary and contractual employment in the automotive and component sector creates high employee turnover and has recently led to deterioration in the industrial relations cli-mate. More proactive employee engagement and management of grievances is necessary. It is however difficult for companies to invest in training and employ-ee engagement, and to reap returns by doing so, when only a fraction of the workforce is per-manent. Going forward, OEMs might re-assess their approach to contractual employment and related issues such as wage dis-parity. SMEs can look for these shifts and re-align their own practices where possible.

The other significant chal-lenge for smaller enterprises is the shortage of managerial talent. Several of these organiza-tions hinge on a small number of management personnel for both strategic thinking and opera-tional excellence.

With thin managerial talent beyond the promoter and CEO, it becomes impossible to scale up to multiple manufacturing locations, to address demanding and sophisticated customers, or to develop additional product lines.

The solution lies in deploy-ing a more structured approach to managing human resourc-es, with focus on actions such as creating the right structure, assessing, preparing, and aug-

menting the leadership team, investing in workforce skilling, and nurturing a talent pipeline to create readiness to handle growth in the business.

Capital And Infrastructure Challenges

Cost of capital is an on-going challenge for Indian industry, when it seeks to compete with manufacturers in economies with negligible lending rates. For SME auto suppliers, access to capital is even more of an issue due to the current slowdown which has impacted their cash flow and valuations. Alternatives such as private equity and con-solidation are being explored by various players. The cost of doing business, as well as delivery per-formance, is also impacted by inadequate infrastructure (e.g. low availability of power) and high logistics costs. However, interest rates seem to be headed downwards going forward, and the recent renewal in government focus on infrastructure will lead to improvement in the situation.

Conclusion The long term growth pros-

pects for the Indian auto component sector are bright, with ACMA expecting turnover to grow annually at 11 percent to 2020, fuelled by growth of the Indian automotive industry as well as exports of auto components. The current slowdown and on-going changes in the automotive indus-try have created challenges for all suppliers. Smaller suppliers face additional challenges due to con-centration risk, lack of scale, and lack of access to talent, capital and technology. However, a com-bination of carefully planned actions can help to position a small or medium sized supplier to the complex and evolving Indian 4 wheeler industry, to participate in the long term success of the industry.

Shripad Ranade is the Senior Principal of the Auto & Engineering Practice at Tata Strategic Management Group. He has 14 years of experience in industry and consulting. His key areas of interest are business planning, competitive strate-gy, and international business development.

Lurching Into The Fast LaneShripad Ranade of Tata Strategic Management Group says that small scale auto components manufacturers have many challenges staring them in the face.

Cost of capital is an on-going challenge for Indian industry, when it seeks to compete with manufacturers in economies with negligible lending rates.

The large scale incidence of temporary and contractual employment in the automotive and component sector creates high employee turnover and has recently led to deterioration in the industrial relations climate.

Auto Monitor


Cashing In

What are the trends in the tractors and car segment in your operational markets?

Normally, a tractor or a car customer would opt to buy a vehicle in January or February rather than in November or December to benefit from the younger age of the vehicle. But what with the lacklustre sales in Q2 and Q3 this fiscal, tractor and car manufacturers are looking at enticing customers through discounts, incentives and other sales promotional measures.

These measures should ensure that dealers be able to sell off inventories.

We are also moving away from a tendency of availing of loans for around 90 percent of the vehi-cle price and a repayment cycle extending to almost 60 months to a more manageable 75 per-cent of asset value and 24 to 36 month of repayment cycle. The higher quantum of loan amount and longer tenure makes it more suitable for banks to finance the asset.

How is the rural economy doing? What is your outlook?

The overall scenario in the rural economy appears positive. There is some strain in terms of delay in payments from cot-ton sales and the sheer lack of ongoing major large scale infra-structure project. But, on the other hand, there is lot of local economic activity that is likely to be positive. We might see a pick-

up in rural welfare spending in states like Gujarat, Tamil Nadu and Uttar Pradesh. Tractors are nowadays not only used for just farming but also for haulage and other applications. This is lead-ing to demand for high HP and low HP or micro tractors. This trend is likely to accentuate.

Moreover, in most states or markets, farmers typical-ly focus on a single crop and the second crop is a cash crop. Hence tractors will continue to be in demand for haulage relat-ed applications. It also implies that the average life of a trac-tor, which is around seven to ten years, comes down to five to seven years. This could also lead to much higher demand for replacement of existing trac-tors in the coming months. This is good for manufacturers and financiers as the demand for tractors would get increasingly delinked from monsoons and loan repayment schedules of customers is likely to get better under this scenario.

What is your view on the interest rate scenario going

forward?I feel that we have already

seen the uptrend as far as macro outlook of interest rates is con-cerned. We are more likely to see a 100 to 150 basis point reduc-tion going forward. This may lead to improvement in the prof-it margins for most MBFCs as the current scenario allows most players to retain the margin and not pass it on to customers in urgency.

How is your strategy for deeper penetration shaping up going forward?

It makes sense for us to co-exist with other financial entities like banks and financial institu-tions. We have a huge customer base of around two million cus-tomers and have been leveraging this base to generate enquiries for various financial services. The share of tractors in our asset portfolio has come down from around 24-26 percent three years ago to around 16 percent now. Thirty percent of our bal-ance sheet comprises Mahindra manufactured vehicles while remaining is largely new and used cars from Maruti and other automobile companies and per-sonal loans.

We have grown our portfolio on the back of financing new and used cars, agricultural equip-ment and other implements as well as distribution of insur-ance and mutual funds in the rural market. We are in the pro-

Mahindra Finance has been looking to reduce its dependence on Mahindra Group and emerge as an independent auto finance company. Ramesh Iyer, Managing Director, Mahindra & Mahindra Financial Services Ltd tells Abhishek Parekh about the changing landscape in the rural auto finance segment and the way forward for his company.

We are also moving away from a tendency of availing of loans for around 90 percent of the vehicle price and

a repayment cycle extending to almost 60 months to a more

manageable 75 percent of asset

value and 24 to 36 month of repayment

cycle.

Auto Monitor


cess of an on-going evaluation of additional financial products or services, created by us or other players like banks, insurance or mutual funds that can be sold or distributed to our existing cus-tomer base. We bring our robust credit evaluation process and understanding of the rural mar-ket to the table and can partner with any other institution or originator. Having said that we are not facing any issues with our own resource gathering process and can thus comforta-bly expand our asset base at the same or faster pace than what we have already done. Our asset base has grown by around 35 to 40 percent over the last five years to around `24,000 crore and we are already among the top four auto finance entities in the coun-try. We are looking to maintain this growth momentum.

We have also created a robust repossession and recovery mechanism akin to asset recon-struction cell. This has helped us in the repossession of vehicles that have become vulnerable to default by the owner and can be sold off and allows us to play a role even in financing the next buyer. The success of such an initiative comes from keeping

the number of such repossessed vehicles at a low level.

Where do you see balance sheet growth coming from?

We expect rural housing to be a major driver of our growth in the coming months. We are pre-sent in the segment though our subsidiary and its current book size is around `1,000 crore and we expect the entity to grow its balance sheet size to around `4,000 to 5,000 crore by 2015.

What are the challenges to

maintaining this growth rate?There are three factors that

have contributed to our size and growth. Firstly, we have expand-ed our reach by adding around 150 or so branches over the last two years.

This has helped us to bring down our overhead costs and increase efficiency. We have maintained our market share with our parent M&M’s prod-ucts even as M&M has grown in size over the last five years. We have evolved into a full-fledged auto finance company from a largely captive finance compa-ny helping M&M’s tractor and utility vehicle customers. We have brought down our NPA

level to around three percent of total loan book at gross level and around one percent at net level. It would be a major challenge to maintain this discipline on a larger balance sheet. We are also handling an increasing quan-tum of repayment through post dated cheques as opposed to more than 90 percent of repay-ment handled by cash payments three to four years back. We have to streamline processes and ensure a responsive backend to maintain our edge as we handle around 65 to 70 percent of our

monthly recollection of around `1,200 -1300 crore through cash.

The challenge would be great-er as we are now working with or servicing a diverse custom-er profile comprising farmers, small traders, professionals, and other key decision makers in semi urban and rural areas as opposed to mainly farmers a few years back. Today all the large volume car manufactur-

ers are looking to rural market for sustained growth and larger volumes and we are already an entrenched player in these mar-kets. Our growth will come from penetration and growth of our customers (car and commercial vehicle manufacturers). The growth will also come from rais-ing our market share in brands and vehicle segments where we have a lower share.

Mahindra Finance wants to expand its branch network deeper into the semi-urban and rural areas of the country. The finance arm of the Mahindra Group has a branch network of around 650 and it has diligently been adding 50 odd branches every year for the past 3-4 years. While it is looking to maintain or enhance this pace, it is keen that it continues to accrue higher market share in each loca-tion where it is present in rather than relying on branch expansions.

“We are targeting a higher market share among the key brands that we finance like Maruti, Hyundai and tractors brands (other than Mahindra) present in rural areas rather than rely on branch expansion. We have acquired a large, unmatched presence in the rural markets through an extensive network and expertise in cred-it evaluation. We would now like to reap the benefits of this reach and expertise and potentially enter new areas,” said Ramesh Iyer, Managing Director, Mahindra Finance.

He added that a largely untapped area with huge potential in the coming months is likely to be rural housing finance. The company is looking to leverage its existing resources in terms of manpower, branch presence and technology backbone to gain an advantage in this segment.

Taking Deeper RootsThe challenge would be greater

as we are now working with or

servicing a diverse customer profile

comprising farmers, small traders,

professionals, and key decision makers in

semi urban and rural areas as opposed to mainly farmers a few

years back.

With the Indian auto market in the grip of a severe slowdown, the tyre industry is witnessing an inventory pile up of around 40 per

cent over normal levels. The production has far outpaced demand from automotive OEMs and consumers who are reluctant to go in for new purchases at a time of soft market conditions.

“There is pile up of inventory in tyre segment due to subdued demand from carmakers, while export markets are also not encouraging as glob-ally markets are down. In the last six months cheap Chinese imports is entering the Indian market, which is creating difficulty for manu-facturers here,” Rajiv Budhraja, director general, Automotive Tyre Manufacturers’ Association (ATMA) told Financial Chronicle. As a result the sector’s forecast growth rate has been cut to 2-3 percent for 2012-2013 period.

Budhraja said Chinese tyres are 15-25 percent cheaper compared with Indian tyres. Further the replacement demand has slowed down as consumers are hit by high retail inflation and slow wage hikes.

Siam has third time lowered auto sector’s growth forecast to 0-2 percent this financial year. The original forecast for passenger cars growth was 10-12 percent. Demand in two-wheelers too has been soft with sales of motorbikes skidding while sales of scooters, which are a smaller com-ponent of the industry sale, have held up better.

Sudhir Rao, managing director at Skoda Auto India, said, “Demand in India dampened for several reasons like fuel price hike, which led to slowdown in the economy.” He said that replacement demand has also reduced. Sales of bread and butter medium and heavy com-mercial vehicles too have been falling due to a slowing economy.

Rabindra Mukhopadhyay, head research and development centre of JK Tyre Industries said that the tyre sector is hoping the govern-ment will take steps to boost growth. “Although growth has slowed down in Europe and the US, there are other markets export markets, which companies should focus on like exporting to Africa, West Asia among others as demand con-tinues in these markets,” he added.

ATMA wants banks to cut interest rates on auto loans cuts to around 0.75-1 per cent and reduce excise duty in the budget. This along with increased focus on building out roads and high-ways could help boost demand.

Budhraja said that it is difficult to predict growth of the sector in 2013-2014 but if the rate cut happens definitely demand will revive.

Auto Sector Woes Pile Up Inventory At Tyre Makers

Auto Monitor

F E A T U R E241 - 31 JANUARY 2013

Wheels Of Mixed Fortune

The current slowdown in car and CV sales has not only been a cause of concern for the vehicle

manufacturers but also finan-ciers. At a time when most CV manufacturers are eager to revive sales and boost senti-ments, banks and auto finance companies are biding their time to catch early signs of uptick before taking proactive meas-ures to revive lending.

“Given the low Index of Industrial Production (IIP) numbers witnessed in the recent months, there is lack of demand for freight capacity and that in turn is affecting sales of M&HCVs,” says Sudhir Khanna, Head- Tractors & Agri Financing, Kotak Mahindra Bank.

Khanna is concerned that commercial vehicle sales are seeing a downturn and chances of a revival are unlikely in the near future as freight availabil-

ity, infrastructure projects, and mining activities are not wit-nessing a major momentum. Sales, especially in the M&HCVs, are likely to be affected in the coming months. Though manu-facturers have been making an effort to revive sales by passing on higher discounts and other incentives, there does not appear to be any perceptible recovery or revival in sales.

Sales of small and light com-mercial vehicle have been buoyant over the past few months as the ‘hub and spoke’ models of good transportation has been playing out. In devel-oped markets, typically three to four small (less than 1.5 tonnes) and LCVs are sold for every heavy duty truck whereas the ratio is around one to one in India indi-cating huge growth potential for this segment.

“Tapering GDP growth is neg-atively impacting the medium

and heavy duty truck segment. Truck operators are not look-ing to expand their fleet or even changing their older vehicles as falling availability of freight is not inspiring confidence among truck operators,” says Nalin Mehta, Managing Director, Mahindra Navistar Automotives Ltd in an earlier interaction with Auto Monitor.

A source in the banking sec-tor pointed out that around 25 to 30 percent growth of small and light commercial vehicles seg-ment in last two to three fiscals has already tapered down to less than 15 percent. The current fis-cal forecast is not more than 15 to 16 percent growth. The over-all sentiment is negative and this has impacted sales across all cat-egories of commercial vehicles. Most large sized fleet operators are not expanding their fleet or contracting out excess freight or load transportation capacity to

smaller fleet or single fleet oper-ators. This has led to absence of newer truck operators entering the market or any expansion of fleet by single vehicle operators.

Reaching With FocusMost banks and finance com-

panies are looking to focus on

lending and nurturing other financing relationships with large truck operators and exist-ing customers in the current uncertain times. Few players are looking to focus on other seg-ments to grow their loan book rather than depend on car or CV financing. Industry is looking to

take a cue from IIP numbers and most players including vehicle manufacturers and financi-ers have adopted a ‘wait-and-watch’ policy.

Kotak Mahindra Bank, for instance, has increased focus on growing its lending to exist-ing transporter customers to cater to other business requirements, grow its construction equipment financing business and it is also in the process of identifying other untapped areas. It had gradually shifted its focus to financing LCVs from M&HCV over the last couple of years and is evaluating expanding its product portfo-lio as well as brands in order to achieve deeper penetration in the segment.

“We are in a position to offer many custom-ised solutions and tap a wider customer base as we have the edge of having existing banking relationships that could be leveraged for mutu-al benefit,” said Khanna.

But a slowing market has also meant that banks and finance players are already staring at lower margins with little respite from any quarters in the coming months. “We have been bracing up for the slowdown in CV sales for quite a few months now but it is difficult to say whether we are in midst of a cyclical downturn or short term slowdown. There would be a sig-nificant margin pressure for players who do not have a diversified customer or product base,” said Umesh Revankar, Managing Director, Shriram Transport Finance Ltd, a leading used truck finance company.

“We are looking to increase our touch points across cities and towns through a combina-tion of auto dealership presence as well as other means so as to tap the demand in tier II and tier III towns. This would help us miti-gate the car sales slowdown to some extent but we cannot entire escape it,” said Sumit Bali, Director, Kotak Mahindra Prima, a subsidiary of Kotak Mahindra Holding Company engaged in financing new and used cars. It is one of the leading car finance companies in the country with an asset base of around Rs 13,000 crore. Other leading players in the auto finance seg-ment include State Bank of India, HDFC Bank and Mahindra Finance.

A slowing market has also meant that banks and finance players are already staring at

lower margins with little respite from any quarters in the coming months. a slowing market has

also meant that banks and finance players are already st

aring at lower margins with little respite from any quarters in the

coming months.

Banks and finance companies catering to the commercial vehicles are a worried lot. The low sales in CVs is reflecting on sagging lending, finds out Abhishek Parekh.

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Time To Engage

What is the outlook for sales in the CV segment?

We could divide CV segment into heavy trucks and small/light truck segments. The sales in the heavy duty segment have got severely impacted due to slowing GDP growth and lack of major new infrastructure projects. Haulage and tip-per segment have both been impacted by the slowdown. The sentiments have been neg-atively impacted in the recent

months. We are just evaluat-ing and keeping track of market developments and are not look-ing at greater momentum in the coming months. Our estimate is that CV segment could grow by around five to six percent in the next fiscal.

Do you feel manufactur-ers or the government need to take measures for facilitating revival?

Manufacturers are already

putting in effort in the form of discounts and incentives and other company or model specific measures. There is a limit to how much a manufacturer can try to push sales in the face of negative sentiments. We do feel that any initiative from any stake holders like manufacturers or govern-ment authority is desirable at this stage.

What is the prevalent out-look among truck operators?

Though we witnessed around 25 to 30 percent growth of small and light commercial vehicles segment in last two to three fis-cals it has tapered down to less than 15 percent. We are unlikely to see more than 15 to 16 percent growth in the current fiscal. The

overall sentiment is negative and this has impacted sales across all categories of commercial vehi-cles. The many large sized fleet operators are not expanding their fleet or contracting out excess freight or load transportation capacity to smaller operators. This has led to absence of newer truck operators entering the market and expansion of fleet by single vehicle operators.

What is your strategy to counter the downturn in auto

financing business?We have been working towards

increasing our focus on growing our asset book by lending more to existing transporter custom-ers as well as cater to their other business requirements, and expand product and brand port-folio. We are also in the process of identifying other untapped areas. We had proactively shift-ed focus to financing Small and Light Commercial Vehicles (LCVs and SCVs) from Medium & Heavy Commercial Vehicles (M&HCV) over the last couple of years and are evaluating other channels to reach out to customers in this segment.

We are in a position to offer many customised solutions and tap a wider customer base as we have the edge of having existing banking relationships that could be leveraged for mutual benefit. All said and done, no player can be insulated from a market down-turn. It is difficult to outperform and grow in such a market with-out taking undue risk in terms of asset quality. We are one of the oldest auto finance players and have a healthy asset quality and would like to maintain our qual-ity focussed growth.

The slowdown in sales of cars and commercial vehicle is having a major negative impact on asset size and loan quality of banks and finance players. Sudhir Khanna, Head – Commercial Vehicles and Tractor Division, Kotak Mahindra Bank, tells Abhishek Parekh about the current scenario in the CV financing business and the measures that could be taken to revive sales in the CV segment.

We do feel that any initiative from any stake holders

like manufacturers or government authority

is desirable at this stage.

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ICRA Outlook on the Indian Passenger Vehicle Industry

Volume Growth Trends and Market Share Movement

Having recorded sales vol-umes of 2.6 million units in 2011-12, at a moderate growth of 4.7%, the domestic PV indus-try continued to stumble upon unremitting challenges of slow demand recovery and supply shocks in H1, 2012-13. While these challenges have been a constant feature for the indus-try over the last six quarters,

volume growth on the contra-ry hasn’t been consistently low. Rather, it has been fickle: volume growth was upright at ~10% YoY in Q1, 2011-12 and Q1, 2012-13 and 17% in Q4, 2011-12, but has been negative/ or in low single digits otherwise. For an industry that had chronicled a scorching 25%+ volume growth in 2009-10 and 2010-11, this unevenness in growth in recent periods has borne uncertainty for indus-try participants and investors alike. On the demand front, the extended bout of high infla-tion, rising fuel prices and firm interest rates has been result-ing in deferment of purchase decision – as reflected in steady

customer enquiry flow at deal-ers’ end but slow rate of sales conversion. On the supply side, production disruption at the manufacturing facilities of the largest PV Original Equipment Manufacturer (OEM) in India viz., Maruti Suzuki (labour issues in June-October 2011 peri-od and July-August 2012 period), besides force majeure events (supply chain disruptions due to natural calamities in Japan and Thailand) that impacted production output of Toyota and Honda, adversely impacted overall industry sales volumes during the last year and a half.

In H1, 2012-13, the domestic PV industry volumes grew by

6.7% over the corresponding pre-vious period, but segment-wise performance was characterized by a wide dispersion in growth rates. While sales volumes of small cars and vans (multi-purpose vehicles) declined by 4% and 5%, respectively; sales volumes of sedans and utility vehicles grew by 11% and 55%, respectively in H1, 2012-13. The relatively stronger growth of higher priced PV segments cou-pled with rising proportion of diesel-run vehicles (that are Rs. 1-2 lakh costlier than the petrol variants) in domestic sales mix, is estimated to have contrib-uted towards a much stronger growth of the PV industry, in

value terms, by ~13% in 2011-12 and ~20% in H1, 2012-13.

The year 2011-12 and H1, 2012-13 were amongst the most challenging periods for the mar-

New Model Launches And Strength Of Market Response

Jitin Makkar

Shamsher Dewan

Subrata Ray

In H1, 2012-13, the domestic PV industry

volumes grew by 6.7% over the corresponding

previous period, but segment-wise performance was characterized by a wide dispersion in

growth rates.

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R E P O R T 291 - 31 JANUARY 2013

ket leader Maruti Suzuki as it saw its market share slide sharply from 45.3% in 2010-11 to 34.1% in H1, 2012-13. The primary market share gainers over the last year and a half have been M&M (sup-ported by volume expansion of Bolero facelift and XUV500), Toyota (on the back of its new cars Etios and Liva, besides strong customer response for the Innova facelift), and Nissan (driven by sustained scale-up in volumes of Sunny). In case petrol-diesel price disparity persists, we expect companies having a strong portfolio of die-

sel cars to further consolidate their market share.

Capacity and Capital Expenditure Plans

Capacity utilization levels have dropped in recent periods given the demand slowdown in the domestic industry, sup-ply shocks experienced by select OEMs plus the impact of recently added capacities (installed capacity of PV indus-try increased from 4.0 million units as on March 2011 to 4.5 million units as on March 2012). Capacity utilization levels are expected to remain dull over the near term with PV volumes estimated to expand only mod-erately. The utilization levels may however differ across OEMs as demand for certain models/platforms could be significantly different from that of other mod-els in the market. For instance, new model launches and spike in demand for diesel cars in India at present has pushed up capacity utilization of models falling in these categories. In contrast, ageing models and sev-eral petrol car models have been experiencing a dip in produc-tion output and consequently capacity utilization. However, we expect capacity utilization levels to inch upwards to 75%+

levels from 2013-14 onwards (70% in 2011-12) as automotive demand recovers gradually put-ting behind the ensuing cyclical dip.

Severa l OEMs includ-i ng Hy u nda i, Toyot a, Renault-Nissan and Volkswagen currently rely on imported die-sel powertrains to produce their vehicles. Following the rapid shift in consumer preference towards diesel-run cars over the last two years, most OEMs have struggled to meet the strong demand for diesel-run cars. Accordingly, a bulk of the capac-ity expansion programmes of PV OEMs proposed over the next two years is oriented towards creation/ expansion of diesel engine capacity. Between Maruti Suzuki, Hyundai, Renault-Nissan and Toyota, a capex of Rs. 30 billion may be incurred over the next two years, to enhance diesel engine manufacturing capacity. This apart, select OEMs viz., Peugeot Citroen, Ford and Maruti Suzuki are at respective project stages towards setting-up Greenfield manufacturing facilities in Gujarat, which may involve a combined capex outlay of ~Rs. 120 billion over the next three years. A majority of the above capex is being done keep-ing in mind the strong medium

term growth opportunities offered by the domestic small car segment, besides the strong exports potential. While the above capex figures may appear daunting given the current environment wherein demand remains sluggish, these invest-ments may be necessary for the industry to gear up with ade-quate capacity when domestic demand recovers.

Outlook: In ICRA’s view, the PV industry’s domestic volume growth is expected to be around 5-7% in 2012-13, as we expect the small car segment that accounts for 55-60% of the industry’s vol-umes, to continue to grow at a rate slower than other PV seg-ments. However, as some of the cyclical variables become less spiteful, the PV industry is expected to revert to a vol-ume CAGR of 10-11% (domestic + exports) over the medium term. The profitability metrics of industry participants too are unlikely to have any meaning-ful respite over the near term in view of (a) increase in expenses related to launch of new models, (b) increase in employee costs as several OEMs have announced substantial wage hikes, (c) like-ly sustenance of discounts-led sales push, and (e) restricted pricing power in the wake of

intense competition. Market share in the domestic PV indus-try still remains concentrated in the hands of few players, reflect-ed in the fact that top four players account for 75% of industry volumes. This implies that profitability pressures on the relatively low volume players may be even higher resulting in sustained external financing dependence to fund losses and capital expenditure requirements.

Segment-wise Volumes

Following the rapid shift in

consumer preference towards diesel-run

cars over the last two years, most OEMs have struggled to meet the strong

demand for diesel-run cars.

Capacity utilization levels have dropped in recent periods given

the demand slowdown, supply shocks

experienced by few OEMs plus the impact

of recently added capacities (installed

capacity of PV industry increased from 4 mn

units as on March 2011 to 4.5 million units as

on March 2012).

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“A National Mission Is A Welcome Step”

Toyota was one of the first to bring electric technology in India through Prius but it sells in few numbers. Why do you think electric/hybrid vehicles aren’t still popular in India?

Toyota is a pioneer of Hybrid vehicles. Toyota hit 4 million units globally for hybridvehi-cles this year . TKM launched the Prius in India to demonstrate its commitment to offer the latest eco-friendly automotive technol-

ogy to its customers in India. With the Prius we wanted to bring in the latest technology to the Indian market. We have sold 156 units so far. Selling numbers was never our aim as the hybrid market is still at a nascent stage in India. The hybrid vehicles will take some time to emerge as it is more of a style statement to drive a hybrid vehicle. The hybrid market in India has a long way to go before it develops. The price of Priusis high in India ,due to the high customs duty. The sales would improve if this issue isaddressed.

Despite excise benefits and support from government (cen-tral as well as state), why are there very few serious players or products in the electric/hybrid segment in India?

Hybrid vehicles attract high customs duty and thus are high-ly priced in India . The demand for these vehicles is therefore low and very few manufactur-ers/serious players are there in this segment.

How inclined is the gov-ernment to get electric/hybrid

..says Dy. Managing Director (Marketing), Toyota Kirloskar Motor, Sandeep Singh. He sees a solid future of hybrid and electric vehicles in India. He further suggests four catalytic steps for the government that can kindle the electric/hybrid vehicle fire in the Indian automotive industry.

Jagdev Kalsi

technology in India?Ans) Government is making efforts to get

electric/hybrid technology in India. Recently Government introduced The National Mission for Hybrid and Electric cars at the budget, which is a welcome step. This will further look into the growth of the hybrid segment in the Indian market. TKM believes that it is a good initiative taken by the Government to encour-age hybrid vehicle sales in India.

What necessary steps should be taken by the government to bring affordable electric/hybrid technology in India?

Creating awareness about hybrid with the help of various Govt bodies and by fos-tering private initiatives in this regard is one step. R&D is also an important step in the development of this segment in India. Government should also introduce various sops to encourage manufacturing as well as imports in India. Reduction in the excise duty will further give a great boost to the sale of hybrid vehicles.

What minimum investment on infra-structure is required to use hybrid/electric technology by common man and when can you see it happening?

Vehicles using both electric motors and gas-oline engines are examples of hybrid electric vehicles. They do not need to be external-ly charged, instead they are continuously recharged with heat from the gasoline engine and regenerative braking. Like a normal vehicle it only needs to be fuelled at an ordinary fuel station.

In which segment of cars do you think the electric/hybrid technology can be successful and why? (Hatchback, Sedan or SUV?)

It can be successful in all segments like any developed country as is in case of US and Japan. Our market will also move towards this over a period of time provided the Govt supports the growth of these segments.

How far do you believe that electric/hybrid technology will be the future of automobiles?

As the fuel/ oil prices rise the best alterna-tive is hybrid, so the hybrid car market has a good future. Also this technology compliments the rising environmental issues. However, this will take a long time.

As the fuel/ oil prices rise the best alternative is hybrid, so the hybrid car market has a good

future.

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F E A T U R E 311 - 31 JANUARY 2013

An Electric FutureBMW is innovating fiercely to make electric cars a viable reality, from reducing body weight to a dual accelerator/decelerator pedal.

BMW has been actively working on developing electric mobility solu-tions since 2007 under

the sub brand BMW i. Initially, BMW attempted to integrate electric components into vehicles originally designed for combus-tion engines, as in the case of the Mini E and BMW ActiveE test cars. But it soon became clear that automotive electrification involves making complex modi-fications throughout the vehicle since electric drive components place totally different demands on a vehicle when it comes to installation space, and cannot be integrated into any vehicle without adding weight and com-promising interior space. As a solution to this, BMW has come up with its own LifeDrive concept

Jagdev Kalsi

in the BMW i range of vehicles.The LifeDrive concept looks at the vehicle as

two separate units, a Life module and a Drive module. The Drive module is the heavier, lower part and forms the vehicle’s suspension, bat-tery, drive system, and structural and crash functions, and is therefore made mostly from aluminium. The upper Life module on the other hand is made of high-strength and extremely lightweight passenger cell made from car-bon-fibre-reinforced plastic (CFRP) to reduce weight. “The LifeDrive concept avoids the additional weight involved in modifications to conversion concepts. At the same time, in both vehicles we’ve been able to cancel out all of the extra kilos added by the electric motor(s) through the innovative use of materials and intelligent lightweight design”, says Bernhard Dressler, responsible for bodywork and equip-ment for project i.

While an electric drive system including bat-tery can be as much as 200 kg heavier than a comparable combustion engine and full tank of fuel, the light Life Module reduces the extra weight with the use of CFRP and other light materials. CFRP not only has the weight advan-tage over aluminium, BMW says it saves 50 percent weight over steel, compared to the 30 percent saved by using aluminium.

Lightweight Lighting for the iApart from reducing body weight, BMW is

also planning to use laser technology to reduce the weight of the lighting equipment. With a length of just ten microns (μm), laser diodes are one hundred times smaller than the small, square-shaped cells used in conventional LED lighting, which have a side length of one milli-metre. While BMW has no plans to reduce the size of the lights, the size advantage can be used to reduce the depth of the headlight unit, open-ing up new possibilities for headlight positioning and body styling. BMW plans to convert the blu-ish laser light beam to pure white by means of a fluorescent phosphor material inside the head-light, and implement the same in the future in technologies such as Adaptive Headlights, the Dynamic Light Spot spotlighting system, and the Anti-Dazzle High-Beam Assist.

Recycled CFRP and aluminium for the i

BMW has been manufactur-ing CFRP with their joint venture partner at the Moses Lake plant (USA) using electricity generated entirely from renewable hydroe-lectric power, and the CFRP used in the Life Module itself consists of 10 percent recycled materi-al. BMW has also been able to replace 25 percent (by weight) of the interior plastics with recy-cled and renewable materials, and 25 percent by weight of the exterior thermoplastic compo-nents in the BMW i3 Concept car. Recycled aluminium, also known as secondary aluminium, and aluminium produced from 100 percent renewable energy, to reduce CO2e emissions, is also used. As per BMW, using renew-able energy CO2e emissions per kilogram of aluminium produced can be reduced by 50 percent

compared to the conventional manufacturing process, while the savings from using secondary aluminium are as high as 80 per-cent. So, wherever possible BMW has been using standard castings for the BMW i3 Concept con-taining 100 per cent secondary aluminium, and for high-strength structural components and crash management components, 50 percent low-emission recycled content is used. BMW states that a total of more than 80 percent of the aluminium used in the BMW i3 Concept is produced either using renewable energy or from secondary material.

Multi-purpose accelerator pedal

The BMW i range of cars have a dual accelerator/decelerator function on the accelerator pedal for energy recuperation. When the driver eases up on the accel-

erator, an attached electric motor works as a generator to convert the kinetic energy of the vehi-cle into electricity, which is then fed back into the battery. This energy recuperation generates a braking effect that contributes to vehicle deceleration. If BMW is to be believed, approximately

75 per cent of all braking opera-tions can be performed without using the brake pedal. Not only that, intensive use of this feature of the electric motor can also increase the driving range by up to 20 per cent.

Adding further to the multi-purpose use of the accelerator pedal is the coasting feature that makes the accelerator singularly capable of acceleration and brak-ing. The BMW i3 Concept offers a “neutral” gear position on the accelerator pedal that discon-nects the drivetrain, coasting the vehicle and increasing the driving range further as the vehicle runs without consuming any power.

Automotive electrification

involves making complex modifications

throughout the vehicle.

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Going ElectricP

r i m e M i n i s t e r Manmohan Singh, at the recent launch of the National Electric

Mobility Mission Plan 2020, summed up what needs to be done to make NEMMP-2020 a success, “While promoting pri-vate transport through electric vehicles is a positive step forward, we must put far greater focus on

the development of public trans-port using energy efficient and alternative energy technologies. Given our population size and urban densities, public transport should be given greater priority than private transport”.

Electrification of public trans-port, apart from benefiting more people, will also encourage adop-tion and acceptance of electric

and hybrid technology. It will be a test of the practical utility and viability of the fuelling sys-tem, the refuelling or recharging of public transport vehicles will set a benchmark for the public to compare against. While the government has been able to set standards when it came to oper-ating a CNG-run public transport system in the capital, questions are still raised about countrywide adoptability of the fuel. Also, CNG has also been partly successful for public and private transport since it can work on conversion vehicles. On the contrary, electri-fication will not only require an upgraded charging system but will also require investment in transport. According to the Press Information Bureau, the govern-ment has planned an investment of `13,000 – `14,000 Cr (estimat-ed) over the next 5-6 years to facilitate automotive R&D and put the charging infrastructure in place. It has also urged auto-mobile manufacturers to match the investment by developing

products and creating a manu-facturing eco-system.

Currently in India, we have Mahindra’s Reva, an all-electric car, and Toyota’s Prius, which is a hybrid. But these vehicles sell in small numbers because the vehicles are relatively costlier than their counterparts and do not make a profitable buy cur-rently. DM and COO, Toyota

Kirloskar Motors, Sandeep Singh, on the slow acceptance of hybrid/electric cars says, “The hybrid market in India has a long way to go before it develops. The price of the Prius is high in India due to the high customs duty. Sales would improve if that issue were addressed”. TKM has man-aged to sell 156 Prius cars since its launch, and believes that the

hybrid market has a good future. Honda had also previously launched its Civic sedan as a hybrid in India, but it cost nearly twice as much as the petrol version and didn’t sell well, though it managed better fuel economy figures.

Bavarian car manufacturer BMW however believes that conversion vehicles can’t make the best solution for electric mobility because of the different demands of electric vehicles. However, manufacturing all-electric vehicles and intro-ducing them in the market has proven costly and unprofitable for manufacturers thus far.

Additionally, in India, where power cuts are frequent, existing and future electricity produc-tion capacity also needs to be calculated. The National Mission for Electric Mobility (NMEM) has projected sales of 6-7 million units for new, full range electric vehicle by 2020 along with fuel savings of 2.2-2.5 million tonnes, and corre-sponding decrease in carbon dioxide emissions by 1.3% to 1.5%, but the question of availabil-ity of electric power everyday for these vehicles remains unanswered. It has been suggested, however, that the implementation and rollout of NEMMP 2020 will be done through various spe-cific schemes, interventions, and policies that are currently under formulation and will be con-sidered by the Government in the near future.

NEMMP 2020 At A Glance The National Electric Mobility Mission Plan

2020 aims at 6-7 million electric vehicles on the roads by 2020, with resultant liquid fuel savings of 2.2-2.5 million tonnes, and corresponding lowering of vehicular emissions and decrease in carbon dioxide emissions by 1.3-1.5%.

In order to achieve this, the Plan aims at providing an initial impetus through demand support measures that facilitate faster consumer acceptance of EV technologies. The government will also facilitate automotive R&D and build charging infrastructure that will require an investment of about `13000-`14000 crore over the next 5-6 years. NEMMP 2020 projections also indicate savings from the decrease in liquid fossil fuel consumption as a result of the shift to electric mobility. India currently imports over 80 percent of its petroleum products requirements, and a shift to electric mobility will create sub-stantial savings for the exchequer.

The National Electric Mobility Mission Plan 2020 aims at 6-7 million electric vehicles on the roads by 2020, with resultant

liquid fuel savings of 2.2-2.5 million tonnes, and corresponding

lowering of vehicular emissions and decrease in carbon dioxide

emissions by 1.3-1.5%.

Toyota Prius at a charging station.

Nissan Leaf charging

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N E W S341 - 31 JANUARY 2013

Mo m e n t u m D y n a m i c s Corporation (MD) has announced

that it has successfully charged the Chevrolet Volt with its wire-less charging technology at the full power capacity of the vehicle.

MD considers this as a signifi-cant technical accomplishment, due to the complexity of the Volt, and a major milestone in the development of wireless charg-ing as a crucial enabler for the widespread acceptance of elec-tric vehicles (EVs).

The Momentum Dynamics wireless charger delivers more than 20,000 watts of power from

the electrical grid to the electric vehicle, far more than can be provided by conventional Level 2 (240 volts) plug-in chargers, which are typically restricted to 3,300 watts maximum.

This higher power poten-tially allows greatly reduced vehicle charging times. The technology used by MD uses a simple receiving pad installed on the underside of a vehicle, and a transmitting pad placed on, or embedded into the road surface.

“Momentum Dynamics has surprised many people in the industry by the amount of power that can be safely delivered with-

out the use of cables, and by its low cost relative to plug-in charg-ers,” said Andy Daga, company CEO and co-inventor.

Daga also said he believes that Momentum’s technology will spur EV adoption, because future owners of electric and hybrid-electric vehicles will demand the safety and all-weather automatic operation of wireless charging at an affordable cost.

By contrast to plug-in charg-ers, wireless systems operate in all weather conditions. MD says they are immune to vandalism, and operate automatically.

“We do for EV charging what systems like E-ZPass have done

for automated toll collection — except in this case it’s about more than reducing toll gate conges-tion — we are actually enabling the growth of an international industry,” said Daga.

Daga further explained that the primary emphasis of his company has been high-pow-er wireless charging for the demanding commercial EV market. For MD, charging the Volt represents a scaling back of Momentum’s technology to the more modest power require-ments of passenger EVs.

“This was a bit of a diver-sion for us, but we proved to the industry that wireless charging

can be rather easily integrat-ed into current production EVs. Nevertheless, our mission remains focused on the larger commercial vehicles where the economics of reducing fuel costs for fleet operators by more than 85 percent are clear and compel-ling,” said Daga.

Several planned field tri-als with the participation of key strategic partners are scheduled to begin in early 2013.

According to Daga, the com-pany expects to be providing wireless charging rates in excess of 60,000 watts (60 kw) to target-ed advanced commercial electric vehicles in the coming year.

Volt Charged Wirelessly By Philadelphia Company

More Hybrid Vehicle Technology On The Way

GE Shows Battery Fuel Cell Bus

While the recent tor-rent of new hybrid auto models may be slowing, hybrid

technology, especially in fossil-fuelled cars, is just picking up speed. “I see the market moving quickly to ‘microhybridization’” says David Vieau, CEO of battery makerA123 Systems, referring to the implementation of fuel-stretching hybrid components across all new vehicles, includ-ing gas-guzzling light trucks and SUVs. The main compo-nent of this microhybridization is the “start-stop” system, which shuts off an idling gas-powered engine when the vehicles comes to a stop, and then uses stored electricity rather than gasoline to get it moving again. “That first burst of the gas combustion engine is very inefficient,” says Vieau, pointing out that an elec-tric start is quieter and more fuel efficient. Various industry stud-ies have shown that vehicles that operate most often on congested city streets could see a 5-10 per-cent increase in fuel efficiency just with start-stop technolo-gy. John Gartner, transportation analyst at clean tech research firm Pike Research, thinks it could be up to 15 percent in sav-ings — from a technology that he says could add as little as 10 percent of the hybrid premi-um onto the sticker price. With “full” hybrids like Volkswagen’s new 2013 Jetta — to be unveiled at this year’s North American International Auto Show in Detroit — commanding an aver-age of $5,000 over the cost of a gas-powered comparable vehi-cles, these “micro hybrids” or “start-stop vehicles”, SSVs, that could add as little as $500 onto the price of a car. Compare that to electric-only vehicles like the Nissan Leaf, which can costs up to $10,000 more than a compa-rable gas-powered vehicle, and requires another $1,000 for the

charging technology at home or work.

A typical commuter would see a payback in gas savings within two years, according to U.S. Department of Energy gas pricing and consumption data.Consumers now have dozens of hybrid vehicle options from which to choose, with almost every carmaker, from luxury marquees Porsche andto mass market makers Ford Motor and Honda , making at least one “full” hybrid. These new models include plug-in electric vehicles with gas engines to extend their range, like GM’s Chevy Volt, or non-plug-in versions that have both electric and gas-powered motors, like the ToyotaPrius. But analysts say the real market pen-etration for hybrid technology will be in vehicles whose owners may think they’re buying a fossil fuel-powered engine.

Pike’s Gartner says SSVs are unlikely to cannibalize the existing hybrid market, but he adds that these micro-hybrids will instead do battle with smaller, more fuel-efficient gas-powered vehicles. “They’ll most directly face competition from smaller compact vehicles that can offer similar fuel effi-ciency by reductions in weight and in other technologies” like fuel injection and aerodynamic improvements, he says.

Driven by a need for fuel effi-ciency in expensive gasoline markets, European and Japanese fleets have used this technology for a number of years, but it’s just coming to North America now. In 2011, about seven SSVs were sold for every two hybrids in 2011, but Gartner sees that growing to 16-to-1 by 2017, due to lower cost of adoption.

He adds SSVs would typi-cally be sold under an “eco” or “blue” label, and come stand-ard on some newer vehicles or as an option on others. A123’s

Vieau says that once the battery pack is installed for stop-and-start, other energy recovery technologies become more inex-pensive since the storage issue is solved. Other “hybridization” technologies use years-old con-cepts like regenerative braking systems, which grab the other-wise-lost energy from braking a car, to embedded solar panels designed to replenish batter-ies while driving. For firms like Vieau’s, wider application of bat-tery technology is good news, since the pure electric vehicle, EV, market is still small. “The largest [green vehicle] popula-tion will be microhybrid, and the smallest will still be EVs” by 2015, he predicts. He says EVs are still expected to be a small over-all player for the next 10 years, but “from a communications standpoint, all of the focus is on EVs.” He adds his firm is still bullish on EVs — especially since EVs need 10 times the battery capacity of hybrids, meaning more potential sales for his firm — but he expects more focus on battery technologies across all vehicle platforms, includ-ing SSVs. Hybrids have become so ubiquitous it’s easy to forget the first Toyota Prius rolled off a car lot in the U.S. in 1999. The Japanese automaker will debut the redesigned version of its flag-ship hybrid, the Prius v, for the 2012 model year.

But with gas prices still high since that first U.S. Prius was sold, it’s the economic motive that has pushed hybrid technology into the mass mar-ket. Squeezing more miles out of a tank of gas has become critical, says Pike’s Gartner, when 95 per-cent of world’s vehicle fleet still uses fossil fuels. “You’re taking the best feature of hybrids and scaling it down,” he says, all at a reasonable cost. “That’s some-thing that will blow past (full) hybrids in implementation.”

The researchers at GE Global Research, the General Electric Company’s technol-

ogy development arm, have achieved a first step in reducing the cost of clean-fuel, zero-emission buses, with a vehicle powered by GE’s new Durathon sodium battery in tandem with a lithium battery and a hydro-gen fuel cell.

This development of a new energy management system could, according to GE, help accelerate both fuel cell accept-ance and electrification of bus f leets, delivery trucks and other larger, heavy-duty vehi-cle fleets enabling clean vehicle technologies.

Now, further testing using GE’s new Durathon battery has produced even better results.

GE researchers believe that the kind of energy management architecture they’re building will allow for a bus to operate at full performance with a sig-nificantly smaller fuel cell than previously possible.

The fuel cell power plant represents a significant cost and GE says its energy manage-ment system has the potential to bring down those costs by up to 50 percent.

“For years fuel cells have been talked about as a clean transportation alternative but cost has always been a road-block to widespread adoption,” said Tim Richter, systems engi-neer in the Electric Propulsion Systems Lab at GE Global

Research. The research is being done

as part of a $13 million research project GE is engaged in with the Federal Transit Administration (FTA) and Northeast Advanced Vehicle Consortium, funded under the National Fuel Cell Bus Program.

“GE’s Multi-Energy High Voltage Energy Management Technology releases vehicle designers from the tradition-al constraints of single battery configurations,” Richter contin-ued. “GE’s Energy Management Technology combined with two or more batteries or ener-gy devices allows GE to enable various power-to-energy con-figurations that match the vehicle needs. By leveraging the right battery to do the right job, overall system cost and efficien-cy can be improved.”

Most types of batteries today come with a trade-off between power and energy storage. Sodium batteries, like GE’s Durathon, are on the opposite side of the spectrum. They store large amounts of energy, but are less optimized for power.

In the hybrid transit bus demonstration, the lithium bat-tery focused on the high power acceleration and braking, while the Durathon battery provided an even electric power flow to extend the bus range.

GE’s Durathon batteries are produced at the company’s start-up Energy Storage busi-ness in Schenectady, N.Y. which opened in July 2012.

As EVs gain in popularity, so does the desire to find a way to get rid of the inconvenience of the charging wire.

News taken from Global Sources

Auto Monitor


CG’s EV Charging Stations to Fuel Smart Grid Growth

The Automation arm of CG, ZIV Metering Solutions, has bagged an order to supply

IBIL, the Spanish electric vehi-cle charging operator, with 90 Electric Vehicle (EV) charging stations. The IBIL order helps

showcase CG’s capabilities at the cutting edge of the energy revo-lution in transportation and its strength in the exciting Smart Grid space.

The depletion of fossil fuels, rising oil prices and increas-ing environmental awareness

are leading governments, utili-ties and consumers to explore energy-efficient transportation technologies. The Smart Grid and EVs are critical in this respect. According to a report, by 2025, 35% of all cars sold will be elec-tric, 25% of which will be hybrids and 10% pure EVs.

These vehicles require an accessible and reliable charg-ing station network which only a Smart Grid can provide. A

Smart Grid balances the flow of power through the electrical network. Its intelligent systems communicate with each other to manage and compensate surges and dips in demand for power, thus enhancing system efficien-cy. The increasing popularity of EVs - especially in the US and the European Union - is driving increased and more rapid deploy-ment of Smart Grid technologies.

CG’s EV charging stations are Smart Grid-enabled, communi-

cating information in real time to and from meters and generators. Moreover, CG offers comprehen-sive Smart Grid solutions through its end-to-end product offerings ranging from meters and protec-tion devices to routers, current sensors and EV charging stations. The global Smart Grid market has seen double-digit growth rates over the past five years and is expected to continue along this trajectory, reaching approxi-mately $57 billion by 2016. CG is

well-positioned to penetrate this sizeable mar-ket on the strength of its global footprint, R&D prowess, and manufacturing capability. This will help the company provide its consumers with innovative, reliable and intelligent offer-ings, even as it helps the environment.

CG Executive Vice-President & President of Automation Norberto Santiago said, “CG has bagged this order from IBIL in the face of intense competition from large and established Original Equipment Manufacturers (OEMs) for the auto-motive industry and the Spanish industrial administration. EVs will play an important role in the electricity network of the future and help meet important challenges such as Europe’s 20-20-20 objective, wherein the continent aims to reduce CO2 by 20%, source 20% of energy from renewable sources, and lower energy use by 20%. CG is an important player in thispromis-ing market.”

CG CEO and Managing Director Laurent Demortier said, “I thank IBIL for reposing its trust in the expertise and differentiation CG brings to the table. The repeat order is a reflection of our strong capabilities in the important and growing Smart Grid segment. CG is well-posi-tioned – in technology, R&D, manufacturing, and access to market - to seize its wide-ranging opportunities.”

IBIL - a JV between REPSOL, the leading Spanish oil company, and EVE, the Basque Energy Agency - had earlier selected CG’s Automation arm for the design and supply of 150 charging stations based on their past successful engagement history. ZIV, which was acquired by CG in July 2012, created its portfolio of EV charg-ing products in 2010.

CG is a global pioneering leader in the man-agement and application of electrical energy. With more than 15,000 employees across its operations in around 85 countries, CG pro-vides electrical products, systems and services for utilities, power generation, industries, and consumers. The company is organized into four business groups: Power, Automation, Industrial, and Consumer. CG clocks US$2.3 billion in rev-enues from product lines that cover the entire value chain of engineering offerings.

The US$ 4 bn Avantha Group is one of India’s leading business conglomerates. Its success-ful entities include BILT, Crompton Greaves, The Global Green Company, Avantha Power & Infrastructure, Solaris ChemTech Industries, Biltech Building Elements, Salient Business Solutions and Avantha Technologies. With an impressive global footprint, Avantha operates in more than twenty countries, employing over 22,000 people worldwide. The Group has busi-ness interests in diverse areas including power transmission and distribution equipment and services, paper and pulp, energy and infrastruc-ture, food processing, farm forestry, insurance, chemicals, IT and ITES.

Smart Grid Market to be Worth $57 billion by 2016

The IBIL order helps showcase CG’s capabilities

at the cutting edge of the revolution in

transportation in the Smart Grid space.

Auto Monitor


The time may have come to end the celebra-tions that began with liberalization and de-

licensing in the early ‘90s. After an unreasonable delay, the government has finally taken actions which will bring cheer to the economy, although the government received flak from some corners for taking their decisions under the threat of foreign rating agencies down-grading India. Ironically, now we are neither considered a devel-oping economy, to seek special favours, nor have we graduated to a mature economy, especially when it comes to the automotive industry.

This is reflected in the way global economies are respond-ing to India. The Generalised System of Preferences (GSP)

being offered to India (in engineering and automobile especially) by the European Union is going to end this year, and it is very unlikely to be revised as they no longer see India as a ‘developing’ econo-my. The US is still considering whether Indian should receive it, since it expired in 2010. At the same time, the Indian automo-tive industry is battling with an unparalleled high cost of capi-tal, power and import duty on raw material, compared to many of their counterparts in other countries. They are operating on very thin profit margins.

Countries l ike Japan, Thailand, and the EU offer free import of raw materi-al to manufacturers, while in India manufactured goods are sometimes cheaper to import

compared to the raw material. Two examples being rubber ver-sus tyres, and aluminium versus

its components. We may dream of competing with China, but let’s not be so unrealistic. A coun-

try like Thailand, which is much smaller than India, exports over USD 10 billion worth of auto com-

Tariff TroublesHigh import duties are straining Indian manufacturing, and FTAs seem to only put the foreign partner at an advantage, observes Nabeel A. Khan.

ponents compared to India’s USD 6.9 billion. Meanwhile, the import bill of Indian auto com-ponent manufacturers is to the tune of USD 10.6 billion, which creates a massive trade deficit, the overall turnover for domestic production being USD 43.5 billion.

It’s been more than two years since a free trade agreement (FTA) with Thailand came into force, but it has not brought much cheer to the automotive industry for many reasons. A num-ber of Indian parts manufacturers are strongly considering setting up plants in Thailand if the government does not come up with a new support policy immediately. They plan to man-ufacture in Thailand and then export to India, but this is not viable for all because of the new nature of production – just in time delivery. “We are not against signing of FTAs with any country, but what we want is a level playing field”, says Arvind Kapur, Ex-President of ACMA and MD of Rico Auto Industries.

In Thailand, the government allows raw material to be imported at zero duty for export purposes and even for domestic usage. Thanks to the FTA, they can export to India and many other countries at almost zero duty. However, if an Indian manufacturer is importing the same raw material from the same source, be it Japan, Taiwan, or Vietnam, it has to pay import duty. The RBI, though, has extended the two percent interest subsidy scheme for exporters in segments like handicrafts, carpets, SMEs, and certain engineering goods till March 2014, expressing worry over the current account deficit, falling foreign exchange reserves, and

Q3 F13 Export Performance

Arvind Kapur, Ex-President of ACMA and MD of Rico Auto Industries

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Tariff Troubles...the tumbling rupee. According to the Reserve Bank of India, the country’s current account deficit widened to USD 22.3 billion, or 5.4 percent of gross domestic product (GDP) in the July-September quarter in 2012, from USD 16.4 billion in the April-June period. It was at USD 21.7 billion in the January-March quarter of the same year.

“At 2011-12 end, our exports grew 33 percent compared to the previous year’s USD 5.2 billion. Europe was our single largest

export destination, accounting for about 35 percent of exports. Unfortunately for this year, as Europe economy isn’t good, exports have come down. Our exports for current fiscal may end in flat or even negative growth,” says Vinnie Mehta, Executive Director, ACMA.

The automotive industry wanted at least five percent subvention in interest rates for the exports segment, and also sought a restoring of the seven percent interest on capital of

three years ago to help the current sluggish market. Interestingly, Thailand not only has lower import duty, but money is avail-able at 3.5 percent or so against India’s average of 12 percent. How is the Indian ma nufacturer to compete with them?

And while Indian component makers remain worried about the unfair advantage foreign players derive

from FTAs, India is currently looking at signing more such agreement with countries such as Brazil and European Union.

“In principle, ACMA isn’t against signing FTAs, but once you sign it, you must ensure that trade in both nations should

benefit, not just one, which in our case is the foreign partner. We are urging the government to sign FTAs with countries like South Africa, whose tariffs (in terms of duty) are higher than us. When our tariffs are lower, they are able to export. So, there

is no real advantage that we get out of FTAs”, adds Mehta.

Echoing the same opinion, another industry expert says, “Look at the duty structure. If you want a level playing field and R&D, push for sustainability of the Indian automotive industry.”

An FTA with the EU, being planned by the government, might help consumers and car buyers, but some OEMs who have already invested in the country may not like the idea. And it doesn’t augur well for component makers for the same reasons as with Thailand because Europe currently has lower tariffs than India. It will encourage imports; and the focus is more on finished vehicles than on components.

Of late, vehicle exports have also been hurt because of the slowdown in the Euro-zone. Sri Lanka increased import duty on automobiles from India by around 100 percent, which will benefit China and other countries in the region. Last year India exported vehicles worth USD 6 billion, out of which automobiles worth USD 800 million was sold in the Sri Lankan market. Adding to its woes is the Drawback Committee’s reduction of drawback rates for commercial vehicles (CVs), and two and three wheelers from 5.5 percent to 2 percent in October 2012. This negatively impacted automobile exports, especially of CVs and two-wheelers.

As regional blocs become stronger, India should look at signing FTAs with these trade blocs, where there is advantage to both parties in the success of the agreement. African, Asian, and South American countries are the prime export markets for Indian manufacturers.

According to the Society of Automobile Manufacturers (SIAM), during April-December 2012, overall automobile exports declined by 2.92 percent against the same period last year. Passenger vehicles grew by 10.52 percent, while segments like commercial vehicles, three-wheelers and two-wheelers fell by 4.76 percent, 20.88 percent, and 2.79 percent respectively. In December 2012, the passenger vehicle, and two and three wheeler segments grew by 31.59 percent, 9.36 percent, and 4.63 percent, respectively, while commercial vehicles declined by 25.79 percent.

The Indian automotive industry has both opportunities and challenges. Growing techni-cal and R&D capability will help India remain relevant in the global market. The country has 10-11 vehicles per thousand people. We have a young population who are ambitious and are keen to buy cars. A lot of the growth will come from the domestic market itself. So, by and large the exports ratio will be very similar. “By 2020 you can expect the domestic market’s production to be between USD 110-115 billion, of which around USD 30 billion will be from exports”, says Vinnie Mehta.

Global Comparison: Calendar Year

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Indian Auto Manufacturing Gets A BoostRecent developments have allowed India to emerge as an auto manufacturing hub, says Shashank Srivastava of Maruti Suzuki.

There was a time not long ago when Indian manufacturing was not considered up to global

standards. As a result, there was little discussion about India’s par-ticipation in the world demand, and the only demand that we real-ly bothered about was domestic demand.

The Indian domestic market was also rather small. In 2005, our market size was around one mil-lion units, while the world market was around 78 million. Economies of scale and acceptance of Indian cars were low. Since then howev-er, there has been a sea change.

While overall demand in 2012 is expected to be around 81 million units, the Indian domes-tic demand should be around three million. Thus while world demand increased only margin-ally, the Indian domestic demand increased three times. This has had a phenomenal effect on our industry. The increased volumes

have put us on the international map not only as a lucrative mar-ket, but also as a manufacturing base. With the confident backing of large sales volumes at home, the development of manufactur-ing capacity both in volume and quality, Indian manufacturers can now look at other markets as well. Our lower production costs and the now large vendor base also play a role.

Many other factors also favour the export of cars from India. High fuel prices have forced consumers to shift to smaller, more fuel-effi-cient cars, and this is a segment where Indian companies are

strong. The reason being that in our country this has traditionally been the largest segment, and hence ‘frugal engineering’ has developed well. Fuel prices are expected to remain high in the future, and the demand pattern transition stated above should continue. The other major factor is currency rates. Due to various macroeconomic fac-tors in the global economy, there has been a hardening of the major currencies against the curren-cies of the smaller and developing economies. Thus the Japanese yen, the euro, and the US dollar all have strengthened against the Indian rupee.

This is a big opportunity for India so far as exports are con-cerned. While exports from developed nations have become more expensive, the reverse is true for us. And this is the main reason why India is being increas-ingly looked at as a possible hub for exports, especially in the small car segment.

Maruti Suzuki now exports to more than 125 countries, and its volumes have grown over the years. Last year it sold more than 127,000 cars, which is about 13% of its overall volumes. Hyundai has done even better, and last year they exported about 237,000 cars, including the i10, i20, and Santro, among others. Nissan exported almost 100,000 cars, which is way above their domestic sales in India. Recently, Honda start-ed exporting Brio, and Toyota started exporting the Etios, to countries like South Africa. All this indicates the increasing trend of exporting cars from India.

Overall, passenger vehicle exports increased by 14% last year, from 444,326 in 2010-11 to 507,318 in 2011-12. Not only this, the markets for which we have an affinity are the growing ones. Thus such markets as Africa, Latin America, Middle East, the ASEAN countries, etc., are projected to grow at much higher rates than countries like Japan , Europe or America. Again this is an opportunity for us.

In fact, for Maruti Suzuki, exports to Europe make up only 20% of its volumes, with 80% being non-European. Just three years back, in 2009-10, exports to Europe were 77% of the market, and non-Europian exports only 23%! Miraculously, almost, the numbers lost in Europe have been made up with huge increases in exports to non-EU countries.

Today, Africa and Latin America comprise more than 60% of Maruti-Suzuki exports, and it is growing. But while the opportunity is there, it is by no means an easy task. We are not the only country with advantageous conditions. Countries like Turkey, Indonesia, and Brazil are more or less equally placed. A big challenge will be to manage the trade terms between India and other trade blocs. In this, of course, it is the gov-ernment which must take the lead. Increasingly, other countries are entering into FTAs with trade blocs, and this threatens exports from India.

For example, the trade agreement between EU and the North African countries in which import duty on cars from EU will progressively reduce, while staying the same for India, will be a threat to the export of cars from India. Nonetheless, car exports represent a very big opportunity for Indian car manufacturers.

We will need to improve our manufacturing and quality processes. We also need to focus on expanding our distribution network in the devel-oping markets. This will not be easy and will require all our business acumen!

Shashank Srivastava is an Electronics Engineer and an MBA. He joined Maruti-Suzuki as a man-agement trainee and is currently an executive director, overseeing product planning and interna-tional markets. He has rich experience of almost 23 years in the domestic market at the regional, zonal, as well as corporate levels, and took up his current position this year.

While exports from developed

nations have become more expensive,

the reverse is true for us.

Auto Monitor


The Last Course

Over the last decade, India’s automotive sector has established global credentials,

with both domestic and inter-national OEMs and suppliers leveraging the domestic demand and manufacturing potential. India is currently the sixth-largest (LMC Automotive, 3Q12 Global Car & Truck Forecast) passen-ger vehicles market in the world. Furthermore, it has emerged as the fifth largest light vehicle pro-duction base globally (overtaking Brazil in 2010), specializing in production of low-cost, small and fuel-efficient cars, SUV’s and light trucks supported by its frugal engineering capabilities and skilled manpower. Vehicles and components manufactured in the country are increasing-ly meeting global standards of quality, reliability and cost.

Strong Growth In Auto Exports

India is Asia’s third-larg-est exporter of passenger cars behind Japan and South Korea. The automotive vehicle export from the country has grown at a CAGR of 24 percent — from 1.2 million units in FY08 to 2.9 million units in FY12. Presently, vehicles produced in India are exported to around 110 coun-tries with key markets being the UK, Germany, Italy, South Africa and Sri Lanka. In the passenger vehicles segment, exports are primarily driven by small cars produced by Hyundai with 47 percent share (Eon, i10), Maruti Suzuki with 25 percent share (A-Star and Alto) and Nissan with 20 percent share (Micra). In the two-wheeler segment, Bajaj Auto is the largest player with over 65 percent share in total exports fol-lowed by TVS Motors and Hero MotoCorp. In the CV segment, Tata Motors and M&M are the key exporters.

Export of auto-components from India have grown at a CAGR of 16 percent — from $3.8 billion in FY08 to $6.9 billion (ACMA FY12 annual report) in FY12 — and is expected to rise to $29 billion by FY21. Europe, (37 per-cent share) followed by Asia (28 percent share) and North America (24 percent share) are the largest export markets for auto compo-nents from India. Engines (42 percent share), transmission (21 percent share) and electronics (17 percent share) are the larg-est export segments (ACMA FY12 annual report and ACMA-EY 2020 Vision).

Strong Regulatory Measures

The government policies and regulations have been key driving forces in promoting investments in the automotive industry. Now with a reasonable scale estab-lished, and expectations that the industry could reach an over-all capacity of 9-10 million PV’s by 2020, the industry seeks to further leverage India as a glob-al and regional development and manufacturing hub. From an overall strategy perspective this allows OEM’s to exploit the low cost manufacturing advan-tage, increase localization levels, and hedge currency volatility. While state governments offer attractive incentives to attract investment, including tax breaks, facilitated access to land and guaranteed access to energy, these are biased in favour of pro-duction for domestic market.

The government has provid-ed some incentives such as the Focus Market Scheme, which provides manufacturers with cash incentives of up to five per-cent for export of vehicles to specified markets. The govern-ment has also entered into free trade agreements (FTAs) and preferential trade agreements (PTAs) with various countries. These agreements reduce, and at times completely waive-off, cus-toms duties. The 12th Five Year Plan recommends the waiver of minimum alternate tax (MAT) on automotive export earnings (Central Board of Excise and Customs India).

However the Central and State Governments should also provide incentives and efficient infrastructure to further promote investment in manufacturing for export markets. India has a stra-tegic advantage with its low cost engineering and manufacturing capabilities, domestic market size, established supplier base and large resource pool that can be exploited, however we need to also keep in mind the emerging competition from neighboring countries.

Competition From Emerging ASEAN Hubs

India faces strong competi-tion from automotive hubs in the ASEAN region including Thailand, Indonesia, Malaysia and the Philippines. The ASEAN Economic Community (AEC) aims to achieve economic unity by 2015 and the automotive industry is one of the 12 prior-ity sectors for integration. The

ASEAN governments aim to create local production and export hubs by driving the local automotive production with incentives and preferen-tial treatment. Strong growth in domestic demand ensures that OEMs are able to achieve criti-cal production levels and export cost-competitive vehicles to emerging markets in south-east Asia, Africa and the Middle East. Furthermore, Japanese OEMs are developing ASEAN countries as their production base in Asia, fol-lowing conflicts with China and natural disasters in Japan.

Thailand is the dominant export and production hub in the region, driven by its low wage structure, established supplier network and efficient infrastructure. Almost 50 per-cent of the annual PV production (~2 million units) in Thailand is exported to Asia (31 percent), the Middle East (26 percent) and Oceania (20 percent). Export of auto components from Thailand has grown at a CAGR of 8 per-cent — from US$7 billion in 2007 to US$9.7 billion in 2011. Nissan has recently announced plans to invest $358 million in a new plant with a capacity of 150,000 units. Ford Motors has opened a new $450-million plant in 2012 (capacity of 150,000 vehicles), to meet rising demand in neighbor-ing ASEAN countries.

Indonesia is the next emerg-ing automotive export hub in this region, with several com-petitive advantages. These include a stable political scenar-io, an improvement in corruption issues and a presence of various local OEMs providing JV and partnership opportunities. By 2017, automotive exports from

Indonesia are expected to rise from 10–12 percent to 20-25 per-cent of the total production. Toyota, Daihatsu, Honda, Nissan, Suzuki, Isuzu and Mitsubishi have plans to invest around US$2 billion in Indonesia for capacity addition to cater to both domes-tic and export markets in the ASEAN region. Automotive sup-pliers, such as Denso, Unipres and Pirelli are also investing in Indonesia to develop a strong automotive supply chain.

After a period of automotive-industry protectionism, Malaysia is now focused on liberalizing the automotive sector. It is reviewing its National Automotive Policy to continue domestic market liberal-ization and use incentives to drive FDI and become a hub for produc-tion and exports. The Philippines is re-crafting its Motor Vehicle Development Program to expand domestic production, sales and eventually the exports of CBUs and auto-components. Vietnam is drafting a special sales tax sup-port for sub-1,500cc vehicles, with over 40 percent localization and with special preferential import tariffs.

OEMs Go Global; Suppliers Local

Global OEMs are investing in local manufacturing and design capabilities to meet domestic demand and establish India as an export hub with the devel-opment of global platforms. Toyota’s Etios and Liva, Honda’s Brio and Hyundai’s Eon are some examples of car platforms which were developed in India and are now exported to other emerging markets. Renault is planning to invest 1.5 billion in India for its small car project in Gujarat and plans to set-up a vendor base for sourcing cheaper compo-nents for global Renault models as well. Indian OEMs are vying for joint-assembly operations and contract-manufacturing in other emerging markets, and are also expanding their dealer/franchise network in global markets via organic and inorganic routes. Tata Motors, Mahindra & Mahindra and Bajaj Auto are enhancing their pres-ence in international markets via both organic and inorganic routes.

Global suppliers are setting up and expanding their R&D centers in India to increase local content in vehicles and leverage it as a global hub for design and tech-nology. Delphi’s Technical Centre

India is a global small-car com-ponent design hub focused on the localization of engineering validation and manufacturing capabilities. Domestic suppliers are focused on forming alliances/partnerships to access advanced technologies and global best practices in R&D, to meet the OEMs’ needs for faster introduc-tion of new products and greater levels of outsourcing.

Collaboration and Govt Policy For Exports

Despite rising competition from these South-East Asian manufacturing hubs, India con-tinues to increase its stature in the global automotive pro-duction and export landscape with its inherent advantages of low-capex production facili-ties, skilled labor, fast growing domestic demand and proxim-ity to new emerging markets in the Middle Eastern, African and Eastern European regions.

Going forward, the country needs to focus on promoting local product development and improving R&D infrastructure to exploit its export potential. Suitable policies need to be defined to promote and incen-tivize investments in capacity which ensures business model simplicity. This is currently not possible with the SEZ schemes given that a vehicle assem-bly plant is a large investment and capacity needs to be cater to both domestic and export demand.

OEMs need to collaborate and invest in their suppliers to strengthen their quality and production processes. Domestic tier-1 suppliers should explore opportunities to take-up great-er responsibilities including testing, validation and prod-uct development. They are also expected to offer flexibility and follow the OEMs’ strategy of operating from multiple loca-tions. With these initiatives and focus areas, the automotive industry can expand its export volumes by delivering high quality and cost competitive products in both developed and developing markets.

Rakesh Batra, Partner at Ernst & Young, is also an Automotive Advisory Leader for Europe, Middle East, India and Africa. He is based in Delhi and has exten-sive experience of over 30 years in both corporate and consulting roles.

India’s achievements in the automotive segment have not only been steady but is growing continuously. But it needs to spruce this further with local product development and R&D, says Rakesh Batra, Partner at Ernst & Young.

Thailand is the dominant export

and production hub in the region, driven

by its low wage structure, established supplier network and

efficient infrastructure. Almost 50 percent of the annual PV

production in Thailand is exported to Asia, the Middle East and

Oceania.

Global suppliers are setting up and

expanding their R&D centers in India to

increase local content in vehicles and

leverage it as a global hub for design and

technology. Delphi’s Technical Centre India is a global small-car component design

hub focused on localization.

Source: Ernst & Young

Source: Ernst & Young

Auto Monitor


One of the important developments in the concluding days of 2012 was General

Motors’ announcement to buy back 200 million of its shares from the US Department of the Treasury in an effort to downplay the ‘Government Motors’ scorn which it had been receiving from some corners since the bailout it got from the US government in 2008 and 2009. Treasury, as part of it efforts to wind down its invest-ments in the Troubled Asset Relief Program (TARP), has announced its intent to fully exit its invest-ment in General Motors (GM) within the next 12-15 months, subject to market conditions.

The vehicle manufacture will purchase 200 million shares of GM common stock held by the U.S. Department of the Treasury for $5.5 billion, or $27.50 per share. Treasury currently holds 500.1 million shares of GM com-mon stock. Treasury intends to sell its other remaining 300.1 million shares through various means in an orderly fashion, subject to market conditions. Treasury intends to begin its disposition of those 300.1 mil-lion common shares this month to a pre-arranged written trad-ing plan.

“This announcement is an important step in bring-ing closure to the successful auto industry rescue, it fur-ther removes the perception of government ownership of GM

among customers, and it dem-onstrates confidence in GM’s progress and our future,” Dan Akerson, Chairman and CEO, GM

said in a press statement.Treasury had invested a total

of $49.5 billion to help stabi-lize and restructure GM – as

part of a broader rescue of the American automotive industry during a severe economic cri-sis. Including GM’s purchase

of common stock from Treasury announced recently, Treasury has recovered more than $28.7 billion of its investment in GM to date through repayments, sales of stock, dividends, interest, and other income.

Treasury intends to begin its disposition of its remaining shares as soon as January 2013, con-sistent with a pre-arranged written trading plan. In addition, Treasury has agreed to relinquish certain governance rights that were included in the U.S. Treasury Secured Credit Agreement with GM.

In a media release, Dan Ammann, Senior Vice President and CFO was quote as: “A fortress balance sheet has been a pillar of GM’s finan-cial strategy and has enabled us to undertake today’s actions. GM’s balance sheet will remain very strong, with estimated liquidity of approxi-mately $38 billion at the end of 2012, following the closing of the share buyback.”

Previously, treasury announced that it expected to make significant additional pro-gress winding down TARP’s bank programs in 2013. Treasury had sold its final shares of AIG common stock. Overall, to date, through repay-ments and other income, Treasury has recovered more than 90 percent ($381 billion) of the $418 billion in funds disbursed for TARP.

“The auto industry rescue helped save more than a million jobs during a severe economic crisis, but TARP was always meant to be a tem-porary, emergency program. The government should not be in the business of owning stakes in private companies for an indefinite period of time,” said Assistant Secretary for Financial Stability Timothy G. Massad. “Moving to exit our investment in GM within the next 12 to 15 months is consistent with our dual goals of winding down TARP as soon as practicable and protecting taxpayer interests,” he added.

According to independent estimates, the res-cue of the American auto industry helped save more than 1 million jobs. Moreover, since June 2009, the auto industry has added a quarter of a million new jobs. For details on Treasury’s life-time cost estimates for TARP programs,

“The repurchase price of $27.50 per share rep-resents a 7.9 percent premium over the closing price on December 18, 2012. The share buy-back is expected to close by the end of the year. This transaction will be accretive to earnings per share, as GM’s total shares outstanding on a fully diluted basis will be reduced by approx-imately 11 percent. In association with this share buyback, GM expects to take a charge of approximately $400 million in the fourth quar-ter, which will be treated as a special item.” the carmaker said in a press statement.

The automotive industry in general, and GM in particular, have rebounded sharply since the rescue. Since the rescue, GM has announced investments of more than $7.3 billion in the U.S. and created or retained more than 20,000 jobs.

GM Buys Back 200 Mn Shares From US Govt Our Bureau

New Delhi

Dan Akerson, Chairman and CEO, GM

Auto Monitor


A Big Mismatch?

How do you see the mis-match between the growth of roads automobiles? What is the solution going ahead?

The growth in roads and high-ways is not keeping up with the pace in the growth of vehicles and that happening in the auto-mobile industry. It is imperative that we look for a simultaneous speedy growth of the National Highways, State Highways and city roads. There is little check on the growth of the automo-bile industry -- everybody is free to own his/her individual vehi-cles. This has led to dealing with a new kind of problem in terms of ways to mitigate the problems faced by urban areas and on the other hand finding a way to expand the intercity roads that are the national highways and expressways.

One way to solve the traf-fic congestion problem faced by cities is encouraging the use of public transport because one needs to ease the traffic snarl. And this can only be achieved through the constant use and the growth of the public transport system. Since it is hard to expand much in urban areas in terms of road systems and network, it is imperative that the extensive use of public transport system and non-motorized systems like pedestrian, bicycles etc, are also encouraged. For instance, if you look at the road in front of us (Mathura Road-Delhi), it car-ries about two lakh vehicles each day. We found this out through a survey we conducted about 14 months ago and I’m sure the fig-ure has shot up to more than two lakh now. This is as far as the sce-nario of the urban roads or city roads are concerned. If you come across the national highways or the connectivity in the major cit-ies or ports and other medium towns, NHAI is working very hard for connectivity amongst these cities.

So you are saying the increasing population of vehi-cles is also an area concern. Why is it hard to upgrade the roads to suit traffic conditions?

If you look at some of the major cities - Mumbai-Ahmedabad, Mu mba i-P u ne, Kol k at a-Durgapur, Delhi-Ambala, they are all being upgraded. If you travel on the Delhi-Ambala route up to Panipat, you will realise clear and free travel movement.

So there’s a tendency along with good work being done by NHAI which is to provide connectiv-ity on a faster mode, and not just connectivity just for the sake of providing connectivity.

I cannot give readily availa-ble figures as to the growth, but as I understand the NH carries about 80 percent of the inter-city traffic, and hence national highways play an important. It is besides the fact that a majority of the NHs are two-lane. That’s why the government along with the NHAI is concerned about upgrading national highways to 4- and 6-lane and makes it the expressway level.

So when can we expect all the NH to be up to the level of expressways?

The government is concerned and working on it. It is talking about speedy connectivity – with around expansions of 20 km a day of new construction. This is their target. And if this is the case, then I don’t find any problem in being able to accommodate the growth in the automobile indus-try. A day will come when you will go by your vehicle From Delhi to Mumbai within 18 to 20 hours and that is not far. A drive from Delhi to Amritsar is now eight hours, and Delhi to Agra has come down to 2.3 hours. These limits are remarkable. Probably with our better design and strict-er emission norms there will lesser pollution and more mobil-ity. You cannot compromise with the safety and security in order to accommodate the high growth of automobiles. On the other hand mobility has to be encouraged to propel economic growth.

India reports a high num-ber of accidents not to mention the high level of pollution. What is the solution for this?

Every facility you provide will have some ill-effects else-where. And one major ill-effect is, of course, safety. We have so far refrained from giving a high-er extent of importance to the safety aspects of the human life when they travel on the road. But one good thing has happened. CRRI has conducted a number of road safety audits of the national highways in the country. These audits are being carried out on behalf of NHAI at the design stage, construction stage, as well as operation stage at every aspect

of the national highways right from its planning stage. The gov-ernment is very much concerned about safety at a time when we see a loss of 1.6 lakh human lives every year in India.

In terms of environment, there’s the pollution to be tack-led in terms of both air and noise. While air pollution norms have been set as BS-IV, we may have BS V – VI coming in the next few years. I understand the automobile industry is work-ing hard on creating innovative designs that will deliver better fuel consumption and better fuel characteristics so that indirectly pollution level can be minimized.

In terms of noise pollution, we have internal and external noise pollution. CRRI, being a premier institute on road research, is working on environment issues and covers many aspects like how to mitigate the air pollution and noise pollution in terms of noise barriers. We are also work-ing on design of noise material, like rubber pads, vibration mate-rial control, etc.

Lifecycle and durability of roads are a cause for concern as it results in much investment of time and money. Under the 11th Five-year Plan, you were assigned with a project to file a report on the maintenance strategy. How’s it going?

I think it is a major concern maintaining the roads. We often come across potholes and bro-ken roads which not only reduce speed but also damage the vehi-cles. Hence we need to build a maintenance strategy. We have to form a strategy as to how to maintain and also allocate the necessary budget.

It appears that the lifecycle of a good pavement or road ought to be 20 to 30 years. This means that we have to build a road keep-ing this in view, figure out the future projected traffic and trav-el demand and then maintain the road at almost zero mainte-nance. In terms of maintenance, there should be some routine periodic maintenance and not anything major. That is the tar-get one should have. We have design standard of the roads well set, which is per IRC norms. The major glitches that actually cause problems are by overloaded trucks, and poor workmanship (which is the major cause) at the time of building roads.

We have executed a project under the 11th Five year Plan on the maintenance strategy of high-speed corridors of India. The report is expected to be ready in the next six to eight months. This was part of the 11th Five-year Plan, but we got a revised extension date of up to December 2013.

This project is of course for maintenance and budgeting schedule for the high-speed corridors which are mainly the expressways and national high-ways that carry high-speed vehicles. Under this project we will quantify the time at which repair will be required.

Is there any existing norm on budgeting of maintenance of road or provision for penalizing the errant contractors?

Right now there is no budget set for maintenance of important roads as such. We should have minimum maintenance restrict-ed to patch work and all. The major gray area of our research is that we are not very sure about the projected traffic after 10 to 12 years on any given road and that is important to understand the quality and kind of roads we would like to build.

Usually the growth rate of traffic is around six to seven per-cent (in urban areas) and based on assumption, we calculate the expected traffic. But it goes as high as nine percent at some places or eight or six percent at certain locations.

Concrete roads are notori-ous for incidents of tyre bursts be it Agra Highway or Pune-

Mumbai. How does one counter this?

People go in for concrete roads in spite of the incidents of tyre bursts. Actually concrete roads are highly cost effective as there is little investment on maintenance. It is near zero maintenance. Yet another problem is that bitumi-nous may not be available after few years and will be in short sup-ply because of the rising global oil consumption. That’s the rea-son we have to adopt concrete for roads. It is a good area of research, but we have taken it in our man-date of CRRI so far.

Is it to enhance public transportation and discourage private vehicles that the govern-ment is again planning to extend the BRT system in Delhi, despite the hullabaloo?

No, the concept of BRT is excel-lent because one should always consider public transport system so that it can be given its boost. You are right one way that it is a policy and I don’t negate this. In any urban transport system, public transport should be given encouragement but the way do it, the way you design it, the way you implement is yet to be real-ized. Every city has got its unique characteristics and nature. It is necessary to recognize local conditions and discover how BRT can be better utilized so that people are enables to use public transportation and will move from moving around frequently in private vehicles. You cannot design a system and make pri-vate vehicle owners suffer. We have to take care of private vehi-cles movements also.

The growth of road has not kept pace with the growth in the automobile industry. Overloading, potholes, and patches continue to mar the lifespan of vehicles, and jeopardize lives. Nabeel A. Khan finds out what can be done to improve the scenario by speaking to Dr. Subhamay Gangopadhyay, Director of Central Road Research Institute.

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For a Rainy DayDisaster can strike any time and in any form, leading to losses. Every business needs to take stock of possible future risks, and plan for contingencies. Sudam Maitra of Maruti Suzuki gives us a lowdown on the Supplier Risk Management (SRM) initiatives undertaken by his company.

Automotive companies today are embroiled in a worldwide indus-try transition. Nearly

everything about the business-es is changing – the products, the services, the challenges, the unprecedented risks, and even the fundamental business models of the industry. At the centre of this massive change is the automotive supply chain. For automotive companies to emerge from this transition as healthy and vibrant businesses will depend largely on how their supply chains proactively adapt to change, respond to risks, and keep clear visibilities.

The top challenges for auto-motive companies are:

performance responsiveness

-tage in deploying new technology study, one-third of all sup-

ply chains fail to manage risk on a formal basis. The story is slightly worse for automotive

companies, with 37 percent acknowledging the absence of formal practices for monitor-ing risk.

in the risk management race. Before I start with

like to cite a few incidents. Cost reduction, delivery performance, faster capacity build-up, and imbibing new technology have been the traditional focus of supply chain which has created a niche in the markets compared to competition.

in the above activities, and in addition trying to cope with high inflation, rising commodity

price disparity, suddenly to no one’s notice on

-lowed devastated most of the eastern coastal

nuclear power plant was also reported.The widespread damage to the eastern

in the country’s recorded history, and has been

available for our car production. Further inves-tigation revealed that the Xirralic pigment

had been destroyed, and no supplies would come from there. It took weeks to discover this information. We immediately began mitigat-

A similar incidence of severe flooding

in Ayutthaya province in Thailand. The World

billion) of economic damage and losses due

to the manufacturing industry, as seven major industrial estates were inundated by as much

supplier, who supplied electronic parts for var-ious controllers and car electronic devices. We had no clue about any alternate supplier, and

As per a cross- industry IBM study, one-

third of all supply chains fail to

manage risk on a formal basis.

Contd. on Pg 52

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had to hunt for alternate sup-pliers all over the globe and get them approved through Suzuki, our parent company, for usage in vehicles.

Another incident was a fire at one of our suppliers, where the entire plant was charred owing to inadequate safety systems and practices, and the improper storage and handling of volatile chemicals. Our supplies were once affected, since we had no alternate approved suppliers for those specific components. All tools had to be shifted to anoth-er plant on a war footing.

A not her unprecedented event occurred when the semi-permanent structural roof (constructed under Kaizen activity) of a supplier’s plant completely collapsed due to excess loading of material on a non-load bearing mezzanine floor. We had to moderate our production plans due to non-availability of components from them, and the non-availability of buffer material due to lean manufacturing practices.

And of course, the several industrial relations issues and strikes at some of our vendors are also worth mentioning. The impact of supply disruption was very high, forcing MSIL had to shift from a lean inventory to an inventory buffer based manufacturing. The situation necessitated introduction of multiple sources in every model, and Maruti was forced to resort to expensive overseas imports.

One of the other issues which Maruti faced was the high dis-parity in diesel and petrol prices.

Maruti being traditionally and primarily a petrol vehicle man-ufacturer, we were put in a tight spot due to the skewed increase in diesel vehicles, leading to short-age in diesel engine and engine components, and idle capacity of petrol. On another occasion, we come to know about anti-dump-ing measures being planned by the Government of India against aluminium cast alloy wheels. Other problems such as the ever f luctuating foreign exchange rate, spike in commodity prices, economic downturn, and cash flow problems at our vendors and suppliers had to be dealt with.

All our strategies and plan-ning went hay wire due to these unprecedented risks, and left us with no alternate but to scramble and take reac-tive countermeasures. All this happened due to supply chain vulnerabilities created by opti-mized and lean supply chains, supply chain complexity due to increased purchasing variety, dependence on outsourced pro-cesses, reliance on less stable Rapidly Developing Economies, and a large and complex global manufacturing network.

To summarize, we followed a firefighting ethic in our day-to-

day activities, with no planning for future scenarios, low visibility into risks faced by tier 2 and tier 3 suppliers, and poor prediction of long-term risks across the globe about various facets of the busi-ness due to a reactive approach. Every buyer and manager had a different understanding of potential risks, and with no standard library of actions to mitigate them, the responses were intuitive and ad hoc.

And so, a strong need was felt for a structured frame-work for proactive supplier risk assessment and mitigation. Back in the boardroom, the supply chain senior man-agement finally thought of initiating and developing a prag-matic and robust Supplier Risk Management (SRM) policy in the Maruti-Suzuki supply chain. Accordingly, in consultation with one of the top consult-ants, experienced in worldwide implementation of Supplier Risk Management in auto OEMs, we finally set up an SRM cell at Maruti Suzuki.

The key objectives of the new SRM Phase 1 were:

assessment of risks long before they become evident

approach using various risk buckets and appropriate scoring logic

-cesses and IT enablement for cockpit view to support SRM

-nate, or hedge/transfer the identified risks before they occured

lines

mechanism

SRM 2nd phaseWe did an extensive study and analysis of the different types of risks and brainstormed for a structured way to assess them, and found ways and measures to mitigate them.

We categorized risk mitiga-tion into different types:

Some of the risk mitigation strategies could be -- work collaboratively with vendor, alternate supplier, hedging, i nvest ments, cont i ngenc y plans, etc.

Finally, a library and a stand-ard vocabulary for mitigating actions were built up for a stand-

For a Rainy Day

ardized set of actions. A cost-benefit analysis of risk mitigation actions was also done, before actual action being taken.

Another major step in SRM excellence was to develop an SRM academy, a professional training centre for supply chain employees. Modules being taught there are Basics of SRM, and Intermediate and Advanced SRM. At the end of the course, the person is called an SRM certified professional

The final objective is to gain expertise in utilis-ing the SRM framework for all components and commodities in the future.

The IT department was instrumental in developing an IT-based application for the SRM system, which had been the backbone of all the analysis of Red, Yellow, and Green of Risks. While most companies created con-tingency plans to mitigate supplier risk, less than half of them actually used these plans when issues arose. Hence, a robust governance mechanism had also been devised to track and monitor SRM activities, and actions would be based on it so that the initiative wouldn’t lose its primacy in actual day-to-day activities.

Having now a structured approach to sup-plier segmentation, SRM leads to actionable prioritization of “at risk” suppliers, compo-nents, and commodities for mitigating actions.

developed which everyone can now follow.The probability of an event occurring in the

future is not an intuitive understanding and reactive approach now, and we now act proac-tively to reduce reaction time. We now have a deeper understanding of supplier risks and have disciplined process to pick up early warnings and proactive identification, and can prioritize risks to act faster with our library of actions.

Sudam Maitra is Chief Operating Officer - Supply Chain, at Maruti Suzuki India Limited. He has a degree in Mechanical Engineering from Indian Institute of Technology (IIT) Delhi. In his present capacity, he is responsible for the entire Supply Chain Vertical which includes pro-curement and development of local, imported components, and raw materials from the local as well as foreign suppliers.

Contd. from Pg 50

Another major step in SRM

excellence was to develop an

SRM academy, a professional training

centre for supply chain employees.

All our strategies and planning went

haywire due to these unprecedented risks, and left us with no alternate

but to scramble and take reactive countermeasures.

All this happened due to supply chain

vulnerabilities.

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Sound Unsound

Vibration may be impart-ed on a human body from different modes, such as transit vehicles,

handheld power tools, industrial machineries, and civil engineer-ing structures. Vibration may be applied at one or more loca-tions of body and in one or more directions. It may be in the form of force input or a motion input. People are generally exposed to mechanical vibrations in their working environment or in the daily traffic situation. Consequential negative effects on health, performance and comfort can appear. The wide range of impacts from human vibrations, affecting almost all branches of industry, requires an interdisciplinary approach to the problem. For investigat-ing health and comfort aspects, innovative methods such as the numerical simulation and the use of dummies open up new per-spectives and provide completely new approaches for the develop-ment and evaluation of vibration reduction measures for ISO 2631-1 (whole-body vibration) ISO 5349-1 (hand-arm vibration). Vibration can cause long term painful damage to our hands & finger. Whole-body vibration (WBV) is transmitted through the seat or feet of driver, who drive vehicles, over rough and uneven surfaces. Large shocks and jolts may cause health risks including back-pain. Other work factors, such as posture and

heavy lifting, are also known to contribute to back problems for drivers. Such studies are impor-tant for Indian conditions.

CSIR-CRRI is implementing a research on “human response to vibration”. Under the study, the whole body vibrations as well as the hand arm vibrations for different types of vehicles for different types of roads with different drivers and different timings (peak and lean time) are being monitored. Human response to whole body vibration result into five separate effects viz. interference with activities, degraded comfort, impaired health, perception of low mag-nitude vibration and occurrence of motion sickness. The degree to which vibration is transmitted in the body depends on vibra-tion frequency. It is found from the research that z directional vibration is more dangerous than y directional and y directional vibration is more dangerous than x directional vibration. Vehicle comfort depends on three factors i.e. static factors (thermal, pres-sure, posture) dynamic factors (transmissibility, SEAT value) and temporal factors (extended sitting time, opportunities for changing posture, driving breaks).

Fig. 1-6 is a case study of a brand new Jeep which has been studied on an hourly basis under its normal running condition. It was observed that the accelera-tion was very high and varies between 2.5 to 6 m/s2.

W hen compared w ith European norms, acceleration action level is 0.5m/s2 and limit value is 1.15 m/s2 for 8 hours/hourly acceleration (fig. no.7 & 8). These values are very high for Indian vehicles which were tested. For vertical vibration fre-quency weighting ‘Wk’ (or ‘Wb’) & people are most sensitive to vibration at 5 Hz; while For hor-izontal vibration Frequency weighting ‘Wd’ people are most sensitive to vibration at 1 Hz.

Roads are equally responsi-ble for generation of vibration i.e. due to bad condition of road, unevenness, speed breaker and different types of roads; vibra-tion in vehicle increases.

Exposure to whole-body vibration is a risk factor for the development of low back pain. The causes of low back pain asso-ciated with prolonged exposure to whole-body vibration are not taken into consideration in India. Due to high acceleration, shoul-der pain, back pain, low back pain, neuro-vestibular disorders, arm pain and vomiting tenden-cy etc. are common in India, but due to lack of awareness, we are suffering.

There is urgent need of formu-lating Indian guideline on

*Vibration and* Human response to vibration

Without guidelines, no one can appreciate that the acceleration is so high in any vehicle. CSIR-CRRI is working in this direction to for-mulate the guidelines for India.

Akhtar Nasim is Senior Scientist, Transportation Planning division, CSIR-Central Road Research Institute (CRRI), and the current Editor-in-Chief of the International Journal of Noise, Vibration & Harshness. He holds

a B. Tech in civil engineering, and an M. Tech in environmental engineering. He has worked on a number of large projects and has published more than 50 papers on noise pollution in national and international journals.

Vehicular vibrations are not an enjoyable experience. Akhtar Nasim of the Central Road Research Institute (CRRI) explains the study process that CRRI has been doing the last couple of years.

Fig.No: 1Acceleration at 4th gear, 50km/h Speed Fig.No: 2 At 4th gear, 50km/h Speed vibration fluctuation

Fig.No: 3 Peak-peak value at 4th gear, 50km/h Speed Fig.No: 4 Impact of Airborn vibration due to pass by trainduring at 4th gear, 50km/h Speed

Fig.No: 5 Acceleration after vehicle after startup Fig.No: 6 Acceleration at 2nd gear, 25km/h Speed

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As with other ways of spending public money, the key question with high-speed rail (HSR) is

not whether people want to travel faster and more comfortably, but whether they value these bene-fits highly enough to compensate for the huge investment costs of constructing the line, its environ-mental impact and its operating and maintenance costs.

The point is whether society is willing to pay the opportuni-ty cost of HSR. It performs very well in terms of market share in corridors of 400-600 km but this success is in many cases the result of rail users not being charged the infrastructure costs.

A high-speed line requires high volume of demand to share the investment costs associat-ed with its construction. Many lines are heavily subsidized, so high load factors and market share are compatible with a poor social return. It is not surpris-ing that HSR investment is more popular among politicians and the general public than among economists.

A potential benefit of HSR investment is the reduction of environmental externalities, though this depends on the vol-ume of demand deviated from less environmentally-friendly transport modes and wheth-er demand is high enough to compensate for the negative externalities during construc-tion, the barrier effect, noise and visual intrusion. Analysis shows

that in order to balance the annualised emissions from high-speed line construction, traffic volumes of more than 10 million annual one-way trips are usu-ally required. It is only in a case of high diversion of passengers from aviation in combination with low CO2 emissions from the marginal electricity produc-tion that substantially fewer trips suffice (still more than 7 million).

The economic evaluation of permanent infrastructure requires a careful construction of the coun-terfactual and there are many assumptions that might seriously bias the results. This is the case for transport pricing during the lifes-pan of the project. Pricing policy needs to be explicitly addressed. We need to consider how the alter-native transport modes are going to be charged.

The Right DecisionTransport infrastructure do

not follow the same long-term planning criteria. Private opera-tors, including car owners, decide how much and when to invest in new capacity (also includes tech-nology). Private airlines decide which type of aircraft to buy depending on demand expecta-tions and business strategies.

On the contrary, roads, air-ports, ports and railway tracks and stations ultimately belong to the public sector (with some exceptions). Although many cru-cial transport decisions are in the hands of private operators subject to market discipline, the public

sector can heavily influence future modal split and the configuration of transport networks through investment, pricing and regula-tory decisions affecting capacity. This is the case with high-speed passenger trains operating large-ly within the public sector, both in the areas of infrastructure and services. The endorsement of railways by the European Commission, and specially of the development of a highspeed rail (HSR) network, has provided this rail technology with public funds and political support.

The future of interurban trans-port is expected to be dominated by strict budgetary constraints and the introduction of efficiency-oriented policies affecting pricing and investment decisions, such as the application of polluter-pays and userpays principles, and the planning of infrastructure on a strict economic basis. The ultimate objective is to have an “integrated and sustainable transport system” that promotes economic growth and social cohesion (European Commission, 2009). What is the role of HSR infrastructure?

Economic AngleAn economic evaluation of pro-

jects would, in principle, lead to the best ones being selected, but there is overwhelming evidence that this is not happening. The con-text in which the social appraisal of projects is carried out cannot be ignored in the economic assess-ment of major infrastructure projects. The institutional design

is a key element for understand-ing public decision-making when different levels of government are involved, as is the case in the EU or generally when the national and regional governments of the same country do not necessarily share the same objectives, particularly with regard to where public invest-ment should be made.

Investment

than 50% of HSR invest-ment. This implies huge costs for poor decisions due to irreversibility.

maximum potential at medi-um length corridors.

requires high-demand to compensate costs.

justify the investment because of emissions during construc-tion period.

The investment in HSR infra-structure is one of the feasible `do something´ alternatives to deal with transport capacity problems in intercity passenger corridors, but is not the only one. The economic case for HSR option is more likely when there are capacity constraints in the conventional rail net-work, roads and airports; and the release of capacity generates additional benefits for freight, long-haul flights and other side effects of the marginal capacity that avoid major investments. Another potential benefit of HSR investment is the reduction of environmental externalities, though this depends on the vol-ume of demand diverted from less environmentally friendly transport modes and whether the demand is high enough to compensate for the negative externalities during construc-

tion, the barrier effect, noise and visual intrusion.

Some critics of HSR investment point to the high investment costs associated with the construction of a new highspeed line. However, the point is not whether the pas-senger prefers to travel with this technology instead of the conven-tional modes, nor the high cost of the HSR, but whether society is willing to pay its opportunity cost. There is nothing intrinsically good or bad about this railway technol-ogy and economists do not have any other a priori position with respect to the construction of new HSR lines, beyond the suggestion of the importance of compar-ing social benefits and costs of the project under consideration before taking any decision.

The Pricing ImperativeThere is considerable pressure

on governments to build new high-speed lines as if the invest-ment were a kind of ̀ now or never´ decision. The construction of HSR infrastructure is irreversible and there is uncertainty associ-ated with costs and demand. The optimal timing of the investment should be addressed in the case of a positive net present value. Even the idea of `all or nothing´ is false, as it could be profitable to build a line today and another in the future. Moreover, it is fea-sible to build an HSR rail track on parts of the overall line and use it for traditional trains as it is prepared for high-speed services that would operate once demand motivates building new tracks on missing links.

This report is a summary of works undertaken for the BBVA Foundation, the OECD/ITF Transport Research Centre, the CTS, Stockholm, and the EGES (Ministry of Finance, Sweden).

Public Money In HSR19th ACEA has brought out a report on the feasibility of investing public money in high-speed rail.

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Better Labour

Since the brutal labour strike at the Maruti Suzuki plant, a number of ideas and recommen-

dations have been going around the country. The bodies repre-senting the automotive industry have been demanding a flexible hiring and retrenchment policy based on the rise and decline in production requirements. But the subject remains forbidden, and no one from the company is willing to make a public state-ment. And yet, many auto and component makers admit that the labour issue has impacted the growth of the automobile industry.

“We should acquire some amount of flexibility in labour laws, in the sense that when there is a ramp up of production, we are able to hire more people, and when the production goes down we should be able to lay-off. It seems heartless, but what is recommended is that there be some kind of insurance when they are out of a job so that they can sustain themselves for the time they are jobless. This is what happens in most countries globally”, says Vinnie Mehta, Executive Director, Automotive Component Manufacturers’ Association (ACMA).

In the Delhi-NCR region, every factory has on average 65 percent of casual labour, and it can be as high as 96 percent in the case of small factories, where out of 500 employees only 20 to 30 are permanent, the rest are employed on a casual basis. “What happens is that since there is no flexibility in the labour law, you only keep temporary work-ers. That’s the problem. Keeping

temporary workers is not what is recommended because you have to train people for productivi-ty anyway. You train temporary workers, and they go away after some time. That’s the challenge, flexibility will help”, an indus-try expert said on condition of anonymity.

A b d u l M a j e e d , P a r t n e r A u t o m o t i v e , PricewaterhouseCooper, agrees with the f lexible hire and retrenchment policy. “However, we also have a provision to ade-quately compensate workers being laid off”, he says.

An International Labour Organisation (ILO) report observes, “The crisis in the auto-motive industry has offered an opportunity to reconsider the models of labour management relations. New, voluntary, ways for labour and management to work together need to be devel-oped. Within this development, the appropriate role of the gov-ernment needs to be ascertained. This development needs to be done in line with the evaluation of the government policies being implemented during the crisis.”

ILO further explains that the traditional workplace model, with a “social contract” between workers and management, designed to overcome opposing interests of employees and man-agement, is no longer sufficient. Nonetheless, it has helped to transform the working class into a middle class. A new concept of an “enterprise compact” would emphasize the common inter-est of all parties in the success of the industry. In this new model, both unions and management are responsible for improving productivity and quality and for the transition towards a greener industry. The current crisis could

be the moment to institutional-ize the enterprise compact as a paradigm for working together.

Contesting this opinion, a contract worker at an automobile factory says, “The easy retrench-ment policy will be misused and will allow the company to retrench people who have spent a few years and become old, so that they can hire young boys, and it will become like a use and throw policy.” The other concern from the labour side is that “they sack contract employees when-ever there is a slowdown, but in a similar fashion they should share profits also when things look up,” a union leader says.

In the last couple of years we have seen rising labour issues of varying severity across the country. Dunlop in West Bengal, Bosch in Karnataka, GM in Gujarat, and Rico Auto and Honda Motorcycles in NCR, all have had labour issues.

Among these strikes, the worst and probably most vio-lent labour-management scuffle was seen at Maruti Suzuki India

Limited (MSIL), India’s lead-ing carmaker. Industrialists and the company in this Gurgaon-Manesar-Daruhera belt blamed the incident on external players. However, it is also important to understand that MSIL hurriedly ramped up manufacturing a few years ago. Work load increased tremendously at its plant in Gurgaon, production rose sub-stantially, and at Manesar it galloped at a staggering rate. To maintain production levels, breaks were cut to two tea-and-toilet breaks of seven minutes and 30 seconds, and one 30-minute lunch break in each eight-hour shift. Things did not end there, and on many occasions pay cuts for missed work were enforced which impacted morale on the shop floor.

Manufacturers are also under tremendous pressure to maintain acceptable profit margins amidst strong competition, inflation, high cost of raw material, slow-ing demand, and rising domestic interest rates. Companies are under pressure to increase effi-ciency and productivity, while the aspirations of the young population, and discrimination between casual and permanent employees keeps the work envi-ronment on edge. MSIL has also admitted after the ghastly strike that they need to understand the younger lot of workers, and their aspirations to be able to deal with them. “In the last one decade there has been great growth in the automotive industry, and the company must pass it on to the workers. Some of the demands of the workers are justifiable,” says Kapil Arora, Partner, Automotive Practice, Ernst & Young.

Casual employees get only a fraction of the salary com-pared to permanent workers.

The difference is so wide that a permanent employee earns Rs 40,000 a month for the same work for which a casual employee earns Rs 10,000. Despite suffering losses worth thousands of crores of rupees, the companies are not able to look at solving this dis-cord of disparity.

“Often, it is people from out-side who provoke labour issues. Politics is also involved in it. If you notice, you will find that these incidents usually take place dur-ing election time,” says Arvind Kapur, MD, Rico Auto Industries, which had major labour strike in 2009.

According to industry sourc-es, the Hero MotoCorp Gurgaon plant has 1100 permanent employees against 7500 casual, while the Honda Motorcycles plant has 1800 permanent against 4500 casual employees. MSIL had a workforce of 3,300 before the strike, of which 1,528 were permanent. These casual work-ers were not in a direct contract with MSIL, but were provided by a contractor.

According to National Sample Survey (NSS) data, casual or con-tract workers went up from 38 percent in 2000 to 58 percent in 2010 in organized sectors such as manufacturing and con-struction. According to reports, manufacturing has cut five mil-lion casual jobs in five years.

In the 2011-12 period, cor-porate India owes around Rs. 711 crore in unpaid wages to permanent workers. The other disturbing figure comes from the labour courts which had a back-log of 13,642 in 2012. And these are cases involving permanent employees, since casual and con-tractual workers have little room


Following the recent headline-grabbing labour strikes at Maruti Suzuki, manufacturers want more flexibility in labour laws.

Contd. on pg 60

According to NSS data, casual or

contract workers went up from 38

percent in 2000 to 58 percent in 2010

in organized sectors such as manufacturing

and construction. According to reports, manufacturing has cut five million casual jobs

in five years.

Auto Monitor


for legal recourse, given their tight employment contracts.

Ashok Yadav, President of the Employee Union at Honda Motorcycles, Gurgaon, says, “The biggest problem is that man-agement have a very negative impression of employee/labour unions. They try to curb regis-tration and formation of labour unions. This is where the prob-lem begins. I think they should understand that unions also help management to smooth things, and solve problems.” Yadav has been an active member of the struggle for the forma-

tion of a labour union at Honda Motorcycles. The labour strike at the Honda Motorcycle plant continued for a month before management finally allowed the formation of the employee union. In some, countries it is mandato-ry for companies to have labour unions.

The effect of the global crisis is wide ranging. Direct effects include decreased demand for automobiles at home and abroad. An indirect result is reduced demand for parts and compo-nents. High interest rates and lack of financing have forced

automobile producers to cut back on production by using par-tial plant shutdowns, layoffs and employee transfers, and to defer new investments and cancel new vehicle launches. For example, Tata Motors retrenched 4,000 temporary workers and closed its commercial vehicle plant in Jamshedpur for three days in November 2008. Force Motors reduced its working week to five days, while SKF (Svenska Kullagerfabriken), a components supplier, transferred some of its employees other 36 divisions.

MSIL’s Manesar plant has seen a lot of labour unrest in recent times. The plant witnessed a 13-day standoff between man-agement and labour in 2011 as the workers were demanding rec-ognition of a new trade union. In

September 2011, the MSIL plant was again rocked by a month-long strike over a ‘good conduct’ issue. A month later, business was hit again when workers went on strike demanding that workers who were fired during the strikes be reinstated. The labour unions of several other industrial units also came out to support Maruti workers, leading to concerns across the indus-try. Students from the premier Jawahar Lal Nehru University also came forward to express their support for workers. The trade union blamed MSIL, alleg-ing that management had been paying less than the prescribed wages for industrial workers. However, the union could have taken legal recourse and sought redressal for the alleged anoma-lies instead of rioting.

For all the wrongs we cannot not blame the labour laws alone as this is a story that is not con-fined to India, the land of the rigid Industrial Disputes Act (IDA). No doubt the IDA has contributed to stagnation in organised sec-tor employment growth, but it alone cannot explain the broader phenomenon of the labour-man-agement tussle. The unrest has badly impacted the automotive industry. Suppliers also suffered losses.

“This is not only a corporate issue but also a socio-political and economic issue. All three stakeholders, the workers, the management, and the gov-ernment, should devise a transparent mechanism illus-trating the reasonable rights of all the party to solve this issue. This will take some time”, says Kapil Arora, Partner, Automotive Practice, Ernst & Young.

According to data from the annual survey of industries conducted by economist C P

Chandrasekhar, in the after-math of strikes in the 1970s, the real, inflation-adjusted wages for workers increased by nearly 40 percent in 15 years, from 1981-82 to 1994-95, and then fell 15 per-cent in the next 15 years. In the last 30 years, wage payments as a percentage of the net value cre-ated by companies have dropped from 30.3 per cent to 11.6 per cent, and profits have increased from 23.4 per cent of net value to 56.2 percent. Wages have not risen in proportion with profits.

One reason is increasing use of cheap casual labour, reduction of perks such as health benefits, provident fund, and pension. However, carmakers MSIL and Hyundai Motors gave record high pay hikes of 50 and 45 percent in 2012.

Talking about learnings from the labour strike, Arvind Kapur says, “We have seen that there was a lack of communication between management and workers. Now we have activated all the commu-nication channels. We are always in touch with them, and are func-tioning quite smoothly.”

Better Labour Contd. from pg 58

The effect of the global crisis is wide

ranging. Direct effects include

decreased demand for automobiles.

An indirect result is reduced demand for components. High interest rates and

lack of financing have forced automobile

producers to cut back on production.

Auto Monitor


Going The Extra Mile

One major problem facing the industry today is that of deal-ing with a disgruntled

workforce. In recent times we have witnessed a number of fallouts between workers and management at many compa-nies, irrespective of size and type. Yet there are some who have gone the extra mile to build a better relationship with their work-force through novel approaches and initiatives.

During a recent visit to the Daimler India Commercial Vehicle (DICV) plant in Chennai, Auto Monitor found a simple ini-tiative aimed at going beyond a purely business relationship and building a social and emotional connect with the workers. Once a week workers can bring their families on a visit to the plant. “Such initiatives create a sense of ownership and pride in the workers’ minds,” says a DICV

spokesperson. Such initiatives are not limited

to bigwigs; even small component makers are becoming more and more proactive in creating good-will among their workers. “We also have a very fair salary struc-ture, and moreover we go to every individual from time to time to check on their requirements and needs, which give them a sense of belonging and loyalty towards the company,” says Naveen Behl, Executive Director at Kay Jay Forgings, during a visit to their plant in Ludhiana, Punjab. They can boast of a tiny, almost neg-ligible, attrition rate. The `400 crore forge components maker also have family get-togethers with all the workers on occasions like Deepawali.

Companies are experiment-ing with various initiatives to give workers the feeling of fam-ily. They try to be with them through thick and thin. The rela-

tionship has extended to helping with marrying and educating the children of the workers. A

Ghaziabad-based auto ancillary manufacturer, Abilities India Piston, organizes computer and

other training courses during the summer vacations for workers’ children every year at their plant.

One of India’s biggest auto component mak-ers, Samvardhana Motherson Group (SMG), used to be a small company of `200 crore or so, and has now transformed itself into a multibil-lion dollar enterprise. “We have the right kind of people, and they are loyal and have been with us from our humble beginnings,” says V.C. Sehgal, Chairman of SMG. Sehgal gives all credit to his team, and every person is continu-ally motivated. Though he is travelling across the globe most of the time, and has to manage over 140 plants across various countries, his rapport with his team is very good, and that has paid off handsomely.

Content ConnectWe have seen many complications in han-

dling the workforce in foreign locations when an Indian company makes an acquisition, due to various preconceived notions and cultural differences. SMG has acquired many compa-nies abroad, including Visiocorp. “It is true that people abroad sometimes have many miscon-ceptions about India and Indian work culture, and we have to be very careful, but as a compa-ny we have not had any such difficulty, and the reason is that we have a policy of retaining the local workforce and not forcing Indians upon them” says Sehgal. He further explains that the local workforce, be it in Germany, Brazil, or the US, are as competent as Indians, if not better. However, they do sometimes appoint Indian managers. The Group’s largest revenue share currently comes from Germany.

Back home, Toyota Kirloskar Motors beautifully connected its corporate social responsibility to boost human resource qual-ity at its plant in Bangalore, Karnataka. The company has its own technical institute where it selects a certain number of poor students after class ten. They are also imparted on-job training to make them industry ready. These students sometimes join the centre with one pair of clothes to wear, and on graduating earn a salary of `18,000 a month working for TKM. “We have not made it mandatory for them to join us. They are free to join other companies, but thus far over 90 percent of past students have joined us,” says an official. The compa-ny provides all the facilities which any decent college or institute would provide, including a hostel and canteen. Bicycles are also provided to every student to move within the campus. Toyota started this a few years ago, and it has helped the company build a nice image among the local population.

To further strengthen bonds with shopfloor workers, Toyota has initiated periodic train-ing programmes which train workers to enable them to rise to the mid-management level. These efforts have paid off well. TKM had one labour strike a couple of years ago, but the situ-ation overall remains cordial.

Given the recent spate of labour strikes in the auto industry, companies explore ways to motivate the work force and earn their loyalty.

Auto Monitor


Orders Surge As Jap Firms Seek New Sites

New jobs blow has hit Swindon with the announcement that 370 agency posi-

tions are to be axed at Honda’s logistics company in South Marston. Managers at DC Ltd, which is owned by the Japanese car giant, broke the grim news in phases as workers turned up for shifts during the day.

Honda announced two weeks ago that it is axing 800 out of 3,500 jobs at its plant in South Marston due to a slump in demand in Europe. The lat-est jobs cull will not affect permanent staff at the distri-bution centre, which employs a total of 970 associates. The temporary workers began six months ago when Honda stepped up production and they were hired with the inten-tion that they would eventually be made permanent.

The cull will only leave 80 agency staff at the supply chain hub, part of the KeyPoint Development in Thornhill Drive. Steve Gopal, the gen-eral manager at DC Ltd, said the cut was a devastating blow. But he said events at the Honda plant left the firm with no other option.

Honda had forwarded a production plan to its logis-tics company showing that it intends to reduce production from 166,000 to 150,000 cars before the end of this financial year. Mr Gopal said: “Because of that downturn we have had to reduce our workforce by 370 temporary associates. “We

are inextricably linked with Honda’s production. As it goes up our labour force goes up and as it comes down our labour force contracts. It’s never a good day for any company to reduce its workforce and we view our associates as an intri-cate part of the company. To see any reduction in that is a devastating blow for us.”

The logistics company is part of the Honda Logistics Incorporated group. It pro-cesses and distributes parts intended for the Honda plant.

A Honda spokesperson said: “Whilst it is never easy to hear of such news, SDC is entirely independent of HUM and whilst there are strong links between the business-es, any manpower decisions at SDC are not made or decid-ed on by Honda of the UK Manufacturing.”

The result has been a dramatic upsurge in demand for industrial machinery, as witnessed

at Metalex, the region’s largest international machinery trade exhibition and conference, held annually in Bangkok.

Order volumes at the most recent edition of Metalex, late last year, were up 42% from the year before. Exhibitors point-ed to three factors driving new demand: Japan-China tensions, the higher minimum wage in Thailand, and further integra-tion of Asean economies.

Many Japanese companies operating in China last year began contemplating relocating production, as tensions mount-ed between the two countries the islands known as Senkaku in Japan and Diaoyu in China.

Sales of Japanese goods in China have plunged, with auto-mobiles down as much as 70%, and some Japanese factories were damaged by angry Chinese protesters.

Asean countries seem to be the preferred destinations for those Japanese companies that want to move out of China. Japanese businesses can have the best of both worlds because Asean and China have a free trade agree-ment, while the formation of the

Asean Economic Community will make doing business in the region easier.

Soichiro Goto, a representa-tive of the overseas sales section with Horkos Corp, a Japanese manufacturer of machinery for the automotive industry, said many Japanese auto companies wanted to avoid risk from China. At Metalex he saw many Japanese companies seeking new machin-ery to install in new factories outside China, and Asean coun-tries were their targets.

Goto said that China had become the most important market for many Japanese com-panies, overtaking the United States and Europe. However, if the conflict in the East China Sea cannot be resolved, Japanese businesses have to be prepared to change their strategy.

According to the Ministry of Commerce in Beijing, FDI by Japanese companies totalled $460 million in October 2012, a decrease of 32%.

However, Goto is still opti-mistic that the dispute between China and Japan will be short-lived. China will remain a high-potential market for Japanese companies, while Asean also offers good opportu-nities for machinery sales.

In any case, he said, Asean

was a fast-growing market for the automotive industry given rising urbanization and afflu-ence. More Japanese companies are pouring investments into the region to meet demand.

Horkos, for example, plans to start operating a factory in Chachoengsao province this year to support its customers, which are leading carmakers.

Increasing wage costs are another factor driving machin-ery sales in Thailand, one of the industrial centres in the region.

Theerapat Songlerk, product manager of T.N. Metal Works Co, the distributor for Hyundai Heavy Industries of robots and automation machinery, said the company attracted a lot of interest at Metalex from visitors seeking to automate factories and reduce human labour.

Automation has been used in Thailand for years, but robots are not yet widespread. The use of robots will reduce production losses usually made by human errors, Theerapat added.

Hyundai Heavy Industries only introduced robots in Thailand last year and has yet to receive many firm orders, as prospective customers are weighing the cost and payback period before making decisions, he said.

Rising tensions between Japan and China are having a knock-on effect on industry as Japanese companies look for new factory locations outside China to reduce their risk.

SDC Axes 370 Agency Positions

Honda had forwarded a production

plan to its logistics company showing that

it intends to reduce production from

166,000 to 150,000 cars before the end of this financial year.

The logistics company is part of the Honda

Logistics Incorporated group.

Auto Monitor

C O L U M N 671 - 31 JANUARY 2013

Stars Arjun Rampal and Chitrangada Singh along with Shereen Bhan, executive editor CNBC-TV18 and jury mem-ber and motorcycle racer Sarath Kumar present the trophy

to Yamaha national business head, Roy Kurien.

The OVERDRIVE awards consider vehicles that went on sale in the coun-try in the last calendar

year. For the 2013 award, all vehi-cles launched between January 1 and December 15, 2012, were eligible for awards. OVERDRIVE does not consider refreshes, updates, facelifts and minor model changes for awards unless the changes cause a major shift in the positioning of the vehicle.

In all the major categories, car of the year, bike of the year,

SUV and MUV of the year and scooter of the year, only vehi-cles manufactured or assembled in India are considered. Direct imports are restricted to their own categories.

The process of identifying the winners follows the internation-al norm for awards of this kind. The OVERDRIVE jury is allotted, per juror, a set of points (maxi-mum of 25) which they distribute among the nominees having driv-en, ridden and tested the vehicles extensively. No juror can award

top marks to two vehicles, each juror has to clearly identify his best

choice. After the scores are accu-mulated from all the jurors the

highest point tally puts the spot-light on the winner.

EligibilityAll the bikes and scooters launched in the cal-

endar year 2012 are eligible for the OVERDRIVE Awards 2013. In addition to fresh model launch-es, revamped models which include styling and engine upgrades leading to a change in price point and product positioning in a segment, qualify as new launches, as does a complete mechanical revamp, including engine change.

Nominees (Scooter Of The Year)*Yamaha Ray*Piaggio Vespa*Hero Maestro

WinnerYamaha Ray

Just when you thought the 100-110cc scooter market couldn’t possibly need one more auto-matic for the people, Yamaha came out with the Ray, saying it was a girl’s scooter. Turns out, the scooter is light, among the sharpest look-ing (and not obviously feminine at all), scores highly for its neat ride and segment-best han-dling and is light on the pocket as well. What a debut, Yamaha.

SCOOTER OF THE YEAR

How The Winners Emerge

20132013

Auto Monitor

A N A LY S I S681 - 31 JANUARY 2013

-43.25%

-15.16%

1.12%

3.92%

-10.21%

-5.35%

-14.14%

-15.98%

-19.85%

-0.33%

57.53%

68.88%

917.24%

Passenger Vehicles

Passenger Cars

OEMs 2011-12 2012-13

BMW** 7,224 6,129

Fiat 10,439 5,924

Ford 64,482 60,149

GM 65,126 49,181

HM 2,047 1,813

HSCI 32,560 51,292

HMIL 277,754 280,860

M&M 12,915 11,597

MSIL 574,477 597,019

Merc 5,289 5,006

Nissan 16,653 28,124

Renault 841 8,555

Skoda 21,095 22,104

Tata 171,011 146,828

Tata JLR - 1,597

TKM 62,232 52,288

Audi 4,534 6,901

VW 57,621 46,184

Porsche - 220

Total 1,386,300 1,381,771

MPV

OEMs 2011-12 2012-13

Force 137 11

M&M 18381 23657

Maruti 105,881 84,504

Tata 44,098 66,580

Total 168,497 174,752

Commercial Vehicles Two-Wheelers

LCVs (PC+GC)

OEMs 2011-12 2012-13

ALL 2,937 24,214

Force 17,538 15,804

HM 118 149

M&M 92,349 103,746

MNAL 7,315 5,850

Piaggio 8,736 2,175

Swaraj 3,407 2,811

Tata 188,091 217,067

VECV - Eicher

6,915 6,693

Total 327,406 378,509

3-Wheelers (PC+GC)

OEMs 2011-12 2012-13

Atul 19,326 23,407

Bajaj 149,742 166,052

Force 9 1

M&M 51,114 50,065

Piaggio 140,616 138,635

Scooters 12,329 11,453

TVS 9,995 12,513

Total 383,131 402,126

M&HCVs (PC+GC)

OEMs 2011-12 2012-13

ALL 54,638 49,081

AMW 7,329 4,894

Daimler* 85 NA

MNAL 2,191 2,685

Swaraj 5,760 5,712

Tata 147,370 109,178

VECV - Eicher

26,572 25,545

VECV - Volvo

501 475

Volvo Buses

475 509

Total 244,921 198,079

Scooter/Scooterettees

OEMs 2011-12 2012-13

BAL -

HML 296,580 392,924

HMSI 855,157

1,062,838

IYM - 34,109

M&M 2W

106,429 85,101

Piaggio - 25,641

SMIL 195,262 247,344

TVS 385,672 330,252

Total 1,839,100 2,178,209

Mopeds/Electric

OEMs 2011-12 2012-13

TVS 570,003 580,259

Electrotherm* NA

Total 570,003 580,259

Motorcycles/StepThroughs

OEMs 2011-12 2012-13

BAL 1,950,241 1,907,716

HDMC 149 809

HML 4,217,490 4,031,447

HMSI 553,687 872,285

IYM 272,324 231,068

M&M 2W

RE 55,407 86,761

SMIL 37,389 67,496

TVS 473,186 420,761

Total 7,559,873 7,618,343

* Data not available since August 2008 onwards** BMW monthly data not available

UV

OEMs 2011-12 2012-13

Force 3,211 3,479

Ford 1,985 1,253

GM 17,315 15,269

HM 1,524 1,379

HSCI 211 186

HMIL 1,198 589

ICML 363 260

M&M 143,632 191,850

MSIL 4,534 60,652

Nissan 191 701

Renault 262 24,039

Skoda 1,300 880

Tata 31,823 34,660

TKM 45,697 67,679

VW 6 45

Total 253,252 402,921

724.45%

-20.03%

-9.89%

-75.10%

15.41% 32.48%

18.44%

15.61%

24.29%

26.67%

-20.04%

-14.37%

-2.18%

-4.41%

-15.15%

-11.08%

442.95%

57.54%

-

56.59%

80.52%

0.77%

1.80%

0.00%

-10.17%

22.55%

-25.92%

-3.86%

-5.19%

-19.13%

7.16%-50.83%

-28.37%

-32.31%

8.35%

-9.51%

-11.85%

50.98%

3.71%

-20.19%

28.70%

-11.82%

-36.88%

21.12%

25.19%

4.96%

10.89%

-88.89%

-2.05%

-1.41%

-7.11

-11.43%

-6.72%

-24.48%

12.34%

26.27%

-17.49%

-3.21%

The passenger car segment fell by 0.33 percent during the April-December period this fiscal, while the utility vehicles segment grew at a robust 59.1 percent due to strong sales of Mahindra & Mahindra, the Renault Duster and the Maruti Ertiga. People movers or MPVs showed 3.71 percent growth pulled back by Maruti’s slump in sales in the segment despite a good showing by Tata Motors. Honda Nissan and Renault were the fastest growing passenger car manufacturers, all aided by successful new offering this fiscal.

Commercial vehicles segment registered a flat growth of 0.74 percent in April-December, 2012-13 as compared to the same period last fiscal to touch 576,588 units. M&HCVs sales fell by 19.13 percent clocking 198,079 units compared to 244,921 units in the same period in the previous year. The slump in M&HCVs was offset by a strong showing in the LCV space growing by 15.61 percent to 378,509 units in this fiscal, compared to 327,406 units in the same period last fiscal.

Three-wheelers too performed better than M&HCVs reg-istering a steady 4.96 percent growth in sales at 402,126 units in April-December period compared to 383,131 units in same period last year. Passenger carrier sales grew by 8.96 percent in April-December while goods carriers fell by 10.29 percent in the same period. ALL’s Dost continues to clock strong sales in the LCV segment and Atul Auto and TVS are grow-ing consistently to new heights in the three-wheeler segment.

The second largest two-wheeler market in the world grew at a steady 4.09 percent this fiscal to 10,376,811 units against 9,968,976 units during the same period in the previous fiscal.

Motorcycle sales struggled to clock a negligible 0.77 percent growth rate with sales of 7,618,343 units in April-December period as compared to 7,559,873 units in the corresponding period in the previous fiscal. This is mainly due to the fact that the world’s largest two-wheeler manu-facturer, Hero MotoCorp registered flat sales of 527,375 units in December. Honda motorcycles is growing from strength to strength due to sucessful product launches registering a sales growth of 37.36 percent this fiscal. Other major motorcycle manufacturers - Bajaj, Yamaha and TVS have fallen in sales by 2.18 percent, 2.62 percent and 6.83 percent respectively.

Scooter sales in the current fiscal grew by 18.44 percent due to increase in models in the segement. Hero MotoCorp, Honda and Suzuki ruled the roost in this segment clocking above avergare 28 percent growth rate in this period. The entry of Piaggio and Yamaha in this segment has also helped scooter sales reach new heights.

TVS’s monopoly in the moped segment continued to work to its advantage growing at 1.8 percent between April-December with sales of 580,259 units compared to 570,003 units in the same period last year.

4.78%

52.21%

1237.72%

9075.19%

48.10%

650.00%

8.91%

59.10%

33.57%

267.02%

-91.97%

1.80%

-33.22%

-0.83%

Auto Monitor

O V E R D R I V E A W A R D S701 - 31 JANUARY 2013

EligibilityVehicles launched in the

calendar year 2012 are eligi-ble for the OVERDRIVE Awards 2013. Revamped styling which includes a change in price point and product position-ing in a segment qualify as a new launch, as does complete mechanical revamp, including an engine change.

Judging ParametersThe judges looked for sheer

superiority of a product in its class, to see how it compares as also how it performs in various conditions.

The judges also looked for:

and exterior of the car-

utmost importance special-ly in a price sensitive market like India. Value-for-money vis a vis affordability brings about an interesting scenar-io for comparison

-ly important aspect for the Indian buyer

Overall, the vehicle which the

jury conferred the title on had to be one which makes a signif-icant impact on the market in terms of volumes, driving the market forward, or creating a new niche.

The judges were allotted 25 points from which they could award points to the compet-ing vehicles in a category. No vehicle could be awarded more than 10 points, while no two cars could be awarded high-

clearly indicates his/her clear winner for the award.

This also ensures that parti-ality and ambiguity are reduced. A third party independent body tallies the scored and validated

the process, ensuring a bias-free result.

Otherwise the judges were free to mark the vehicles as they wish. This year Ernst & Young

the results.The results were not declared

in advance. Winners were announced only on the night of the OVERDRIVE Awards cer-emony. This maintained the eager anticipation associated with such premier awards.

Nominees

*Hyundai Elantra

*Toyota Camry

WinnerMaruti Suzuki Dzire

under the four-metre line but the difference from the old car to this all-new one is vast. It

a smarter, just as spacious cabin and that coupled with

-vice makes it one of the easiest

standards for the segment and

of the year.

Team Maruti Suzuki led by chairman RC Bhargava collects the trophy from Arun Maira,

member planning commission, Geet Sethi, for-mer world billiards and snooker champion, Hari Singh, jury member and five-time national rally

champion and Sandeep Srikanth, associate fea-tures editor, CNBC-TV18.

MIDSIZE SEDAN OF THE YEARMIDSIZE SEDAN OF THE YEAR

Auto Monitor


HALL OF FAMEMahindra Scorpio

In 2002 Mahindra & Mahindra began an all-new journey into the unknown. From making general purpose SUVs Mahindra & Mahindra dared to venture into a segment that was uncharted. From the outset the Scorpio established itself as the lifestyle choice of thousands of Indians. Its blend of style, sturdy engineering and off-road ability pio-neered the craze for SUV’s. Over the last decade the Scorpio has constantly reinvented itself to achieve the same results - unparalleled driving pleasure. Hundreds of thou-sands of owners today stand testimony to the efforts of a few visionaries who saw the influence a lifestyle SUV would have on our market. We welcome this landmark SUV into our Hall Of Fame.

TATA SafariIn 1991 TATA Motors saw the need to provide India’s masses with the ability to

choose personal vehicles that best reflected their lifestyles resulting in the Sierra and the Estate, early expressions of indigenous engineering and design. In 1998, this led to the birth of the TATA Safari, a wholly indigenous SUV which addressed the needs of a nation that was eager and willing to explore the vast expanse of our country. With luxurious comfortable interiors and a 4x4 package, it inspired Indians to ‘Reclaim Their Life’. It has and always will be remembered as one of the first luxury off-roaders built by Indians for Indians. 15 years on, the original enters the Hall Of Fame while the suc-cessor is a nominee for SUV Of The Year.

Nominees*Nissan Evalia*Mahindra Quanto*Maruti Suzuki Ertiga

WinnerMaruti Suzuki Ertiga

Another vehicle that has created a new seg-ment for itself in the market is the Ertiga. India’s first compact 7-seater MUV was designed in house by Maruti Suzuki and is based on the Ritz platform. Offered with a choice of pet-rol and diesel engines, a surprisingly versatile and spacious cabin and attractive styling the Ertiga has been a runaway success for India’s largest carmaker selling close to 7000 units a month. The Ertiga impressed us no end with its space, design, engineering and value for money proposition. But above all this what we liked most about this car is that it drvies pretty much exactly like a Swift does. An MUV that drives like a car, we love it!

MUV OF THE YEAR

Nominees*Mercedes-Benz M-class*Renault Duster*Tata Safari Storme*Ssangyong Rexton*Mitsubishi Pajero Sport

WinnerRenault Duster

The Renault Duster is one of those products that creates a new category in the market and completely changes the way a company is per-ceived by the customers. Given India’s love affair with SUVs a compact SUV that offered up eye-catching styling and compact dimensions was always going to be a winner. The new entry-level SUV also offers a well engineered chassis with a high ride height that’s ideal for Indian roads as well as good ride quality while being as fun to drive as some premium hatchbacks. By offering the Duster with a choice of a petrol and diesel engine in two states of tune and three trim lev-els Renault has given the consumer a range of options to suit requirements and budget. Its effortless performance and packaging redefines the expectations from an entry-level SUV and propels it to the pole position for the 2013 SUV Of The Year.

SUV OF THE YEAR

Auto Monitor


* Bajaj Discover 125ST* Bajaj Pulsar 200NS* Kawasaki Ninja 650* Harley-Davidson

Super Glide Custom* Harley-Davidson

Street Bob* Honda CBR150R* Honda Dream Yuga* Hyosung GT250R* KTM Duke 200* Suzuki Hayate

Nominees

EXECUTIVE CAR OF THE YEARHyundai Elantra

The Hyundai Elantra has already won the OVERDRIVE Car Of The Year title in its earlier avatar and when the new car was launched we naturally expected great things from it. And suf-fice it to say that the Elantra not only met and beat those expectations, but it saw off the chal-lenge of a particularly strong crop of excellent cars to win the 2013 Car Of The Year.

Hyundai has brought to the Indian market some very well-designed cars in the past cou-ple of years with their new styling ethos, fluidic design. The Elantra stands head and shoulders above its siblings with its swoopy, curvaceous form finding a wonderful resonance with the size and proportions of the executive segment automobile. The result is a striking sedan that is at once fresh, sharp and elegant.

Under the skin are petrol and diesel options, a full set of transmission options all of which per-formed beyond expectations in performance, economy as well as real world street testing. The breadth of powertrain options allows customers to come as close as possible to the car they want.

This abundance of choice carries on to inside the cabin as well with the car offering a set of fea-tures across trim variants that rivals cars from several segments above it. The cabin itself uses high-quality materials and execution to create a warm, spacious and well-made space for the occupants and will appeal to drivers who like it sporty as well as owners looking for style and class.

The final step of the ascent to victory is Hyundai’s usually excellent pricing and war-ranty along with effective country-wide service coverage. Within its segment, the Elantra offers an unusually strong value-for-money proposi-tion. It’s a winning package that clawed its way to the top without breaking a sweat. The CNBC-TV18 OVERDRIVE Car of the Year, ladies and gentlemen, is the Hyundai Elantra.

BIKE/MID DISPLACEMENT BIKE OF THE YEAR

WINNERKTM 200 Duke

If you have read OVERDRIVE over the past year, you know that the KTM 200 Duke has more or less creamed the competi-tion in every single comparison, whether it be on the street or the track. The KTM is perhaps the first motorcycle we have test-ed that suggests that street motorcycles need not be versatile jacks of all trades. That there is a role specialisation makes a big difference. This manifest in its gearing which makes highway runs a bit harder than we expected. But the trade off was eye-widening street performance and an incredible turn of pace at the racetrack and on mountain roads where we found the 200 Duke to be nigh uncatcheable.

What makes the package more persuasive still is the fact that unlike almost every other motorcycle in the country, the 200 Duke is a hard-edged motorcycle that rewards skilled riders while encouraging newer riders to work on their skills.

Underlying all of this is an astonishingly well-fleshed out package. The aggregates, for example, are all top notch by inter-national standards and unprecedented by Indian standards. From the Indian-made upside-down forks and the radially mounted callipers to the super sticky tubeless radial tyres and the aluminium swingarm, the Duke doesn’t cut a single cor-ner on the equipment. The engine similarly, not only makes 25PS, it is also a fuel-injected liquid-cooled, four-valve DOHC engine that feels effortless at low revs and beautifully urgent at the redline.

What makes it a winner is how all of these character and mate-rial positives blend together into a compelling motorcycle that comes to market at a price point guaranteed to give headaches to its peers. It’s this incredible combination of performance and value that makes the 200 Duke our Bike Of The Year. The Duke is also our Mid-Displacement Bike Of The Year and you, dear read-er, resoundingly selected it as our Viewer’s Choice Bike Of The Year as well.

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R E P O R T 771 - 31 JANUARY 2013

With gasoline pric-es soaring twice as much as die-sel rates, the

market for diesel-powered cars in India is witnessing a growth curve. It must be noted that the Government has slashed mas-sive subsidies on gasoline prices since 2010. Diesel subsidies were, however, retained, as it is a fuel which is also used by farmers and economically weaker seg-ments of the society. As a result of the evident cost benefits, die-sel-powered utility vehicles and other diesel cars are fast becom-ing the preferred choice of India’s burgeoning middle class segment.

By contrast, sales of gasoline-powered cars have dropped by 30–40 percent in the past year. This has driven passenger vehi-cle (PV) manufacturers to cut gasoline car production and make way for diesel car output. Interestingly, diesel prices rose by a whopping INR 5-6/liter in September 2012. The erst-while “cheap” fuel is, thus, now, at par with “expensive” pet-rol rates recorded in April 2010. Direct effect: recovery in gaso-

line car sales, but limited to the mini segment. The prominent models, herein, include Maruti Suzuki Wagon-R, Alto 800, Omni, Hyundai i10, Santro, Eon, and Tata Nano.

Market Trends and Fuel Preference

Even though diesel prices increased in September 2012, the current trend is still inclined toward diesel.

In the past 5 years, gasoline has dominated the Indian fuel market with 75-80 percent mar-ket share in the PV segment. Today, however, the gap between petrol and diesel vehicles is nar-rowing; wherein diesel PVs garner about 50 percent market share. Although diesel PV market price is much higher than their gasoline counterparts, they are gaining popularity due to com-paratively economical diesel prices. Even though a minor shift in the diesel-petrol ratio has been projected, the overall impact of this will be nominal. There may be marginal shift for petrol cars only in the Mini and Compact category, but not for the UV category.

Considering the recent hikes in petrol prices, most man-ufacturers are introducing diesel variants in the Compact, Super-Compact, and Mid-size segments. Chevrolet Beat, Toyota Etios and Etios Liva, Nissan Micra, and Renault Pulse are the most recent market launch-es with diesel variants. This will further boost the demand for Compact segment PVs.

New launches in the die-sel segment, especially in the UV/Sport Utility Vehicle (SUV) segments, also tipped the bal-ance in favor of diesel cars. Recent launches in these seg-ments include Renault Duster, Mahindra Quanto, XUV 500 and Rexton, and Maruti Suzuki Ertiga. Also, Ford, Chevrolet, and Nissan are now exploring oppor-tunities in this segment.

Source: Vehicle Manufacturers, Frost & Sullivan Analysis

Table 1: Sales split of gasoline and diesel vehicles for select models

Model Sales in November % Gasoline % Diesel Month (Units)

Ford Figo 4,785 3% 97%

Ford Fiesta Classic 881 9% 91%

Ford Fiesta New 124 15% 85%

HM-Ambassador 260 30% 70%

Nissan Micra 849 17% 83%

Nissan Sunny 1,663 19% 81%

Renault Duster 5,251 2% 98%

Renault Pulse 436 4% 96%

Renault Scala 807 1% 99%

Renault Fluence 82 12% 88%

Skoda Fabia 133 26% 74%

Skoda Rapid 1,099 23% 77%

Skoda Laura 209 11% 89%

Skoda Superb 120 59% 41%

Toyota Liva 2,181 17% 83%

Toyota Etios 2,050 21% 79%

Toyota Corolla 362 39% 61%

600.0

19.7

April

Total Passenger Cars Utility Vehicles Vans

Source: SIAM, Frost & Sullivan Analysis

Chart 1.1: Trends in domestic demand for PVs, UVs, and Vans(From April to November 2012 - Units in ‘000)

May June July August September October november

39.0 40.617.3

15.2 16.6

21.2

23.021.0

53.3

172.5

246.7 227.1

158.3

48.7

20.1

48.2

157.5

228.8

45.1

118.1

184.4

38.1 44.9

155.8 143.5

209.0 205.0

168.4 163.2

227.0 221.1

500.0

400.0

300.0

200.0

100.0

0.0

Contd. on Pg 79

Market Trends and Outlook for Fuel Technologies in India

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R E P O R T 791 - 31 JANUARY 2013

Market Trends.....

Apart from diesel prices, the taxation and duty structure applicable to gasoline PVs remains the same for diesel PVs.

Emission and Fuel quality-related issues

There are several issues per-taining to diesel PVs that are yet to be addressed. Most importantly, diesel cars emit more pollutants than gasoline cars. Currently, Bharat Stage IV norms are in force in 20 cities. It must be noted that nitrogen (NOX) emission values of diesel remains almost two times higher than that of gas-oline. As per a study by the Center for Science and Environment (CSE), diesel-powered cars emit 7.5 times more toxic particulate matter as compared to gasoline cars. Reason being, the quality of diesel used in the country is still very high in sulphur content. If the Government decides to remove subsidies on diesel even partially, it will help oil compa-nies invest in new technology that would aid in lowering sul-phur content.

As Bharat Stage V norms are expected to kick-in shortly, automakers will need to install a high-quality diesel particulate filter (DPF) in their engines. This is essentially a device designed to remove diesel particulate matter from the exhaust of a diesel engine in order to make the car more environmentfriendly. However, the additional cost of DPF will make diesel cars dearer by INR 30,000-40,000.

Alternative FuelPV manufacturers are placing greater faith

in dual-fuel technologies than in battery-pow-ered alternatives because the necessary support infrastructure, such as recharge stations, is not yet in place for widespread adoption of the latter.

Although PVs running on Compressed Natural Gas (CNG) are gaining popularity due to lower cost of operation; much more needs to be done to improve the fuelling infrastructure before CNG vehicles become more mainstream.

It is estimated that at least 5 percent of new car buyers are now opting for a CNG variant where available. According to Frost & Sullivan analysis, this could rise by 8–10 percent in future as the demand increases for vehicles with lower running costs. Although currently most Liquefied Petroleum Gas (LPG)/CNG vari-ants of passenger cars cost about INR 15,000 to 50,000 more than their conventional counter-parts (gasoline).

Strategic OutlookPersistent rise in fuel prices has steadily been

keeping the overall inflation rate high. Inflation may continue to remain high for next few months, especially in case there is further rise in petrol prices. The cumulative passenger car demand has consequently slowed down, post-ing a weak 1.2 percent growth during the period of April-November 2012, compared to the cor-responding period last year. On the other hand, UV demand has increased, posting a healthy 61.9 percent growth during the same period as compared to the prior year.

Ambiguity over diesel pricing and the possi-bility of additional duty on diesel cars has forced several carmakers, including market leader Maruti Suzuki to go slow on or even abandon their expansion plans in the fastest-growing segment of India’s automobile industry. While manufacturers are reacting to the existing envi-ronment by trying to increase diesel vehicles’ supply, no one really knows which way the mar-ket is headed in the long run.

Demand for diesel variants has shot up; but this can change if macro variable factors related to diesel vehicles, such as fuel pric-ing and production costs are altered, as per Frost & Sullivan analysis. It is understood that in Europe the mix between diesel and gaso-line is 50:50 and India, too, is likely to go the same way.

At present, there is no diesel option available in Mini segment cars. According to Frost and Sullivan, if this persists, gasoline PV demand will remain at par with diesel vehicles in future. Also, vehicle manufacturers pro-viding alternative fuel options (CNG/LPG), which are compat-ible with gasoline engines, may result in increased demand for dual-fuel PVs.

Key challenges in fuel technologies and adoption of alternative fuel technologies1. Fuel Price Volatility:

a. Volatility in fuel prices affects growth of the PV market. Rising fuel prices, especially petrol prices, are impacting demand for petrol vehicles. Oil prices have an impact on inflation, affecting savings and disposable income of consumers, thereby affect-ing demand for passenger vehicles. Thus, volatility in oil prices affects prospects of the industry.

2. Customer power:a. Fuel economy is the pri-

mary driver in the Indian market

3. Government/Regulatory Support:a. There is no national policy

for electric vehicles/CNG vehicles and Biofuel/etha-nol pricing.

b. There is lack of coordi-nation among various Government agencies, such as Ministries of petroleum, forests and environment,

agriculture, etc.4 Fuelling/Charging

Infrastructure:a. Low number of CNG filling

stations (about 900-1,000) vs. about 40,000-45,000 c on v e nt i on a l f u e l (gasoline/diesel)

b. Inadequate number of charging stations for elec-tric vehicles and that too limited to select cities

ConclusionCurrently, demand for die-

sel PVs is high and will remain so if gasoline prices continue to increase, benefiting the die-sel car market. However, if the Government imposes addi-tional duty on diesel cars and further increases diesel prices, demand for diesel PVs may take a beating. Moreover, vehicle man-ufacturers providing alternative fuel options (CNG/LPG) that are compatible with gasoline engines may lead to increasing demand for dual-fuel passenger vehicles in future.

Source: Frost & Sullivan Analysis

Chart 1.2: Trends in domestic demand for PVs by type of fuel(From April to November 2012 )

April May June July August September October November

100%

47%

53% 53% 51% 49% 49% 52% 51% 51%

49%49%48%51%51%49%49%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Gasoline Diesel

Contd. from Pg 77

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Leather Matters

“R&D In India Means Affordability”

Automotive leathers are now being processed in India, and with wide acceptance by OEMs around the country, the industry is on the upswing.

Nothing spells com-fort and luxury better than leather seats in a car. Most top-end

mass market models have them as a standard fitment, and there is a aftermarket segment avail-able too at OEM dealerships. And there’s just one manufac-turer for them at the fore – Tata International.

Two years ago, manufac-turers would import finished leather from abroad and have them stitched here to the fitting of the seat. An ambitious com-pany called Saddle, Inc. (aptly named), a major seat cover sup-

plier to OEMs, would be supplied processed leather which the com-pany would fit onto seat covers and deliver to OEMs. Around that time, Tata International, a major player in the supply of leather for shoes and garments, got into the business of producing automo-tive leather. The company forged an alliance with Saddle, Inc. to supply OEMs with leather that could now be processed in India.

Processing leather from raw hides for automotive applica-tions at the OEM level is done by a handful of companies around the world. When Tata International took the plunge into the automo-tive industry in 2010, it added a number of OEMs to its client list. The company owns one of the world’s largest tanneries in a small town near Indore called Dewas. Here, it began processing leather for automotive applications.

Having a tannery for automo-tive leather within India provides advantages in terms of both cost and logistics. The price advan-tage of leather processed in India vis-à-vis one procured abroad is obvious. Further, it is easier for OEMs to be involved in choices, alterations, and the development

process. Imported leather leads to inventories going up, and you are at the mercy of an interna-tional delivery schedule which will definitely take longer than leather processed in India.

There has been a shift in buy-ing trends in the recent past. From a predominantly hatchback market, where luxury features like leather seat covers are not that popular, the market has seen a rise in the sedan segment, and the success of SUVs and MUVs in the past year.

Accord i ng to Tat a International, around 3.5 per-cent of vehicles produced in India have leather seats. This financial year, the company expects this number go up to 4-4.5 percent. That’s a little over 1.1 lakh vehi-cles produced this year. If you take a ballpark figure of Rs 30,000 for a set of leather seat covers per car, the automotive leather industry is worth Rs 330 crore. These are conservative estimates that don’t take into account pre-mium leathers, the aftermarket segment, and also the size of the vehicle. “In USA and Europe, this percentage is in double digits so we expect plenty of growth in

the coming years”, says Suman Nayak, Head of Marketing and Sales at Tata International.

Nayak adds that there are about 7-8 companies in the world that have the technology and the capability to cater to the demands of OEMs, and Tata International is one of them. Automotive leathers come in the category of perfor-mance leathers. This means that the product has to comply with a set of specifications that are higher than leathers used for other purposes. The variables, says Nayak, are very high. “It is not just leather, but an engineer-ing product. The specifications and process controls needed, and the techniques for producing this leather are different from the fashion products we produce.”

Raw hides are imported from Latin American and European countries due to their size and quality (size is important because the pieces need to be large for seat covers). The company is also working on locally available hides to bring costs down and the results, says Nayak, are positive.

Tata International has observed that OEMs don’t mind using imported leather despite the cost involved, but are keen to localize leather upholstery owing to the shorter supply chain and faster supply.

On the supply front, Saddle, Inc. has four workshops catering to the major automotive clus-ters in India – two in Bangalore for manufacturers in the South and for the aftermarket, one in Pune that supplies mainly to Tata Motors, Mahindra, and Fiat, and a fourth unit up north in Gurgaon.

The trend of leather seat cov-ers as an aftermarket product has fallen considerably with most

OEMs now offering it as standard fitment. As an aftermarket prod-uct, when leather seat covers are offered through the accessories division of a dealership, taxes and multiple entities in the sup-ply chain catapult the price of the product to almost double that of an OE fitment.

The costing of OEMs is quite stringent, so profits aren’t as high compared to an aftermarket product, but continuity and large orders more than make up for the smaller profit per unit.

Even if the market reaches a conservative target of 10 percent of vehicles in the next few years using leather seat covers as OE fitment, the automotive leather indus-try more than doubles in size. In the beginning of the last decade, luxury features in cars included air-conditioning and a music sys-tem. These are now available as standard fitment across almost the whole range of passenger cars. Among premium manufacturers, leather seats are a must-have, but some of the upper mass market vehicle segments too are likely to start offering leather seat covers as standard fitment in the near future. There are no points for guessing who will benefit then.

You are a fairly new entrant in the Indian automobile indus-try. How are you planning to progress?

When you set up a new compa-ny in a new country you first look at the industrial competence. First area is to manufacture the products, which, in terms of tech-nology is provided by Magneti Marelli. So design responsibility in most of the cases is by Magneti Marelli. In India, we have a JV with the Motherson group that was signed in 2008. They have two plants, one in Pune in Chakan for lighting products and another for intake manifolds. In the area of electronic systems we have a plant in Manesar, which is a joint venture with Unitec

Machines. It’s also known as Alpha Toyo. The first joint ven-ture that we established in India was with Suzuki Motor Corp (Japan) and with Maruti Suzuki in powertrain to make ECU. It started in 2007 and production started in 2008. It’s in the Maruti Suzuki supplier park. We came in India in 2007 and have seven JVs today, with eight manufacturing plants.

Do you plan to invest in R&D in India?

We are setting up R&D in each of these JVs. In some cases we have good engineers. I think his-torically India has not been very strong in automobile design but off late it has been improving.

India is now a manufacturing hub, especially for small cars. We are already the second larg-est production hub for small cars. Our first focus has been manufacturing, once we have stabilized that, the second focus is design and development, so

we have both manufacturing and technical alliance in India.

How do you plan to benefit from R&D in India?

By having R&D base in India we are reducing R&D from out-side India. That translates into

good technology at affordable cost, which can further be done by local manufacturing and local engineering base. Next phase is we have the frugal engineering, and most global OEMs are tak-ing advantage of that. Chrysler has a large engineering base out of Chennai. GM has significant engineering base in Bangalore.

How do you find the talent pool in India for R&D purpose?

I think the competence is available in India, it is growing and we are supporting our R&D centers from Europe to grow our people in terms of knowledge. So there are training programs going. There’s a lot of movement from India to global training centers, they work on projects jointly with their European col-leagues, at times with Brazilian colleagues for shock absorbers and with Germans for lighting. They gain knowledge from there and bring it back to India.

Anand Mohan

The specifications and process controls

needed, and the techniques for

producing this leather are different from the

fashion products Tata International

produces.

The trend of leather seat covers as an aftermarket product has fallen considerably with most OEMs now

offering it as standard fitment.

…says Saju Mookken, Country Manager India, Magneti Marelli, as the company pads up to drive the Indian innings in top gear. Magneti Marelli wants to capitalize on its Indian talent pool to the maximum by getting them to the drawing boards, so he tells Jagdev Kalsi.

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The Better OptionThe technology of producing bioethanol, biodiesel, bio oil etc is being actively pursued in several parts of the country. However the economic viability of production has to be established, says Professor L M Das

It is well known that fossil fuel reserves are being exhaust-ed at an alarming rate. Oil prices continue to rise and

awareness is growing about ‘peak oil’. At this point of time, every citizen has become increasingly conscious of the environmental impacts of using fossil fuels in the transport sector. Internal combustion engines form the backbone of our automobiles/vehicles. Vehicular pollution is the primary offender for causing air pollution in the urban areas. These pollutants release into the atmosphere which sometimes interact amongst themselves and other pollutants thereby dis-rupting the ecological balance. Renewable alternatives to tra-ditional transport fuels must be expeditiously identified which should also examine the possible

biophysical, social and econom-ic impacts of their production and utilization. It will perhaps be relevant to mention here that Electric vehicles, hybrid vehicles and fuel cells have not been con-sidered in this paper because the paper concentrates on substi-tutes to petroleum-based fuels.

As far as automobiles are con-cerned, they are broadly of two types: Spark ignition and com-pression ignition. It should be borne in mind that a good fuel for diesel engine is characteristi-cally a bad fuel for diesel engine and vice versa unless any major modifications are incorporated in the engine. As is well known that a host of alternative fuels such as Ethyl alcohol, Methyl alcohol, Compressed natural gas, Hydrogen, Liquefied Petroleum Gas (LPG), Biodiesel, Dimethyl

ether(DME), Biomass to liquid (BTL), Gas-to-liquid (GTL), coal-to-liquid (CTL)and a lot of others are being seriously looked into as alternative fuels in different parts of the world. However, the present discussion is restricted to some feasible options which are, in my opinion, very important for India.

In view of the higher octane number, alcohols have been very attractive for their higher octane number. Methanol had been suc-cessfully used in automobiles sometimes in 1930s. Methanol’s other intrinsic advantage as an gasoline additive came out very glaringly when lead was being phased out.

Many are now aware of the water-polluting chemical MTBE (methyl tertiary-butyl ether) and its rapidly growing threat to the

quality of drinking water. However, it was sub-sequently observed MTBE dissolves easily in water. When a spill or leak occurs, MTBE sepa-rates itself from the other fuel components and moves away from the spill site with water flow. It has also been observed that it is difficult and expensive to clean up, and MTBE was detected in drinking water supplies so quickly.

The Bigger PotentialIn Indian context ethanol has received great-

er attention than methanol. Ethanol has got a wider production potential. It is blended with gasoline to improve octane number of gasoline. At present, it is being blended with gasoline in several countries and gasohol (a blend of gaso-line with ethanol) has been the major transport fuel in Brazil. Bioethanol and cellulosic ethanol have acquired status of “second generation” bio-fuel. Since ethanol molecules contain oxygen, therefore it ensures conditions close to complete combustion thereby reducing substantially the pollutants such as carbon monoxide and oxides of nitrogen. Even though ethanol is found to be useful for spark ignition engines, it needs an appropriate additive to form a stable mixture with desired cetane number necessary for use in diesel engines.

It has been observed by some researchers that the fuel economy is emerging towards gas-eous fuels. Natural gas consists of methane as its major combustible component with vary-ing proportions of ethane, butane and propane depending upon the geographical locations. Natural gas has been successfully introduced in many parts of the world. Natural gas has got a higher octane number and a higher flammabili-ty limit which can facilitate better fuel economy, higher power output and lesser level of emission. It is well-known that compressed natural gas (CNG) has been very widely used in transport sector in India and has substantially reduced the vehicular emissions.

Liquefied Petroleum gas (LPG), which is

Natural gas has got a higher octane number and a

higher flammability limit which can facilitate better fuel economy, higher power output and lesser level of emission.

It is well-known that compressed natural gas (CNG) has been very widely used in transport

sector in India and has substantially reduced the

vehicular emissions.

Contd. on Pg 84

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essentially a mixture of pro-pane and butane, has also been successfully used in internal combustion engines. However LPG is being used in the coun-try as a cooking gas. Apart from technical feasibility, the social constraints need to be carefully reviewed for using any alterna-tive fuel for automobiles.

Series of steps adopted in the country within the past few years have been very successful in cleaning the air.

Hydrogen is an ideal fuel, and can be produced from a host of non-fossil sources. The engine can run at a higher compression ratio, at a much higher thermal efficiency than a correspond-ing gasoline engine. The engine can run un-throttled and there-by reducing pumping losses. Upon combustion in engines it does not produce any harmful pollutants such as oxides of car-bon, oxides of sulphur, unhurt hydrocarbons, smoke, lead or any other toxic metals. Sulphuric acid deposition, benzene and other carcinogenic compounds,

ozone and other oxidants are all absent in hydrogen combustion in engines/automobiles. Oxides of nitrogen (NOx) are the only pollutant of concern. Research in IIT Delhi has demonstrated that NOx level can be drasti-cally reduced by adopting an appropriate fuel injection sys-tem and operating the engine/vehicle in lean mode with lower of equivalence ratio. This tech-nological approach has been very successfully adopted in the hydrogen-operated three-wheel-ers developed in a collaborative UNIDO-funded project to IIT Delhi, Mahindra and Mahindra Air products. However efforts are being made for economic pro-duction of hydrogen for transport application.

In my opinion, diesel engines, the other family of vehicles which are used in transport sector now can be adopted for biofuels developed from locally available resources in the coun-try. Obviously the feedstocks should be locally available in adequate quantities and need

not be produced from edible sources. The technology of pro-ducing bioethanol, biodiesel, bio oil etc is being actively pursued in several parts of the coun-try. Any form of biofuel that can be produced from availa-ble resources and can exhibit physio-chemical characteristics close to those of diesel, can be used in diesel engines. Such an approach could contribute sig-nificantly towards evolving a solution to the energy-environ-ment crises sugarcane ethanol in Brazil and starch-based etha-nol in USA have been identified as prospective substitutes. Corn ethanol, wheat-straw derived ethanol, sugarcane molasses

ethanol have been tried out in different parts of the world. Next generation fuels include biodiesl produced from algae, cellulos-ic ethanol and fuels produced from gasification of biomass. Many researchers are of opin-ion that synthetic fuel, which is a liquid fuel obtained from natural gas, coal, oil shale and several biomass sources thru Fischer-Tropsch (FT) process can have a much wider applica-tion. FT diesel is manufactured by the liquefaction of synthesis gas (mixture of CO and hydro-gen) produced from gasification of biomass. Presently FT die-sel is receiving a lot of attention in many countries. It has been successfully used in vehicles without any major modification in the engine hardware or in the fuelling infrastructure.

Biomass to liquid (BTL), CTL, and GTL are being considered as alternatives by many research-ers. BTL is a process in which different kinds of biomass (such as wood and agricultural residue) can be converted to liquid. Coal to liquid technology creates syn-thetic fuels by liquefying coal. GTL is an alternative to diesel. It is free of sulphur and aromatics and thus environment-friendly. It

can be blended with petro-diesel, and does not need any change in the existing diesel distribution system.

Even though it might appear quixotic to collect informa-tion from several sources and describes the state of art with-out any definite conclusion. In an assessment and identifica-tion of the alternative fuels for automobiles, the merits and disadvantages often overlap. Keeping in view an ultimate free-dom from fossil fuel crisis and environment degradation, I feel hydrogen is the ultimate peren-nial fuel for the existing designs of spark-ignited vehicles with-out a substantial modification in existing system hardware. However the economic viability of production has to be estab-lished. Till that time we can move ahead with CNG and a rationale blend of hydrogen-CNG mixture. As far as the diesel engines are concerned, probably biofuels are the answers.

Dr. L.M. Das has wide research and teaching experience in alter-native fuels and low emission engines. He is currently a professor at the Centre for Energy Studies, New Delhi.

The Better Option Contd. from Pg 82

Many researchers are of opinion that

synthetic fuel, which is a liquid fuel obtained

from natural gas, coal, oil shale and several

biomass sources thru Fischer-Tropsch

(FT) process can have a much wider

application.

American electric car company Tesla says it wants to “take away every hur-dle” to electric car ownership - and is setting up a chain of free fast-charge

stations so that owners will be able to drive exactly as they could in a car with an internal combustion engine.

Tesla established eight of these so-called superchargers at the end of last year, mainly in California. They are said to be capable of giving the mid-sized Model S saloon a 150-mile range in 30 minutes.

The plan is to cover the entire east and west coasts of America initially, and then the whole of the USA. And the supercharger idea will be rolled out in other countries where Tesla sells.

“It is our aim that you will be able to take a trip just as you would in an internal combustion-engined car,” said head of sales and ownership George Blankenship. “In the time it takes for you to stop and have lunch you can put another 150 miles of range into the car.

“Ultimately it’s our goal to do this with solar energy. We have said that we will make electric-ity free forever on sunlight.”

Tesla expects to sell 20,000 cars globally in 2013 and to increase its total of worldwide stores from 33 to 58. Half of the additions will be out-side America, including its first store in China.

At Detroit the company showed a design concept based on the platform of the Model S. It is a stylish fusion of crossover and MPV called the Model X, with an additional electric motor between the front wheels to give it all-wheel-drive capability.

Its most unusual feature is the “falcon wing” rear side doors, which raise vertically before swinging out so they can be opened in confined spaces.

Tesla’s next production car will be a small model costing around $30,000 (£20,000) in the US. It is expected to be on sale in three to four years.

Tesla Removing Barriers To EV Ownership

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Start The Engines

Can you provide a perspec-tive on current and upcoming research initiatives and pro-jects that ARAI is working on?

We undertake work in three broad categories from funding perspective. These areas include projects undertaken by us, large-

ly self-financed or funded, with the aim of building up our com-petency. Here, we are currently working on five to six major pro-jects in the areas of electronics, powertrain development, and comfort/fatigue.

We also have projects of

national importance where we feel we are in a position to make a major contribution. For instance, ARAI has built up a database of Indian road condi-tions and this can be simulated in a laboratory environment. The data captures around 120 odd parameters that pertain to actual operating conditions on the road. The auto industry in India has been using the data for the last couple of years and we have been adding additional parameters and variations on the data to enhance its utility. We also undertake sponsored assignments and projects for specific manufacturers or group of manufacturers.

Any interesting project that ARAI is involved in?

We are collating data on the stress and load conditions that a

wheel of a vehicle could be sub-jected to when vehicles operate on the roads here. In our view, such data and analysis work is extremely useful for the auto-motive industry as it reduces the need for experimentation on prototyping that can be time consuming and expensive pro-cess. The quality of analysis and developmental efforts can be greatly enhanced if road network in the country can be profiled and their conditions simulated in a more precise manner. The data on the actual road condition can also help in development of systems that can enhance safety and crash worthiness of a vehi-cle in a cost effective manner as actual road conditions can be closely simulated to predict vehicle behaviour.

What research projects

are being undertaken by ARAI that have industry backing and sponsorship?

We have worked on various projects that have added value for various automobile manu-facturers. We were involved in testing the structural frames of Tata Motors’ world truck (the Prima range). Due to confiden-tiality agreement with on-going projects, we cannot share details on such current projects. We have build up capabilities and expertise in data collation and analysis, early stage design related work, hybrid-electric powertrain, and light weighting of vehicles.

We also provide instrumen-tation and testing to various automobile manufacturers for design and testing of vehicles. Electric mobility is another promising area from our per-

spective and we are working on a few projects in this area. Additionally, we have undertaken projects that have been sponsored as well as those that are critical from national interest perspective in the area of light-weighting.

Around 60 percent of the projects undertak-en by ARAI, undertaken from our own resources or sponsored by customers have found practi-cal application in a vehicle or mobility related areas. We are hoping to maintain this momen-tum going forward.

What are the key concern areas for the automotive sector going forward?

A major challenge for the automotive sec-tor is availability of Bharat Stage IV compliant fuel across the country. This challenge could also throw interesting learning opportunities for us. Vehicle safety is another area where we are anticipating major challenges to arise for vehicle manufacturers and component manufacturers alike. Crash avoidance, an area connected to the vehicle safety, is like-ly to emerge as a major challenge for vehicle manufacturers and we are looking to build up capabilities in the domain.

We are anticipating major work to arise in the area of Noise Vibration Harshness (NVH) control and reduction as vehicle manufactur-ers are looking to offer safer and comfortable vehicles at affordable cost. Even as NVH level needs to be controlled in the internal combus-tion engine vehicles, an electric powertrain needs to emanate noise in order to make its presence felt for other vehicles and pedestrians alike. Most vehicle manufacturers are looking to ensure that the vehicle manufactured by them are not only safer but also economical to use and environment friendly and meeting these objectives is a major challenge.

At one hand even as vehicles are increasingly connected and getting ‘intelligent’, extensive deployment of IT systems will also unclog the roads and highways and ensure smoother flow of traffic and we are looking to play a role in this area as well. The Indian auto industry has to take major initiatives in the electric mobility space through the private and the mass trans-portation route.

The Automotive Research Association of India (ARAI), Pune, has undertaken newer projects in electric mobility, vehicle safety, and NVH related areas. It wants to enhance its role in these evolving areas to develop its capabilities and work jointly with partners on newer projects. Shrikant Marathe, Director, Automotive Research Association of India, explains to Abhishek Parekh the areas where ARAI is expected to play a prominent role.

A major challenge is availability of Bharat

Stage IV compliant fuel. This challenge could also throw interesting learning opportunities for us. Vehicle safety is another area where we are anticipating major challenges to arise.

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F E A T U R E 891 - 31 JANUARY 2013

Japa nese t wo-w heel-er manufacturer, Honda Motorcycle & Scooter India (HMSI) is intensifying its

Indian R&D operations to gain cost competence in the Indian two-wheeler market and devel-oping indigenous products to suit Indian commuters. For this, the company has shifted its Honda Research & Development India Pvt Ltd (HRDI) technical cent-er to the Manesar facility from Gurgaon to work in tandem with HMSI engineers. While the total brain strength of the new tech-nical center is 200 engineers, Yadvinder S. Guleria, VP (Sales & Marketing), HMSI, said that half of the engineers in the tech center are from HMSI. With this Honda will be looking forward to sync synergies of both HMSI and HRDI engineers to develop home grown products for the market.

Atsushi Amataka, President, HRID, said, “India is very impor-tant for HMSI and the reason we have come up with a new tech-nical center. It will allow HMSI to develop new products spe-cifically made for the Indian market.” At the new technical center, the company will carry out designing, engineering, BOP/purchasing and quality checking to manufacture better products at lower cost. HMSI will also execute supplier quality assur-ance from now onwards from its technical center in Manesar. Amataka elaborated, “The tech-nical center will also carry out

supplier quality assurance and we will be working with sup-pliers to improve their product quality.” This way HMSI will plan to better its product reliabil-ity and quality by improving the quality of its vendor products as well. Apart from quality and cost competence, the company is also looking forward to develop new home-grown products quickly to gain higher share in the Indian market.

“HMSI is planning to launch new two-wheeler products every quarter in India,” said Guleria. He added that 3-4 products are already in the development stage and are being developed at the Indian technical center that are due for launch by 2014. However, he ruled out the fact that there will a completely new two-wheeler launched every quarter, and instead confirmed at least a new model or a variant of the existing two-wheelers will be on offer. In 2012-13 Honda is esti-mating selling over 26 lakh two wheelers with 14.1 lakh scoot-ers and 11.9 lakh motorcycles. The company is also estimat-ing an increase in the market share by 4 percent from the cur-rent 13 percent. In order to reach the said target, the company announced its new Karnataka plant to be operational in the first half of 2013 with 1.2 million units capacity. With this plant operational, HMSI will have a yearly capacity of 4 million units (at full production) when the plant gets operational. Keita Muramatsu, President and CEO, HMSI, said, “As India becomes

the global innovation hub for Honda, customers can look for-ward to new products by Honda every quarter and also faster delivery of some of our higher demand models with the start of operations of third facility at Karnataka soon.”

Further, to strengthen the development capabilities, the company has equipped its new technical center with wind tun-nel for aerodynamics testing and chassis and engine dyna-mos for the respective product’s testing. The new tech center’s engine dynamo is currently test-ing the capabilities of Dream Yuga’s 109cc engine. The new tech center is spread in 10,000 sq mt area with a test track as well to perform real world tests. While the company is currently tight-lipped on the investments that have gone in for the development of the test center, it is upbeat to announce that the tech center will allow the company to intro-duce new two wheeler products every quarter in India.

HMSI will however be develop-ing products for the local market only and is not planning to con-centrate beyond. HMSI R&D has also developed Honda Eco Technology by virtue of which the company’s 110 cc engine that does duty on Dia, Activa and Aviator scooters will be able to deliver 60 kmpl fuel efficiency, an increase of 11 percent. HMSI has also upgraded its transmission by optimizing pulley converter ratio and driving force by which it managed to churn better fuel efficiency despite maintaining

the power output. The R&D team has managed to reduce friction by offset crank in the engine and reduced weight of the reciprocat-ing parts. It has also lowered the tension piston ring and improved bearing oil seal to achieve higher fuel efficiency. Another factor that contributed to the higher efficien-cy is improved combustion using nickel spark plug and optimizing the engine’s inlet port. “We have achieved 60 kmpl now and we are further looking to improve the efficiency”, said Guleria point-ing at other measures to improve efficiency like weight-reduction using light-weight materials in

manufacturing. Atsushi Amataka further confirmed that the com-pany will provide the HET engine technology in its motorcycles as well soon.

The company has also launched the three aforemen-tioned scooters with the upgraded 109cc HET engine and these will be the first products featur-ing the Indian technical center developed engine. With 3-4 more products under development in the HMSI R&D, the company is planning to get aggressive in the market with back to back launch-es of home-grown good quality cost competitive products.

Powering AheadHMSI has grand plans for its India chapter. Jagdev Kalsi

The new engine.

HMSI will develop products for the local market.

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A Gradual Process

How has the tractor seg-ment performed last fiscal and what is your outlook going forward?

The tractor segment grew by around 25 to 30 percent in the last to last fiscal and the financial year before that. The total indus-try volumes have almost doubled from around 300,000 units three to four years back to around 525,000 units currently sold per annum. It is unlikely that such a pace of growth is sustainable for the industry. Moreover, as a mar-ket leader in the farm equipment business we are increasingly looking to offer end-to-end crop-based mechanisation solution we feel is the way forward.

We are seeing a faster growth in tractors below 30 HP and above 45 HP as average land holding

continues to be small and trac-tors get increasingly deployed in non-agricultural applica-tions including infrastructure development.

How is the industry dealing with the diktat about complying with emission norms?

The industry has been brac-ing for progressively higher emission standards. The lesser the horse power of a tractor, the lesser it costs to make it compli-ant with emission norms goes down. It is more expensive and technologically challenging to make large or high HP (40 HP and above) tractors that are compli-ant with emission norms. We are constantly evaluating effi-cient and cost effective methods to meet and comply with emis-

sion standards. Going forward we will need to take into account the industry evolution, market demand, and other cost related consideration on this matter. The effort at emission compli-ance also leads to increase in cost and in turn, could lead to lower demand for that particu-lar capacity tractor.

We expected the increase in price of 50 HP and above trac-tor due to emission related costs would to lead to a fall in sales. That did not happen in a big way and demand in that segment remains upbeat on account of agriculture and non-agriculture applications for such tractors.

What are your plans in terms

of new products development?We are evaluating opportuni-

ties and gaps in the market for introduction of new products or realignment of the existing product line. We need to offer end-to-end solutions to farm-ers. We have selected crops such

as rice, wheat, paddy, maize and are looking to offer all equipment for the entire lifecycle of these selected crops. The solutions for efficient farming are not restrict-ed to tractors but include add on

equipment like harvesters which can be used alongside or in addition to tractors. Harvesters are used for large scale farming and are expen-sive compared to tractors and are seeking out compact harvesters to enable their wider adop-tion. Similarly, we are working on a new range of rice transplanters to help farmers.

The broader concept is to provide all tech-nologies, equipment and a combination of solutions for select crops, to begin with, for effi-cient farming. We are targeting cash crops as of now and will gradually move to seasonal crops in the coming months.

Additionally, there are two platforms that we use to evaluate to help us cater to the evolving requirements of domestic customers. Customer requirements have evolved from pure function-ality oriented product to products that also offer comfort and ease of usage.

What is likely to drive tractor demand?Factors like economic downturn, lack of infra-

structure spending, and erratic electricity for farming and irrigation, etc may hamper farm productivity but it is unlikely to have a long term negative impact. Monsoons and farm productiv-ity will continue to play a major role in driving sales of tractors. The increased use of tractors for non-agriculture applications is also playing a major role in growth. We are focussing on pro-viding end-to-end crop specific farm equipment solutions in order to aid in higher farm mechani-sation. Farmers are likely to go in for higher level of mechanisation if it is economically beneficial. We are looking at a more sober six to seven per-cent growth in tractor sales going forward.

How is the international market penetra-

tion shaping up for M&M?Exports to neighbouring countries have suf-

fered due to economic slowdown and lower level of mechanisation. We are hoping for a steady growth in North America and Latin America. Having said that, the fact is that market develop-ment is a gradual process and we are looking to have a steadily expanding long term presence in these markets. We are planning introduction of new models and expanding our service network in North America and Latin America and may also consider a larger manufacturing presence there over time.

Currently, our volumes do not justify invest-ment in a full-fledged manufacturing facility. We are expecting a growth of around 15 to 20 per-cent in North America albeit from a low base. We are not yet addressing a major part of the market which is in the range of 150 HP to 225 HP range and that is the segment we would be looking to address by developing suitable products. We are also looking to enhance our presence in markets in Africa. We have stated our goal of becoming the third largest player in China and we are on course to achieve that objective.

The uncertainty for tractor demand notwithstanding, the industry appears to be hopeful of better demand in the coming months. Bishwambhar Mishra, Chief Executive - Tractor & Farm Mechanisation, Farm Equipment Sector, Mahindra & Mahindra explains to Abhishek Parekh the current scenario in tractors.

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With A Stronger Will

Tiller manufacturers in India have been under constant threat of imports from China. How does the scenario look now

from your company’s and the association’s perspective?

The imports and availabil-ity of tillers manufactured in

China has continued unabat-ed over the last few years. Our estimate is that there may be more than 35 different models of Chinese manufactured tillers approved and sold in the Indian market. This is leading to fierce competition and is a cause of concern for the industry from the perspective of quality and service. Despite this unabated competition among local and cheaper imports, we (VST Tillers &Tractors) have been able to retain around 45 percent market share in the domestic market.

Do you intend to make any representation to the govern-ment or any other authority in this regard?

Though we are concerned

about the scenario, we are keen to have a level playing field for all agriculture equipment manufac-turers. The concern arises when fly-by-night operators earn a bad reputation for the entire sec-tor. Hence we are worried about indiscriminate entry of new types of players in the market.

The government subsidy is available to all tiller manufac-turers irrespective of brand, manufacturing origin or qual-

ity and this could lead to undesirable consequences for the genuine players in the sector. We have accordingly made our representation as an industry to the ministry of agriculture and are hopeful of a suitable resolu-tion. Our key contention is that best practices in a particular state or territory for subsidy dis-bursal should be identified and implemented. This may lead to a situation of all stake holders

getting timely payments or credit for their con-tribution and the government is able to meet its objective of agricultural growth through farm mechanisation.

In our view, the disbursal mechanism adopt-ed by the Orissa government appears to be well suited to the needs of the different stake holders and could be adopted by other state governments. We have accordingly made our representation to the Central government.

What is the growth outlook for the power

tiller segment?The segment has grown significantly over

the last few years and the sales outlook con-tinues to be bright. Rising rural prosperity and growth is unlikely to dampen the demand for power tillers in the same way that growth of two wheelers has not been adversely affected by preference for four wheelers. Each of these vehicles or equipments has its role to play in the ecosystem. Certain market segments like tractors in the capacity range of 20 to 30 HP tractors are growing faster than the overall tractor segment.

We (VST Tillers & Tractors) have also set up a 30,000 unit capacity in Hosur for manufactur-ing 25 HP tractors and are looking to develop and sell a 22 HP tractor in the coming months. Though the segment of low HP tractor is get-ting increasingly competitive, we are looking to leverage our understanding of the market, topography, channel relationship and other factors that could help us in gaining an edge in the segment. We are also assembling trans-planters in South India and are leading in that segment in this part of the country. We are looking to notch up big sales volume and value added products in this segment.

Do you feel that authorities like UIDAI

(Unique Identification Authority of India) could help in direct disbursal of subsidy to farmers?

We believe that any scheme that could reduce the administrative delays and multi layer mech-anism in disbursal of subsidy can potentially prove to be helpful for the stakeholders in the sector. There has to be a political will to take measures and introduce reforms.

It’s a double whammy for agricultural equipment manufacturers who are not only facing a slowdown in sales of tractors and power tillers but also bearing the brunt of policy inconsistency. BCS Iyengar, Executive Director, VST Tractors & Tillers and the Secretary of the Power Tiller Association of India tells Abhishek Parekh that a consistent policy framework in case of subsidy disbursal mechanism in various states and encouragement towards farm mechanisation can help revive sales.

Rising rural prosperity and growth is unlikely

to dampen the demand for power tillers in the same way that growth

of two wheelers has not been adversely affected by preference for four

wheelers.

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Tractoring OnThe southern region may outpace the overall tractor market growth in coming months.

Tractor sales are expect-ed to grow in the high single digits this fiscal, with the greater con-

tribution coming from markets in Southern states, according to industry sources.

Tractor sales in the East and South, which together account for one-third of total sales, are expect-ed to grow faster over the next five years, according to a CRISIL Research report. In the South, higher investments in irrigation infrastructure and a low base will boost tractor sales. In the East, high crop yields and commercial demand will drive sales.

The unit sales growth in West India is expected to be lower than in East and South India. By con-trast, sales growth in the North will be slower, given the already high penetration levels in the region. CRISIL Research expects

tractor sales to grow at around eight to ten percent Compounded Annual Growth Rate (CAGR) over 2011-12 to 2016-17.

“It is unlikely that tractor sales would maintain a high double-digit growth rate over the coming months as the higher base would take effect, but we are likely to see growth in the low and very high HP segment,” says Bishwambhar Mishra, Chief Executive - Tractor & Farm Mechanisation, Farm Equipment Sector, Mahindra & Mahindra. He points out that replacement-led demand is likely to sustain growth in the coming months.

Tractor penetration in India is 25 per 1000 hectares, as com-pared to highly mechanised countries like Germany which have around 65 tractors per 1,000 hectares, reflecting the relatively low mechanisation and frag-mented land holdings in India. Within India, states such as Punjab and Haryana with rela-

tively consolidated land holdings and better irrigation infrastruc-ture have much higher tractor penetration, demonstrating the criticality of these two param-eters in determining tractor penetration.

Factors that will drive growth, notwithstanding differences in region-wise dynamics, include higher investments in irriga-tion, rising farm incomes, and increasing mechanisation. The government’s efforts to increase investment in irrigation is likely to provide a fillip to tractor sales, according to industry observers. Under the 12th Five Year Plan, investments in irrigation infra-structure are expected to treble. The increasing need for higher mechanisation due to rising farm labour costs, group buying of tractors by marginal farmers, and an increase in commercial use of tractors are other key growth driv-ers. The availability of low-cost finance for tractors, led by the

entry of more NBFCs and private banks will also boost sales.

The tractor segment has been witnessing a contraction in demand since November 2011, after having experienced robust growth over the period FY10 till H1 FY12. Tractor volumes, including exports, declined by 3.4 percent (YoY) in the fourth quarter in FY12, and posted a modest 2.8 percent growth dur-ing first quarter FY13, according to an industry report by rating agency ICRA.

As per the study, the cycli-cal demand slowdown is led by the eroding purchasing power of farmers, with decline in farm-gate prices after the bumper harvest in the rabi season, and a delay in offtake from market intermediar-ies. Meanwhile, demand from the non-agricultural segment (~20 percent of sales) has been impact-ed by a slowdown in construction and infrastructure projects. A high interest rate regime and

price hikes by tractor manufac-turers also deterred farmers from purchasing agri-mechanisation tools. The demand-side eco-nomics in the tractor industry, however, continue to find favour from structural and long-term drivers such as support from the Government of India towards rural development and agri-mechanisation, scarcity of farm labour especially during the sow-ing season, increase in credit flow to agriculture, growth in high and low power segments, moderate penetration, shortening replace-ment cycle, and healthy exports.

ICRA expects tractor sales growth to be slower in this fiscal, with fear of draught effecting consumer sentiments, as well as high base of last year, which saw record volume sales during the festival season. Sales growth is however expected to recover in this fiscal, on the back of high-er MSPs and low base, provided there is recovery in monsoon

Abhishek Parekh

rainfall, which so far has been in deficit. Tractor sales volumes are likely to witness a growth of 0-3 percent for full year FY13, while maintain-ing a volume CAGR of eight to nine percent over the next five years.

Subrata Ray, Senior Vice President & Co-head, Corporate Sector Ratings, ICRA Ltd, says, “In terms of regional performance, demand from Southern states has shrunk rapidly over the course of last two quarters (-34.5 percent in first quarter and -18.3 percent in the fourth quar-ter) led by draught-like conditions in Andhra Pradesh and Karnataka, apart from weak prices of cotton and spices.

Even the western region reported a lacklus-tre performance with volumes declining by 10.9 percent in the first half in the fiscal, stemming from correction in prices of cash crops like sug-arcane and cotton. The northern region, which accounts for over 35 percent of domestic tractor industry volumes, supported industry figures and posted a healthy 14.1 percent YoY growth during the first half in current year, notwith-standing lower sales in Uttar Pradesh because of state assembly elections.”

He added that while states like Punjab and Haryana will continue to generate a healthy replacement demand, ICRA expects the south-ern markets to recover from this blip and outperform the national average over the medi-um term, given low tractor penetration, increase in area under irrigation, and increasing focus by tractor OEMs and financers on this region.

The outlook for exports also looks promising through inclusion of new export destinations, increased product offerings in the higher HP segment, ramping up of capacity as well as investments by OEMs to meet stricter emission norms, as well as greater acceptability of India as a cost-effective and reliable manufacturing location.

In an effort to battle sluggish demand, trac-tor OEMs have expanded and refurbished their product portfolio with more application-based offerings, and offerings for niche market seg-ments. Industry players witnessed a decline in profitability metrics during FY12, struggling from a partial or delayed pass on of increased cost of production, besides a denominator effect. Although players like Escorts and M&M have been able to protect their PBIT margins in the first quarter FY13, weak demand outlook, as well as increase in manufacturing capacity, por-tend margin pressures over the near term.

The cyclical demand slowdown is led by the eroding

purchasing power of farmers, with decline in farm-gate prices after the

bumper harvest in the rabi season, and a delay in offtake.

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East, South To See Faster Growth

Tractor sales in the East and South, which togeth-er account for one-third of total sales, are expect-

ed to grow faster in the next 5 years. In the South, higher invest-ments in irrigation infrastructure and a low base will boost trac-tor sales. In the East, high crop yields and commercial demand will drive up sales. Sales growth in the West is expected to be a tad lower than the above two regions. By contrast, sales growth in the North will be slower, given the already high penetration lev-els in the region. Overall, CRISIL Research expects tractor sales to grow at an 8-10 per cent CAGR over 2011-12 to 2016-17.

Growth in tractor sales in the South to double

South India is typically a more evolved market, with penetration levels second only to the North. However, demand for tractors in the region is cyclical, and highly dependent on rainfall levels.

Over 2001-02 to 2006-07, tractor sales in the South are esti-mated to have grown at a CAGR of more than 20 per cent. In the subsequent five years, however, a drought and successive crop fail-ures in 2010-11 and 2011-12, pulled down average annual sales growth to 5 per cent. Additionally, as per our interactions with industry sources, the relatively low pres-ence of public-sector banks has prevented farmers in the region from availing of the Centre’s Rs 600 billion debt-waiver scheme during the period. Led by a low base and higher investments in irrigation, (especially in Andhra Pradesh) which will boost crop yields, tractor sales are expect-ed to increase at a 10-12 per cent CAGR, over 2011-12 to 2016-17.

Player action will also aid sales. Manufacturers are launch-ing more sub-20 horsepower (HP) models, which suits the region, as more than half of total land hold-ings in Tamil Nadu and Andhra Pradesh are marginal. Almost half of countrywide tractor capacities

likely to be commissioned in 2012-13 and 2013-14 will also be located in the South, including Mahindra & Mahindra (M&M’s) 1,00,000-unit greenfield plant.

Commercial demand, cropping intensity to drive sales growth in the East

Tractor sales in the Eastern

region are expected to grow at a CAGR of 9-11 per cent over 2011-12 to 2016-17. In contrast to the South, the East enjoys better crop-ping intensity, as perennial rivers such as the Ganges ensure better irrigation. However, the region is prone to floods, which keeps trac-tor demand volatile. Moreover, land holdings in the region are also fragmented, far below the pan-India average of 1.23 ha. In Bihar, for instance, 90 per cent of land holdings in Bihar are smaller than a hectare, which are not very suited for tractor usage.

To fully tap the region’s agri-cultural potential, in 2010-11, the government launched the ‘Bringing Green Revolution in Eastern India’ (BGREI) pro-gramme covering 7 states - Assam, Bihar, Chhattisgarh, Jharkhand, Eastern Uttar Pradesh, Orissa and West Bengal. Under the scheme, the government aims to shift cultivation of rice, sug-arcane and other water-guzzling

crops to the region. Commercial usage for tractors is another ena-bler. Almost half of total tractor sales in the East cater to commer-cial demand (use in activities like mining and construction).

Larger land holdings, low penetration highlight growth potential in the West

Lower irrigation intensity – excessive use of ground water resources is depleting the water table – has limited demand for tractors and kept penetration lev-els in the West low.

However, larger land hold-ings — a huge proportion of land holdings in Gujarat and Madhya Pradesh are larger than one hec-tare — and higher investments in irrigation, present a huge poten-tial for tractor sales. The launch of more sub-20 HP models (as in the South), targeting marginal and small farmers, will also aid growth. Over the next 5 years,

sales in the West are expected to grow at a CAGR of 8-10 per cent.

However, the projected growth is lower than that of the past 5 years. Over 2006-07 to 2011-12, tractor sales grew at a CAGR of 17 per cent. Higher realisations from cotton crop — which accounts for about one-fourth of total crop out-put in Gujarat and Maharashtra — drove up sales. However, a sub-sequent decline in cotton prices in 2011-12, pulled down growth in tractor sales. Though a high base will limit growth over 2011-12 to 2016-17, it will still remain healthy.

Replacement demand to drive sales growth in mature northern market

Traditionally, the North has been the largest mar-ket for tractors, aided by high irrigation intensity, cropping intensity and larger land holdings. Consequently, tractor penetra-tion in the region is also higher at 30-35 tractors per 1,000 ha. While this has gradually pulled down incremental growth in tractor sales, the North still accounts for a third of total sales in India. Tractor sales in the region grew at a healthy CAGR of 10 per cent over 2006-07 to 2011-12, largely driven by replacement demand. In the next 5 years too, tractor sales in the North are likely to grow at a slow but steady CAGR of 6-8 per cent. While replacement demand is expected to drive sales in highly penetrated states like Punjab and Haryana, relatively underpen-etrated states of Rajasthan and Eastern UP are expected to wit-ness farmers not owning a tractor currently purchasing one.

Conclusion

To sum up, CRISIL Research expects domestic tractor sales to increase by 8-10 per cent CAGR over 2011-12 to 2016-17. Tractor penetration in India is at 25 per 1000 ha as compared to high-ly mechanised countries like Germany which have 65 tractors per 1,000 ha, reflecting relatively lower mechanisation & fragment-ed land holdings in India. Within India, states such as Punjab and Haryana with relatively con-solidated land holdings and better irrigation infrastructure have much higher tractor penetra-tion, demonstrating the criticality of these two parameters in deter-mining tractor penetration.

Factors that will drive growth, notwithstanding the differenc-es in regionwise dynamics, are: higher investments in irrigation, rising farm incomes and increasing mechanisation. The government’s efforts to increase investments in irrigation will give a fillip to trac-tor sales – Under the XIIth Five-Year Plan, investments on irrigation infrastructure are expected to tre-ble. The increasing need for higher mechanisation due to rising farm labour costs, group buying of trac-tors by marginal farmers and an increase in commercial use of trac-tors are other key growth drivers. The availability of low-cost finance for tractors, led by the entry of more NBFCs and private banks will also boost sales.

(Please note that the views expressed here are those of CRISIL Research and not of CRISIL’s Ratings division. CRISIL Research operates independently of and does not have access to informa-tion obtained by CRISIL’s Ratings Division).

Ajay SrinivasanDirector, CRISIL Research

Hetal Gandhi, Associate Director, CRISIL Research

Geoffrey D’ CunhaManager, CRISIL Research

Tractor penetration – It is defined by the number of tractors used per 1,000 hectares of net cropped area (Figures in this article are as of 2009-10).

Irrigation intensity - The proportion of irrigated land as calcu-lated by gross irrigated area / gross sown area (Figures in this article are as of 2009-10).

Cropping intensity - Number of crops cultivated on the same land parcel during a year (Figures in this article are as of 2009-10).

Average land holding size - Reflects the extent to which land hold-ings are consolidated/ fragmented (Figures in this article are as of 2005-06).

Commercial demand – Driven by use of tractors for mining and haulage operations ((Figures in this article are as of 2011-12, based on industry interactions).

Key parameters

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The Pain Of Suspension

Even as some south-ern states in India have allegedly delayed the disbursal of subsidy

provided to small farmers for buying power tillers, the Power Tiller Association of India has taken up the issue. It has urged the Government to implement a disbursal mechanism that could benefit different stakeholders in the business.

Power tiller is extensively used by small farmers with mar-ginal landholdings for their farm mechanisation and can per-

form all functions of a tractor at a lower cost. According to a rep-resentation made by the Power Tiller Association of India to the Ministry of Agriculture, tiller manufacturers should be treat-ed as implementing partners for the success of farm mechanisa-tion and hence active dialogue is needed to hear each others’ point of view and assess the scope of implementing best practices.

The association’s represen-tation further pointed out that some states do not operate the subsidy scheme throughout the year leading to farmers not get-ting financial support, at times during key months of May to August. It further pointed out that at times release of payments to the manufacturers/dealers had been held back in the name of regulating the market as open market price in case of certain equipments were found to be lower than the subsidised price. In order to tackle such situation arising out of market anomalies, the association has suggested that for products like power till-ers and certain range of tractors, the central government could consider issuing guidelines on the Maximum Retail Price (MRP) and thereby reducing the need for individual states to regulate or issue a minimum price.

“Many states insist upon tiller manufacturers to sup-ply the products at subsidised price and do not release the sub-

sidy on time. The delay in the release invariably stretches the manufacturers’ resources as it becomes tantamount to cred-it sales and has to be managed with short and long term finan-cial resources,” said BCS Iyengar, Executive Director, VST Tillers & Tractors, who is also secretary of Power Tiller Association of India. He added that the delay in release of the subsidy amount invariably leads to higher prices of products.

The association in its rep-resentation to the Ministry of Agriculture, Government of India has suggested that the Central Government could pass on the subsidy amount with sin-gle nodal agency like NABARD (National Bank for Agriculture and Rural Development) rather than release the amount through respective state government as Centre’s share of subsidy burden is around 90 percent compared to just 10 percent in case of state governments. Additionally, the association has also urged high-er involvement of banks in the process that could not only help in streamlining the disbursal process but also help the banks to grow their tiller financing business.

Additionally, the association has also pointed out that the disbursal of subsidy to the man-ufacturers/dealers is carried out through state agro indus-tries/seed corporation leading to additional three to four percent

service charges for suppliers of equipments for invoicing and clearances without providing much ‘value addition’. In certain states, such nodal agencies that have been tapped for disbursal of subsidies also insist on bank guarantees from manufactur-ers leading to hardship for the suppliers.

The Much-Needed BoostThe power tiller segment is

dependent on subsidy that cov-ers around 33 percent of the maximum retail price. Farmers, who form the core customer segment for power tillers, gener-ally authorise the dealer or the manufacturer to collect the gov-ernment subsidy on their behalf at the time of purchase and the tiller is supplied net of subsidy under normal circumstances. Hence the manufacturer is invar-iably exposed to the vagaries of payment release cycle initiated and implemented by the con-cerned government department.

Additionally, some states also provide top up subsidy to boost the farm mechanisation process. The penetration level of power tiller is much lower compared to neighbouring countries like China, Thailand and Bangladesh that have similar topography compared to India, according to an industry player. The segment is expected to maintain its dou-ble digit growth over the next three to four years.

Over 2001-02 to 2006-07, tractor sales in the South are esti-mated to have grown at a CAGR of more than 20 per cent. In the subsequent five years, however, a drought and successive crop failures in 2010-11 and 2011-12, pulled down average annual sales growth to 5 per cent, according to a recent report from CRISIL Research. It further pointed out that manufacturers are launch-ing more sub-20 horsepower (HP) models, which suits the region, as more than half of total land hold-ings in Tamil Nadu and Andhra Pradesh are marginal. Almost half of countrywide tractor capacities likely to be commissioned in 2012-13 and 2013-14 will also be located in the South, including Mahindra & Mahindra (M&M’s) 100,000-unit greenfield plant.

Additionally, some states also provide top up

subsidy to boost the farm mechanisation

process. The penetration level of power tiller is much

lower compared to neighbouring

countries like China, Thailand and

Bangladesh.At times release

of payments to the manufacturers/

dealers had been held back in the

name of regulating the market. In order to tackle

such a situation, the association

has suggested that for products like power tillers and certain range of

tractors, the central government could consider issuing

guidelines on the MRP.

Tiller manufacturers have made a representation to the Central government for streamlining subsidies. They also urge higher banking involvement in disbursal process, finds out Abhishek Parekh.

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Return With A Whole New Approach

What was Mahindra two-wheeler strategy once the Stallio was recalled?

We realized that we need-ed to do everything ourselves. First and foremost, we decided to build our own research and development facility. The sec-ond thing we decided on was to spend a lot of time and effort on building a strong manufac-turing capability. These two factors have got us to where we are right now with the two new motorcycles – the Pantero and the Centuro. More specifically, we have decided that all engines, engine designs, and vehicle designs will be done in-house by us. We have a fairly large capa-bility in that area so these were the initial steps we took.

How many two wheelers can you manufacture at opti-mal capacity?

We can reach that capacity if we need to, but since we have a 50-acre plant, we have space to build more capacity. Later, we will expand to other parts of the country if required.

When did you start to revamp the facility at Pithampur?

Revamping the facility at Pithampur actually started when we took over the company (from Kinetic), but since then we have constantly been improving the facility to bring it to its cur-rent shape. The capacity of the plant now with our scooters and motorcycles is about a million units.

Coming to your mod-els, since you are pitching the Centuro as a premium motor-cycle in its segment, why isn’t a fuel injected variant in the line-up? Even disc brakes, at least as an option?

So far as fuel injection tech-nology is concerned, it is a very different setup. Fuel injection in the 100-110cc segment is a bit of an overkill. You can do it, but the cost of it will put you in a very small micro-segment where the customer says that if I get this at this price, why don’t I spend a little more and buy a 150cc motorcycle? That’s one downside of that technology. At the end of the day, customers in this segment are looking at a compromise on cost and owner-ship. With disc brakes, you are absolutely right and I can assure you that we are looking at it. In the long run, disc brakes are the way to go, but currently Indian consumers do not want to pay a premium for disc brakes, at least in the mass commuter segment.

But we will be making it available as

an option in the near future.

How much of a premium do you plan to charge for the Centuro over the Pantero?

It is tough to say at this point since we aren’t discussing price points, but there is only

so much you can play with in the 100-110cc segment. And

Mahindra is also known for providing value-for-money

products, so we are going to keep both these factors in

mind when we price the product. Then you have

the variants where you can go all the way up

since they straddle a very large price range. The strategy is to have a wide choice of variants, features, and options which allow you to play at the price the customer wants to pay.

In terms of brand strategy, the 100-110cc segment is a space that depends on brand value. Since you are a new motorcy-cle manufacturer, why have you entered this segment first?

Well, let me put it this way: this segment is my prime cus-tomer base. I have more engines in this segment than any other segment in the country. I have millions of tractors, Boleros and Scorpios being consumed by exactly the same customer base where the Mahindra brand and the reliability of our vehi-cles have been well established in their segments. So when we look at customers in that space of rural, semi-urban and small towns, these people know Mahindra very well.

So you’re counting on the strength of the Mahindra brand to help you in the two-wheeler segment?

Exactly. We are part of one company building everything between two to sixteen wheels and we are all about mobility. A lot of work has been done on these motorcycles in conjunc-tion with our capabilities in the automotive space. For example, we have a `65 crore noise, vibra-tion, and harshness (NVH) lab at

the Mahindra Research Valley in Chennai. The NVH of the Pantero and Centuro have been dealt with at that level.

How are you going to launch these motorcycles?

We are going to have a phased launch. We are not looking at an all-India launch at this moment.

How many dealerships does Mahindra 2 Wheelers have at this moment?

At the moment, we have 400 authorised dealerships. We are building a strong network of sub-dealers and ASCs as we speak. So we have 600 touch points. We are planning to increase that num-ber significantly.

What are your plans for the coming year?

We are planning to launch one more motorcycle and scooter in the next twelve months.

So is the Mojo next in line?We hope so. The engine

testing of the Mojo is almost complete. It is a very complex engine. It is the first time that an Indian manufacturer, or any other manufacturer for that matter, is attempting to build such an engine in India. A liq-uid-cooled dual over head cam (DOHC) four-valve engine has not been done yet. We think we can do it as we have a lot of capa-bility and we can transplant a lot of our learnings from other parts of our business.

We have decided that all engines, engine designs,

and vehicle designs will be done

in-house by us.

Following its acquisition of Kinetic Motors and the formation of Mahindra 2 Wheelers, Mahindra entered the two-wheeler segment with the ill-fated Stallio. Now that the company is back with two considerably better products, Anand Mohan quizzes Viren Popli, Executive Vice President - Strategy and Market Development, Mahindra 2 Wheelers, on their future plans and strategies for the two-wheeler segment.

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F E A T U R E 1011 - 31 JANUARY 2013

Piece By PieceUnlike carmakers, most motorcycle manufacturers haven’t taken to assembling their larger capacity motorcycles in India. There is a big enough market waiting to be tapped but manufacturers are hesitating to take the plunge, says Anand Mohan.

At a recent press brief-ing, DSK Hyosung’s Managing Director, Sh i r ish Ku l ka r n i

revealed that the Korean JV has already assembled and sold 800 units of its sportsbikes and cruis-ers in India. For a company with hardly any pedigree and a prod-uct line-up that’s a tad weaker than its competition, it is a sig-nificant number.

An even better example than Hyosung is Harley Davidson since Harleys have larger capacity bikes in their line up. In the 800-1000cc segment, that includes bikes like the 883L and the Super Low, HD sold 511 units. Move a segment higher, in the 1-1.6-litre capacity and Harley dominates this segment too. The American cruiser bike manufacturer sold 230 units in this segment. The Harley range starts at over `6

lakh so it isn’t a cheap motorcycle by any means.In contrast, among other motorcycle man-

ufacturers selling bikes with more than 500cc capacity, in the first three quarters of 2012, Honda sold 70 units, Yamaha rolled out 37 and Suzuki fared slightly better selling 94 motorcycles. All these manufacturers import completely built units to India, which due to the current import duty structure, are priced through the roof.

Besides HD and Hyosung, the only other big bike assembled in India is the Kawasaki Ninja 650. Bajaj sold 244 Ninja 650s from April to December 2012.

When Harley Davidson decided to sell its bikes in India, the company knew from the word go that they had to assemble their motorcycles here to keep them competitive. More than that, buying a HD motorcycle is more about buying into the brand. The way Harleys are sold the world over are about inviting customers to the entire bike club culture experience. A standard Harley is as bare-bones as they come. Once you buy the bike, you can customize it to such an extent that even the key has its own accesso-ries to add on to. This not only gives a certain degree of uniqueness but also increases sales of a directory size catalogue of available mer-chandise that every dealer has at its disposal. This is an excellent way to get customers more involved in the brand.

If you cannot afford a new Harley, leave your contact information and requirements with a dealer and the dealer will contact you as soon as an existing customer comes with a trade-in. It is a very proactive hands-on approach to sell their motorcycles in India and build on the Harley culture. Other manufacturers quite frankly aren’t putting even half the effort into their big bike line-up.

DSK’s Kulkarni said, “The market is grow-ing and we have a good partner in S&T Motors. I am trying to convince them to come to India instead of Korea. They are trying to invest in China but my point is why manufacture in China when you can manufacture here.”

Hyosung has 21 dealerships and by the end of 2013, the company is targeting to open 40 dealer-ships. Localization is another important aspect to reduce prices further. Hyosung is in talks with

vendors and will begin localiz-ing components for the 650 and the ST7 initially after which it will move on to other motorcycles. Tyres, batteries, headlights and a few more components are the parts that the company is aim-ing to localize as soon as possible. Kulkarni said that sales of at least

5000 units is necessary to have localized content in the motor-cycle so once these numbers are likely, levels of local content will increase.

Hyosung says that it can deliv-er a bike anywhere in India within a week of its purchase. For motor-cycles in this segment, such a

short delivery time is unheard of. In the mid nineties, when

Daewoo, GM, Ford and Fiat came to India and started assembling their cars, all other car manu-facturers took notice of the large untapped Indian car market. Motorcycles are facing the same scenario right now. In a few years,

international motorcycle manu-facturers will flock to India too to assemble their bikes. Harley Davidson and Hyosung are stand-ing examples of a market that is waiting to expand.

With inputs from Halley Prabhakar.

In the mid nineties, when Daewoo, GM, Ford and Fiat came to India and started

assembling their cars, others took notice of the

large untapped Indian car market. Motorcycles are facing the same scenario

right now.

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It’s almost a year since you took over Hyosung. how are things looking?

Things are looking very posi-tive. Infact, we have overgrown the number of retails for the GT250. So we are very happy. Now we are going to open sales for the new GT650 and GV650 (the Aquila Pro). Both the bikes will be a good success in the mar-ket because of the new look and design and the engine too is a strong point. We haven’t had any technical issues with the bikes. Hyosung is also very serious in terms of the Indian market now and they are talking about the various aspects of motorcycles here. Coming to the manufactur-

ing facility, it is coming up nicely. There are many plans and we slowed down a bit due to some com-plications in the land acquisition deal. By the end of March, we should have the facility with us.

Once the new facility in Satara is operation-al, are you looking at localizing parts to bring the cost of bikes down?

Yes. The idea behind setting up facility is to bring down the costs and this year will be primar-ily for that. We plan to achieve 5 to 10% reduction in costs by sourcing paints for the bikes locally and also getting local parts like bushes for exam-ple. They are also expensive components and cost a lot. We are looking at a couple of things but devel-oping all this things entirely does take time and we are talking to suppliers from around Pune. We are trying to get as much parts fitted locally as possible to bring down costs. As of now, the only thing local in the bikes is the horn.

What percentage are you looking at localizing?

To begin with, 15-20 percent and as the vol-umes rise, we are looking at more localization. The whole aspect of localization is only if you achieve a part for a particular price, then your goal is met. I cannot tell the local guys to give it to me at a cheaper rate unless I have the volumes. So that planning and business deal is yet to be done. We are talking and everybody wants us to grow and unless the numbers speak, nobody will believe us. It’s not that they don’t trust us, but this is a business and one need to draw a line. After that, we should be able to stretch to 50 percent localization towards the end of 2014. First and foremost, it will be on the 250. Unless we do it, we won’t be able to move forward. The bikes first will come with new shoes.

So, how is the response for the 250?It’s been phenomenal. Our target for the year

was 350-400. We have already got more than 550 bikes on the road. People have accepted it very well. We initially thought that the price point may be an issue but so far, no one has come and said that the price is too expensive. People are happy with the price and the product. The only issue we are facing is the similarity between the 250 and 650. Many customers are moving onto the 650 instead of the 250 because they are getting a more powerful motorcycle. But now with the new 650, I think that will all change. People will now be more than happy to buy the 250 as it will have its own identity. Let’s see how it goes.

Going back to time, when you took over the reins of the company, there were lots of problems. Lots of people would have advised you against making the investment in Hyosung.

Not really. But I did get some advising that I am thinking about it too soon to go and invest in anything. Let it stabilize and get the market. I told them that this is the right time. What I will

get today, I wouldn’t get it at the same rate in 2 years. It makes sense. We are into the construc-tion business, so if we are buying a property for the factory and things don’t materialize, then we can always use the place for our construction business.

You have a name in real estate. What made you get into automobiles?

We started with Toyota. I myself am a rider and I love it. Hyosung was very attractive from the beginning. When Hyosung came in with the GT250 earlier, I wanted to buy it but was too young and so obviously my par-ents didn’t allow it. I was thinking

DSK Hyosung’s Shirish Kulkarni talks to Abhay Verma of OVERDRIVE about the company’s plans for the Indian market.

Korean Invasion

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into going into manufacturing but investing in Hyosung was a lucrative proposition. The plate is almost 90% ready and man-power and everything was in place so that is why I decided to get into it. Per se, the group which was known as a local real estate company is now being looked at as a big player in the automotive industry. That is what was more important.

So all the assembly right now is happening in Wai?

Yes. Engine and everything is happening there. Entire bike comes in kits and we assemble it there.

So what kind of investment is happening in Hyosung?

It was not too expensive or cheap but just right.

What kind of jump do you expect in the brand building and sales targets?

That question should be answered by you guys. We are doing our part by investing and promotions. It’s the media which has to step in and make sure we are visible. We are part of shows and all. One way to find out if the customer is noticing or not is by buying the bikes which that they are doing. The 250, a new launch, has made sure we have been noticed, 550 units on the road speaks for themselves. Now, what has happened to the ST7 and 650R is that since we are not market-ing them much, when a customer comes to the showroom, he sees a ST7 and he realizes that we have a much bigger portfolio and he has many more options. In Mumbai, there have been instances when customers have come in for the GT250 and saw the naked, real-ized that they have to pay only a bit more to get it, agreed to fork out the extra and bought it. Our products complement each other and the entire national sales fig-ures have seen it. That is the kind of jump we want.

Plans for the future?We are looking on bringing

in the 125 also and a 150. Given the kind of brand that Hyosung attracts, it will be viable for us to be present in the volumes seg-ment as well. 150cc will be easy to

ride as the power will be manage-able. The 125cc engine is already there with Hyosung and I think we might get the 125 before the 150. But I don’t think it will hap-pen before the end of 2015. Engine is one part but we don’t want to get the parts or anything from outside and want to do it here in India. Right now, it’s all in verbal and nothing is on paper. First we have to focus on getting the design and other aspects ready. If they have one ready, they call us and let us know, and then we’ll decide.

Are you looking at taking technical help from Hyosung?

Yes, we have to because they know the engine better. That’s not saying we don’t have quali-fied people here but at least for the first couple of years, we will need them. After that, we don’t think we will require much assis-tance from them.

Are you looking at setting

an R&D centre?Yes, we are. Initially it will

be a small one particularly to understand the market and there wouldn’t be too much investment in the first two years. Once we freeze on the 125 and start think-ing more on the designs, frames and chassis, and then testing, then we will see how much more to invest. We also have to study how many changes to make to the existing assembly lines.

In Korea, a 125 is not seen as a commuter and is more like a cruiser. What kind of bike are you looking at for India?

In India, 125cc is seen as a commuter, a supersport position will not do as people will say that the riding position is not com-fortable. We use bikes which we can take to work everyday. So the 125 here should be a comfortable one. I am looking at a crossover kind of thing for the 125 here. It shouldn’t be too tall and will be

having a straight seating posi-tion, not a cruiser but a commuter style. The overall ride and feel should be very comfortable as well. We will try to give as much features as possible. Probably a full digital speedometer and nice electronics on it. Rider and pillion comfort is primary.

What are your immediate plans for the future? You are going to launch the GV650 now…

We have the GV250, around March or April. After looking at the response for the Aquila, we can think about the 250.

Will the design be like the Aquila Pro?

No, it will be an entirely differ-ent design. It’s not similar to the Aquila.

What are the plans for the GT250R? Will it follow similar lines of the new 650?

I spoke to Korea but they don’t want to do it. The 250 is getting its own identity, why shake it? If anything will happen, it will be entirely different than the 650. But nothing is going to happen on it for at least a year.

What is the vision for the Indian market? People are mov-ing to fast motorcycles and there has been a change in the trend. What is your perspective?

Market is evolving. If you see the premium bikes like those from Honda, they are doing great, not too well but still they manage to move one bike out of the showroom every month. Earlier selling Rs 8 lakh bikes was a task, now it’s not too hard. When we first took Hyosung, we had about 58 ST7s with us and it was a task to sell them. Garware was successful and we had to take a strategy. The 650 is also getting good response because there are not too many bikes in this category. People upgrading from 150cc bikes like the Pulsar want something big and Bajaj isn’t able to offer it other than the Duke. The 220 Pulsar didn’t deliver on its promise and hence they have turned to us for the 250. This is how the shift hap-pens and growth will continue.

You are already doing pro-motional activities like group rides and all. What else can we expect from you? Any plans to enter Motorsport?

Motorsport is a little difficult. F1 has just entered. First day, people were crazy, second day less crowds, third day, way too less admissions. I don’t think it is happening at all. Now that we are talking about MotoGP, Buddh is too big for it. We probably will have to create something new, which is not advisable. Instead we can try a tie-up with stunters like GhostRyders and those local promotions will be more ben-eficial than spending money on other activities. Customers and buyers can get a touch and feel of the bikes. It is power-ful and can do stunts easily. If there is anything good coming up in marketing, we can consid-er for a one-off event. We don’t believe in brand ambassadors but maybe for one or two prod-ucts, we may consider that too. HyRiders had 60 riders. Mumbai and Pune dealers were involved. Riders were doing stunts on the roads and all, which is dangerous but people were enjoying. There is a possession about the brand and biking is all about going in groups. This is the crowd mania that we wanted to create. We will do it in Delhi, Kolkata and even Bangalore. We might even do 3-4 rides in a year in each city. That’s what we have thought of. These rides give them a chance to explore their bikes. If we do plan it and people are ready to come, in terms of security, logistics and all, there might be one in a year. Day rides are more the game.

Are you looking at any

upgrades for the current models?

Yes, they will be happening. The 650 Naked probably will have a styling update. I am pushing Hyosung to make high compres-sion engines for the 650 and 700. But it will take some time. The current engines just have decent power and not too exceptional. They are working now on sin-gle cylinder 250cc engine and not much. In 2014, you might see those changes.

The GV650

The GT650R

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Exhaust Effect

Can you update us on the emission systems arm of Borg Warner?

After our joint venture with the Vikas group ended last year, we had to move from the Faridabad premises and move into a new one. The new plant we set up in Manesar is operational now.

Which products do you manufacture at your new plant and can you tell us a little about them?

We manufacture parts of the EGR (Exhaust Gas Recirculation) system like EGR coolers, EGR tubes, and this year we will begin

production of EGR valves as well. This will make us a completely localised EGR module manufac-turer. That is our plan for this year. EGR coolers help reduce Nitrous Oxide (NOx) emissions, and our coolers provide better heat rejection with less soot and hydrocarbon build-up. These coolers are compact too, which means they offer better flex-ibility. We also produce a variety of EGR tubes for commercial and passenger vehicle applications.

Can you tell us about your new facility at Manesar?

It is an 8,000 sq.m. plant. It has a complete assem-bly facility to assemble EGR coolers, tubes, and valves. We also have designing competency avail-able for EGR coolers, and we are also adding valve designing capabilities. Market growth in 2012 hasn’t been as high as the previous year, and this year is also expected to show average growth by industry standards. Adding more products to our portfolio and increasing our capabilities in India to match up to our global plans is the way forward for us.

When do you plan to start production of EGR valves?

This year, once we begin production we will have the whole module. This year we will set up the manufacturing facility and train our engineers abroad for designing competency. So in the next 12-18 months, we will not only have design capa-bility but also validation as it is done in Europe. We will probably be the only company in India to have manufacturing, designing, and validation facili-ty by next year end. We will be able to give that advantage to the customer to reach them faster at local costs.

What is Borg Warner’s relationship with OEMs in India so far as emission systems are concerned?

So far as passenger cars are concerned, we are one of the key suppliers for major OEMs with products in the diesel market. We have a good relationship with them, and are consistently increasing our clients.

Since you are supplying to most of the major OEMs, what are your volumes like?

We doubled the units we manufactured from a year ago, and this year we are planning to con-solidate on the technology front and increase our capabilities.

Do you undertake R&D responsibilities too or is it sourced from your headquarters in Michigan?

We do not have a fixed product that can be fitted into any vehicle. We provide customised solutions to OEMs. Customers give us their requirements and we customise them to suit their specifications.

What are your growth plans for India in the coming years?

Last year we doubled sales. In the next three-

four years, we expect to be a `500 crore company. As of now, we are worth `100 crore.

Are there any requirements that are India specific?

In the Indian market, all the major players are present here. The difference here is in the vol-umes. What we produce here in thousands go into millions in western markets because there are fewer cars produced here. Requirement-wise, we are at Bharat Stage IV (BS4) in a hand-ful of cities. In Europe, there are already talks of Euro 6 emission norms.

So what is Borg Warner doing towards the supply of products that cater to more stringent emission norms?

We can’t really push for it, but we have the products available. It is up to the customer to fit their vehicles with systems that com-ply to the most stringent norms. If an OEM has to export its vehicles to Europe, it has to fit the vehi-cle with a Euro 5 compliant EGR system. Even in metros where it’s mandatory to be BS4 certified, the company will use our systems. So it is basically need-based. When this need increases, we will be ready to cater to that demand.

You supply EGR systems only for diesel vehicles in India as of now. Are there any plans for petrol cars too?

The technology that Borg Warner has in India right now is only for diesel vehicles, but globally, we are working on petrol cars too. It is too early for India to work on petrol sys-tems. But we have products for petrol vehicles too. The advan-tage Borg Warner has in India is that we already have prod-ucts that work well for Euro 5 and Euro 6 norms. If a customer wants a solution for present and future export plans, we are able

to meet that from here.

Any other product that you plan to add to your portfolio in the near future?

Every product that we manu-facture globally can be brought to India. It must be justified by volumes, that’s all.

Do you also supply to CVs?We have the products but right

now, the norms are at BS3 level. We are waiting for them to be raised to BS4 compliance. They will use our products in volumes only when the norms are forcing them to.

Borg Warner India’s emission systems division is gearing up for the future when norms will be more stringent, and OEMs will have to turn to a supplier with EGR systems that comply with the norms. Sudhir Kumar Chawla speaks to Anand Mohan on the division’s plans. The technology that Borg Warner has in India right now is only for diesel vehicles, but

globally, it is working on petrol cars too.

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When you fail, you learn from the mis-takes you made and it motivates you to

work even harder. More impor-tant are the lessons gleaned from failures that egg you to ensure that you do not commit them again. And that’s what Mahindra 2 Wheelers seem to have focused on.

Meanwhile, the company at its R&D facility in Pune, togeth-er with a band of 200 engineers, is working meticulously on a range of products that it expects to launch in the Indian market in the coming year.

The company has come a long way from the time when it launched its first commuter motorcycle in 2010. The Stallio was then unveiled with much fanfare and plenty of hype. Alongside the Stallio stood the Mojo, Mahindra 2 Wheelers’ brand builder with a 300cc heart and a lot of muscle, which at the time wasn’t too common a sight in the Indian market. But when the Stallio hit the road, it was like waking up from a bad dream.

A commuter bike, most of all, has to be hassle free. Something you don’t have to care too much about while it ferries you about town. Gearbox problems, quality issues and an overall poorly engi-neered bike made it a complete failure to the point that Mahindra had to recall the bike from its showrooms, stop production and

trudge back to the drawing board. The issues with the Stallio were

many. For starters, the Chinese engine powering the Stallio was sub-standard, the parts were flimsy and it was overall a half cooked attempt at penetrating the most important two-wheel-er segment in India. Indeed, the motorcycle needed a complete rethink. “We realized that we need to do everything ourselves. First and foremost, we decided to set up our own research and development facility. And the second point was our decision to spend a lot of time and effort on building a strong manufac-turing capability,” explains Viren Popli, Executive Vice President - Strategy and Market Development, Mahindra Two Wheelers.

Acting on these steps, the company opened a R&D centre in Pune in July, 2012. It modernized its facility at Pithampur and went to work on re-engineer-ing the Stallio. The new bike has now been rechris-tened the Pantero. PS Ashok, Senior Vice-President and Head of R&D, Mahindra 2 Wheelers, who has been instrumental in its resurrection says, “Except for the styling, for which we got a posi-tive response, the motorcycle is completely new.” Going through the details, he emphasizes, “The

engine is all new, and the ther-modynamics and the valve-train too are new. We have done a lot of CFD on the engine exhaust system. The frame has been com-pletely reworked by us and, in the process we have dropped about 1.2kg.” The company has also utilized its other readily available facility, the Mahindra Research Valley in Chennai to test the NVH of the Pantero and the Centuro.

The motor jointly developed by Engines Engineering, Mahindra and a Chinese company was axed. It was replaced by an engine

developed completely in-house by Mahindra

called

the

MCI-5 for Micro Chip

Ignited, 5-curves. This 4-stroke 106.7cc four cylinder powerplant is more powerful than its predecessor and Mahindra claims that the Pantero has bet-ter performance and is more fuel efficient than the segment bench-mark, the Hero Passion Pro. The Pantero has got an ARAI certified mileage of 79.4kpl.

Both the Pantero and the Centuro are essentially the same bikes with minor tweaks done for different positioning. The Centuro is a more ‘upmarket’ offering. The engine gets minor tweaks to its tuning that separates the two. Apart from this, the Centuro gets a few extra premium features like a digital instrument cluster with white backlighting, an economy and power riding mode indica-tor, a trip counter, a service due reminder, an odometer and a clock. An interesting feature is a car-like theft deterrent system with a LED torch equipped flip open key. The company thinks that these premium features will position it higher than the rest in its segment. Mahindra 2 Wheelers is also looking at introducing a disc brake variant in the near future although it feels that this segment does not require it and price sensitivity is very high here.

These two motorcycles will be launched in the coming weeks. It will be interesting to see how these products fare in the market but one thing is for sure, the offer-ings are far more competent than they initially were.

Following the two commut-er bikes will be another offering coming this year that Mahindra is tight lipped about. We assume it’s the Mojo that’s currently under testing since that is the only other motorcycle displayed to date. It has a DOHC liquid cooled four-valve 292cc engine, something that’s new to the Indian market. It will be a crucial motorcycle for Mahindra as it’s their first attempt at making it aspirational. Ideally, most manufacturers would prefer a top-down approach while enter-ing a new market but Mahindra is going the other way round. The company believes that it is best at offering value products since that’s what it is known by.

With a good product in place, next come sales. The company is going to launch the two motor-cycles in phases instead of a pan-India launch. With 600 touch points, it will be a wide enough network to cater to its customers. The target, like most Mahindra products have been, is the rural and semi-urban population where the Mahindra group is a household name. The motorcy-cle arm is expecting the positive brand image of the company’s other verticals will brush off on them for that initial penetration into the motorcycle market.

At present, the Pithampur facility has a capacity of about one million units. Enough in the beginning for the entire Mahindra portfolio but the management believes that if the response is overwhelming and production needs to be ramped up, the cur-rent facility can be optimized to produce approximately three mil-lion units.

In the commuter motorcycle segment, about six lakh units are sold on an average every month. There is a big enough pie to share of which Hero MotoCorp is hogging about half of it. Since the split with Honda, this share is falling and all other manufacturers are queuing up to grab a larger bite. Honda and Bajaj are already claiming stake at larger shares with new launches so Mahindra must be optimistic that there is enough room to co-exist in this segment.

There is only one basic formula to get it right in the com-muter segment. Build homegrown motorcycles that fit like a glove to Indian tastes and sell it under an established brand. Mahindra 2 Wheelers has got the first bit right, and for the latter, one can only hope that the company can lever-age the respect and image earned by the Mahindra group.

Anand Mohan

Mahindra 2 Wheelers gets back to what Mahindra does well: Building homegrown vehicles for the masses.

Back To Basics

Auto Monitor

C O L U M N1101 - 31 JANUARY 2013

“Governments Are Spending Billions To Help Industry Develop Future Technologies”

The automotive sector is one of the few suc-cess stories in Indian manufacturing, a fact

which does us proud. Supported by a conducive and stable pol-icy environment over the last decade, and driven by spirited Indian entrepreneurship, this sector has marched onward relentlessly to carve a niche for itself in the global arena. The last 15 years – not very long by industry standards – have seen the Indian automotive industry transform from an inward-look-ing and introverted approach to today’s unabashed displays of ambition and aspirations of becoming a significant world player.

However, today the indus-try is challenged by a slowing domestic as well as international market, rapidly evolving tech-nology, and growing concerns about the environment, passen-ger safety, and energy security. If we have to sustain the shining progress made by the industry over the last decade and half, the industry structure as well as manufacturing policy will need to be fine-tuned to respond to these challenges.

Building The InfrastructureMany of these challenges are

linked to each other. Concerns about the environment, safety, and energy security pave the way for new and cleaner fuels, renew-able energy sources, as well as technology to minimize and economise the use of tradition-al fuels. Safety considerations, on the other hand, often tend to work against the principles of fuel economy and reduced emissions. Changing customer preferences also result in shorter model life and frequent vehicle makeovers, which in turn affect manufacturing scales, and ulti-mately, profitability. Our ability to address these challenges will determine how competitive our manufacturing remains in the coming decades.

No manufacturing policy for the automotive industry can operate effectively in the absence of a national initiative for technology development. Governments all over the world are spending billions of dollars to help industry develop future technologies – electrics, hybrids, hydrogen fuel cells, etc. This is followed by support to make these technologies affordable to consumers through schemes which are more in the nature of investments for the future, and not just plain subsidies.

Japan has committed over US $1.7 billion, USA $5 billion, France more than 3.5 billion euros, and China over US $20 billion. All these initiatives aim at developing appropriate elec-tric technologies and a sizeable market, which only can estab-lish the necessary economies of scale to make commercial manufacturing viable. India, although a latecomer in this area, has made a serious begin-ning in this respect with the

formation of the National Electric Mobility Mission by the Ministry of Heavy Industries and Public Enterprises. This Mission can become the springboard for ushering in sustainable mobility solutions based on electric and hybrid technologies for the peo-ple of India.

The success of this nation-al mission will depend on how effectively we can support tech-nology development initiatives, local value addition, creation of the necessary infrastructure, and most importantly, making these new technologies afford-able to the cost-sensitive Indian customer. This calls for the allo-cation of necessary funds and concerted action by all stake-holders, including industry and government.

For the small and medium-sized enterprises (SMEs) in the auto-component supply chain, development of product and process technologies is criti-cal for sustaining competitive advantage. Such technologies can either be developed in-house or acquired. Most SMEs and even many large companies may not have the resources to develop state-of-the-art tech-nologies in-house. For them, acquiring such technologies or outsourcing research and devel-opment (R&D) work may be the most viable option. The govern-ment should consider creating a technology development and acquisition fund to assist Indian companies in this regard.

For companies which choose to outsource R&D, the benefits of weighted tax deduction on R&D expenditure should be extended to outsourced R&D, irrespec-tive of whether such R&D is carried out in India or abroad. The objective should be to assist Indian companies to build and own intellectual property rights (IPR), without constraining our R&D to the limits of domestic capability alone.

Any manufacturing policy needs to clearly differentiate between local assembly and local manufacturing. To achieve the latter, which will create new investments and employment opportunities, the policy needs to holistically embrace and impact the entire supply chain, so that real value addition and employment takes place domes-tically. This is one of the most challenging tasks, since local value addition cannot be man-dated by policy but has to be encouraged by leveraging local competitive advantage, espe-cially in the SME sector, which will largely cover the auto com-ponent Tier 2 and 3 suppliers.

The role of a prudent fis-cal and taxation policy which

favours local investments, man-ufacturing, and value addition is also critical. In the automo-tive sector, India has followed a very clear policy of allowing free market access, but through the route of “investment” rath-er than “trade”. We are perhaps the only developing country in the world with serious ambitions in automotive manufacturing which has allowed 100% FDI on an automatic basis in vehicle and component manufactur-

ing, while staying away from the concept of free trade. Most other developing countries require local partners as a man-datory requirement. This policy has reaped good dividends and has allowed large investments in automotive manufacturing to flow into the country. Allowing free market access through the trade route at this stage could undo a lot of the good that has been achieved over the last dec-ade, as it could create needless disparities in the domestic com-

petitive scenario and therefore discourage new investments in automotive manufacturing.

Building The SkillsDirect employment in the

automotive industry is 18 mil-lion. Shortage of skills and skilled manpower is already being felt in the automotive sector. The long automotive supply chain, starting from component manu-facturing and ending with sales and after-sales service, requires diverse skills at each stage of the chain. This demand is further complemented by the support sectors like insurance, banking, logistics, etc. The Automotive Mission Plan estimates that the requirement of direct and indi-rect manpower till 2016 will be an additional 25 million. The National Skill Development Corporation (NSDC) is a great and timely initiative. The gov-ernment and the industry, in their own interests, need to support the NSDC by setting up Sectoral Skill Development Councils. The Automotive sector has been first off the mark with the setting up of the Automotive Skills Development Council (ASDC), which is a joint initia-tive of ACMA, FADA and SIAM.

The sentiment in manufactur-ing is impacted by the stability of conducive policies, particularly trade, investment, and fiscal policies. Frequent changes in policy, especially those which have been operating effectively,

can disturb the rules of the game and the operation of companies. Some recent decisions and dis-cussions in respect of excise duty valuation, additional taxes and duties on diesel technology, etc., tend to vitiate the atmos-phere for manufacturing. No business can invest confident-ly if the basic rules of the game are not consistently followed. Investments will normally flow to the most investment friendly destination. Hence, the trade, investment and fiscal policy environment needs to remain conducive to the business of manufacturing on a sustained basis. Periodic benchmarking of our policy environment with other countries competing for the same investments may be worth considering.

The National Manufacturing Policy announced by the Ministry of Industry and Commerce in 2011 augurs well for Indian manufacturing as a whole. It holistically recog-nizes and addresses most of the above issues. The manufacturing sector, particularly the auto-motive industry, looks forward to seeing this policy being made operational on the ground as soon as possible, and to develop synergies between the National Manufacturing Policy and the Automotive Mission Plan 2016, as well as the National Mission on Electric and Hybrid Mobility, for a robust and healthy future growth of the automotive sector.

Vishnu Mathur

No manufacturing policy for the

automotive industry can operate

effectively in the absence of a

national initiative for technology development.

Frequent changes in policy, especially those which have been operating effectively, can

disturb the rules of the game and the operation of

companies.

Vishnu Mathur, Director General, SIAM

Auto Monitor

F E A T U R E 1131 - 31 JANUARY 2013

Turning The PageThat’s what Tata Motors is doing now. After seeing the highs and lows of the automotive industry in their decade and a half as a car manufacturer, the company is going through a lull before a new generation of Tata vehicles hit the market.

Tata trucks have plied our roads since 1954 and that’s what Tata Motors were known

for till the early 90s, when the company launched their first passenger car, the Sierra. It was still a small operation, but after the Indica turned their fortunes, there was no looking back. At least, that’s what it felt like back then.

From the glory of the new mil-lennium to the present, it’s been an eventful journey. Eventful to the point that at present the model range has nothing exciting to boast about, and mid-cycle refreshes are forced onto the market to keep the brand fresh in customer minds. So what brought Tata Motors to

Anand Mohan

this state?President of Tata Motors Passenger Car unit,

Ranjit Yadav, agrees that the passenger car mar-ket has been challenging for Tata Motors. Much of the growth in the market has come from new models. “We realize that, and that is why we are going to have two new models this quarter to real-ize their benefits.”

The Nano ScopeNothing has caused Tata Motors as much

heartache in recent times as the initial failure of the Nano, not even the single-digit sales of its most premium product, the Aria. Initial failure because unlike any other auto product in India, the Nano has a long shelf life. There is no other four-wheeler in the market at this price point, and there will possibly never be one, so the Nano is going to be around for a long time. The company has a brilliant product but a weak strategy. It is beginning to reach its target customers only now, but the cost of petrol and a small fuel tank (thus a small range) are keeping it back. Nano owners do not want to visit a fuel station and refuel as often as they are currently required to.

That’s Tata Motors’ nearest goal: making the Nano more affordable than it already is. And here is where the company begins a new chapter in the passenger car business. Tata Motors top manage-ment aren’t giving any indications on the launch of CNG and diesel versions of the Nano, but there has been plenty of buzz in the industry of a launch sometime this year. This could be a significant model for the passenger car business.

We revealed in the October issue of Auto Monitor how Tata Motors were developing two new sub four-metre cars, a mini-Aria and a mini Sumo Gold. These vehicles are still some time away, if they make it to production, and an all-new product is at least a year away from production. The Megapixel concept showcased at the Geneva Motor Show last March looks close to a production version. Geneva being one of Tata’s pet locations, expect something exciting this year too, probably a next generation Indica, Nano, or something else in the family design language.

Back To Square OneBut despite a lot of speculation about new prod-

ucts from Tata Motors, the focus will remain on the Nano till an all-new vehicle is launched. Tata Motors is acting on customer feedback to improve the Nano and deliver what they want. “If a customer needs something, we have to provide it”, says Neeraj Garg, VP. Out of the top three customer demands from the Nano, Garg said, “Power steering is num-

ber one on the list, followed by a CNG and diesel versions.”

It’s a bit of an irony for Tata Motors. When the company bought out Jaguar Land Rover (JLR) in June 2008, the British carmaker was in serious debt. Tata Motors took a Rs 2,400 crore loan to turn JLR around. Now, it’s the British carmaker who is leading the group’s profits and masking the underperforming Indian passenger car operations.

Sales A ConcernExcept for the Ace, Magic, and

the Sumo Gold, every model is selling less than it did. Not a single Aria was produced in December, while Nano’s production is run-ning at a meagre 26 percent of the 2.5 lakh capacity at the Sanand plant. Indica and Indigo CS sales have fallen by about 20 percent,

and only 110 Indigos and Manzas were sold last month.

That said, in the first three quarters of the year, Tata Motors was still the third largest passen-ger car manufacturer in India, with a narrow lead over Mahindra. Mahindra sales, though, have grown by about 31 percent, while Tata sales fell by four percent.

Gearing UpAfter the Aria, no all-new Tata

has been launched. Unlike man-ufacturers who can introduce international models into India with a few tweaks to suit our conditions, Tata Motors does not have that luxury. All new models have to be developed in-house.

That is why the company needs to plan its future for the coming decade or so by devel-oping a strong team for its next

generation of models. Former GM head, Karl Slym, joined the company last year. Tata then roped in Ranjit Yadav as the president of the passenger car unit. Yadav was the coun-try head for Samsung India, and knows a thing or two about building a strong brand and portfolio. Then there’s their VP Neeraj Garg, who has done top-level marketing and sales stints at VW and Nissan India.

Backstage, there’s Tim Leverton, the head of research and development, instrumen-tal in creating new products for the Tata stable. Leverton, who has headed R&D at BMW AG, revealed last month that Tata Motors is developing a mini SUV on the Vista platform.

The way Mahindra is per-forming right now, Tata Motors

will concede the lead sooner rather than later. The question is, when signs of a weak model portfolio were already start-ing to show by 2010, why didn’t the company act sooner? Tata Motors is holding its cards close to the chest. There have been no announcements, and noth-ing major expected in the near future. There’s a sense that the market is getting impatient. Maybe it is time you showed us your hand, Tata Motors!

Nothing has caused Tata Motors as much heartache in recent times as the initial

failure of the Nano.

Tata Motors needs to plan its future for the coming decade

by developing a strong team for its next gen models.

Auto Monitor

C O L U M N1141 - 31 JANUARY 2013

Driving Cost EfficiencyInflation combined with a stagnant market has sent Indian automobile manufacturers on a cost cutting drive. Rajiv Singh of PricewaterhouseCoopers offers innovative methods for reducing raw material cost and improving the bottom line.

The Indian automobile industry is currently going through one of its toughest phases,

and has been hit on multiple fronts at the same time – the market size is not growing, pric-es are almost stagnant, high inf lation is leading to increase in input costs, competition is increasing every day, interest rates are high, overall market sentiment continues to remain low, consumers are becoming very choosy and are demand-ing new products and offerings. The CEO has many battles to fight! This article is about one such battle – the battle against cost.

While every OEM has many cost heads, raw material is one of the largest cost bases, and constitutes almost two-thirds of the sales revenue. Hence any battle against cost will have to be predominantly focused around raw material. While I have been lucky to have co-led a number of holistic cost reduction ini-tiatives as a consultant across different industries including automobiles, focusing on all cost heads, this article is about the innovative ways in which OEMs are driving raw material cost reduction, and some of the ele-ments on the softer side which are critical for the success of such initiatives.

Procurement Efficiency & Design Efficiency

Traditionally in any OEM, raw material cost is consid-ered to be the responsibility of the materials function. This function faces the dilemma of sourcing material at the lowest cost, while ensuring a high ser-vice level for the manufacturing munction, to ensure zero stop-pages on the line. OEMs found a solution by breaking this func-tion into two separate cells: the strategic sourcing cell, which focuses on identifying the right source and fixing the pric-es, and the procurement cell, which focuses on placing the daily/weekly schedules and chasing the material.

Cost thus became the respon-sibility of the strategic sourcing cell, and this has led to multiple gains and helped OEMs in cut-ting down costs. The strategic

sourcing cell focused on oppor-tunities for low-cost sourcing, rationalizing the supplier base, consolidating the demand, changing the share of busi-ness, discovering the true price by applying principles of first principle costing/zero-based costing, getting into third party agreements with the supplier’s supplier and so on. These initia-tives led to real gains and helped reduce material cost by 4-6 per-cent year-on-year. This is what I call improving procurement efficiency. But over time, OEMs are finding it tough to sustain this year-on-year cost reduction. They seem to have exhausted all the levers available to them for improving procurement efficiency.

This is where some of the leading organizations have begun to focus on what I call design efficiency. A large part of the cost is actually hidden in the way the product is designed, configured, and manufactured. While the strategic sourcing cell focuses on reducing the cost at the parts level and improves procurement efficiency, design efficiency is improved through focus on the aggregate level. This thus calls for a very differ-ent way of working.

While every OEM has many cost heads, raw material is one of the largest

cost bases, and constitutes almost two-thirds of the sales revenue.

Rajeev Singh, Executive Director - Operations Consulting, PwC India Contd. on Pg 116

Auto Monitor

C O L U M N1161 - 31 JANUARY 2013

Traditionally, design has been considered the responsi-bility of R&D, and once the new product is launched the R&D team moves on to the next new product. However, the need of the hour is to split the R&D team into two cells: while one cell focuses on designing new products, the other cell focuses on reducing the cost of existing products by improving design efficiency. However, this cell will have to be far more cross-functional in nature. It will have to have members from not only the R&D team, but also from the strategic sourcing cell, quality assurance, manufacturing, and marketing.

While one may argue and

would want to design the prod-uct right the first time, the reality is that in the new product development phase, the focus is to get the development done in the right time. Further, there are many improvements happen-ing at a far more rapid pace in manufacturing technology and metallurgy, thus forcing OEMs to reconsider what was designed even a couple of years previously. This is the only way the OEM will be able to keep the price of the end-product constant, despite inflation, till the end of the product life-cycle. Interestingly, while Procurement Efficiency gave a benefit of 4-6 per-cent reduction in cost, Design Efficiency holds a potential of reducing raw material cost by 8-10 percent. This would have a significant impact on the bottom line. However, achieving a 10% reduction in raw material cost is not easy!

The Vicious Circle of Poor Performance

Whenever the task of reduc-ing raw material cost by 10

percent is given to the team, the first reaction is one of disbe-lief. The team comes up with all kinds of assumptions beginning with the original rationale for a particular design, high redevel-opment time, little control on the suppliers, non-acceptance by the market, fear of failure, risk of increasing warranty costs, etc. Soon these assump-tions give way to a self-fulfilling prophecy and there is no action taken to reduce the costs. Since cost is not reduced, the pressure on the bottom line continues, and the organization gets drawn into a vicious circle of poor performance.

The only way to break this vicious circle is by rigorous-ly identifying cost reduction opportunities. Today organ-izations are struggling to identify opportunities, but once they know the opportunities then effort is put in, people are engaged in improvement teams, and results are accomplished. The organization is thus able to break the vicious circle and gain cost leadership. However, the beginning happens with the rigour. Rigour can be bought in by using the right tools and techniques for driving design

efficiency.Rigour is required to improve

design efficiency of parts designed not only by the OEMs but also the ones designed by some of the key Tier 1 suppli-ers supplying what are known as proprietary parts. In a typi-cal automobile, while almost 50 percent of the raw material is designed by OEMs, there is another 50 percent for which the design is owned by the pro-prietary part manufacturers. This adds to the complexity of driving design efficiency across the entire spend base. The two spend bases need to be dealt with differently, and innovative approaches are required. Thus raw material cost reduction is no longer only about procurement efficiency improvement but also design efficiency improvement.

Cost Efficiency = Procurement Efficiency X Design Efficiency

While achieving 8-10 per-cent cost reduction calls for innovat ive met hodologies, and different tools and tech-niques, it’s not only about the science. Making these ini-tiatives successful is an art. That’s the reason why multiple

organizations undertake these initiatives. However, only a few of them are successful in driv-ing costs down. While driving these initiatives, the leadership needs to focus on other aspects such as rewards and recogni-tion, linkage with the Key Result Areas (KR As), governance mechanism, designing cross-functional team structures, and creating an environment where members feel comfortable to come up with innovative ideas.

To summarize, although the Indian automobile industry is going through a tough time, these tough times have also taught the industry to become more cost-efficient. And that will go a long way in helping it stay competitive in the future.

The India Automation Technology Fair (IATF) 2013 is scheduled to take place from 1-3 February 2013 at Bombay Exhibition Centre, Mumbai, India.

The event will witness participation from over 50 companies, and over 7,000 business profes-sionals comprising CEOs, plant heads, CIOs, engineering and quality heads, process and safety heads, and senior technical professionals.

Some of the key exhibitors who will showcase their latest technologies include Siemens, Larsen & Toubro, Emerson, Rockwell, B & R Automation, Hitachi, Kuka, Turck, Chemtrols, Forbes Marshall, Baumer and Mitsubishi. Companies will showcase emerging technologies in electrical automation, mechanical automation, robotics, machine vision, assembly and material handling systems, sensors, controllers, actuators, com-munication devices, HMI, software simulation, training, and a host of interface and supporting sub-systems that will enhance the effectiveness of automation investment.

Concurrent activities at the event include a novel “Innovation Exchange” and a Technical Workshop that will be conducted by Foundation Fieldbus India Committee, Profibus & Profinet Association, India Smart Grid Forum and high powered CEO Round Tables, covering various industry verticals. The Innovation Exchange, touted as one of the highlights of IATF 2013, will be a platform for technical discussions, expert talks, and company presentations.

The event is jointly organized by Automation Industry Association (AIA) and Messe München International India (MMI India). “Through IATF we intend to ignite the passion for continuous innovation amongst the various stakeholders of the automation sector. The event will show-case state-of-the-art automation technologies and provide a networking platform for visitors, especially small and medium enterprises, to expe-rience world-class automation solutions, acting like a catalyst to encourage innovation, boost pro-ductivity and enhance global competitiveness,” says Mr. Nandakumar, President, AIA.

For more details and to register, see the IATF website -- www.iatf.in.

India Automation Technology Fair 2013

While procurement efficiency

gave a benefit of 4-6 percent reduction in

cost, design efficiency holds a potential of reducing raw material cost by

8-10 percent.

A large part of the cost is

actually hidden in the way the

product is designed, configured, and manufactured.

Contd. from Pg 114

Driving Cost.........

Auto Monitor

C O L U M N1201 - 31 JANUARY 2013

Output vs DevelopmentNew product development can turn into a nightmare with narrow lead times, concurrent work, resource switch, and pressure from the OEMs, who in turn have their own targets to meet. Satyashri Mohanty of Vector Consulting offers his insights into the problem, and suggests solutions.

The number of house-holds with two-wheeler and four-wheeler own-ership has doubled in

the last decade, and is growing – an indication of the impor-tance of the Indian auto market. Consequently, many original equipment manufac-turers (OEMs) have entered the Indian market. With growing competition, OEMs have found that introducing new models is key to drawing traffic to their showrooms. And so, faster rollout of new models and variants is on the agenda of most OEMs.

The OEMs’ ApproachWhile there is mounting pres-

sure to reduce lead time and improve output of new product development projects, the deliv-ery and lead times of critical tooling and equipment vendors has not improved.

Where lead time capabili-ty has remained the same, and there is a need to reduce it, most OEMs try to compensate by including “concurrent working” in their projects. Most concur-rent working is left unplanned in order to make up for delays in previous stages. At times, the design may not have been final-ized, but vendor work would have started, leading to rework. Since most new product development requires stages of integration of work across vendors, the level of rework cascades to mul-tiple components and their associated tooling and support-ing machines.

The problem is aggra-vated when resources are shared across projects. When there is incomplete handover (unplanned concurrency) and resource switch across pro-jects, there is information loss as resources lose track of pend-ing work, creating more rework. Some OEMs have been able to limit the problem using dedicat-ed cross-functional teams for a project.

Effect On Auto Components Vendors

Component vendors usually do not dedicate cross-function-al teams for each project. Hence, when they resort to unplanned concurrency, the damage is still bigger.

In every new product devel-opment (NPD) project of OEMs, there are parts designed by ven-dors. These designs supplied by vendors need to be inte-grated by checking the validity of assembly and cost targets. This process involves several iterations to get the combina-tion right. As a result, there are interruptions and variability between phases of development projects, thus resulting in many projects being open at the ven-dor end. It is not uncommon to have projects that sudden-ly become urgent, with OEMs putting pressure for expedit-ing. Such requests create havoc on other projects with the com-

ponent vendor. And priority is often determined by who shouts the loudest!

Abundant multitasking, vio-lation of priority, and several simultaneously open projects result in de-synchronization of different parts, thus delaying the completion of a project. This forces OEMs to expedite and change priorities.

Towards the end of a project, vendors begin running out of time and initiate work without resolving all the problems relat-ed to production and quality. Production takes over compo-nents which have not stabilized, potentially wasting production capacity. The vendor also takes a huge risk on warranty costs due to pending production and quality issues in the components supplied to OEMs. Continuous pressure to deliver the next project keeps many such non-stabilized components in the production system, where the project work is still not perfectly completed.

Is there a light at the end of the tunnel? At first sight, there seems no hope for component suppliers. Does the way the suppliers manage their own projects, under the above cir-cumstances, deteriorate the situation further?

The Things Auto Components Companies Can’t Control

Auto components companies cannot influence the interrup-tion time between the phases of a project. There will also be requests for rework in some phases, which are primarily triggered by the OEMs’ way of working. An auto component vendor should be prepared to meet the urgent requirements of auto OEMs without falling into the trap of frequent pri-ority clashes and associated multitasking.

The Things Auto Components Companies Can Control

Auto component vendors can drastically reduce the lead time of independent work packets under their control. They also can cut down the queue of wait-ing work packets dramatically by improving the flow, and always maintain the queue at that level.

The above objectives require an ability to produce more than the current levels with the same set of resources, by eliminating significant wastage of time and capacity in NPD projects. Some of the sources of significant capacity wastage include setup losses and rework caused by fre-quent switches between several tasks by the resources.

Prioritising Work PacketsWhen there are frequent

priority shifts based on the perceived level of urgency, the unwritten rule for getting the work done also includes man-aging perceptions. In such an environment, there are many requests with false signals of urgency both from within the

auto component company and from managers in the NPD environment of the OEMs. Therefore, the first step to elim-inate the switching cost due to frequent priority changes is to take all open independent work packets and prioritize them in the form of a queue in front of the key resource groups. Based on capacity, we have to limit the number of open work packets at any point in time. All other work packets have to be fro-zen. Once one work packet is complete, the next one from the frozen list enters the active zone. This will substantially reduce poor multitasking and de-synchronization.

The ones outside the active zone can be shuffled for priority issues, but the ones inside have to be finished to take the next one in. A master scheduler has to be appointed to ensure that such queuing is set in place. Every stakeholder of the company has to understand that false priority signals are not generated, and priority is as agreed upon by the entire organization. Once this step is implemented, the output goes up significantly and within no time, the pending load from waiting or the inactive list starts dropping dramatically. As the backlog reduces, the pressure to manage OEMs’ urgency reduces dramatically.

The Full-kit RuleTo avoid interruption in

active work packets, it is vital to implement a full-kit rule simul-taneously, where the resources are allowed to start work on a particular work packet only if the full kit necessary to start and complete that work packet is in place in advance. At the same

time, the criteria to end the work are defined. The concurrency, if any, is predefined and not violat-ed in execution at all.

The resources preparing the upcoming work packet should also be separate, so that multi-tasking does not creep in just for the sake of ensuring a full kit. Maintaining a reduced Work-In-Progress (WIP) rule releases the capacity to create a separate pre-paratory team.

Once these two rules are implemented, system chaos reduces drastically and excess capacity is revealed. The above-mentioned two steps usu-ally yield an output jump of 3–4 times of the original output. The queue of the frozen work packets in front of most of the resources shrinks quickly, followed by the output rate exceeding the inflow rate.

The steps require the entire management (marketing, engi-neering, and top management) of component vendors to set a clear priority signal along with WIP rules. In the transition, this might appear difficult due to the vicious loop of delays and asso-ciated expediting and further delays. But once the WIP con-trol and priority rules are set in place, the output expands and lead time shrinks. Further, as the backlog comes down, the delays get eliminated, and so do the expediting requests.

Satyashri Mohanty is the founding Director of Vector Consulting Group (www.vector-consulting.in). Vector Consulting Group is the leader in the Theory of Constraints (TOC) consulting space in India. Satyashri can be reached at: [email protected]

With growing competition,

OEMs have found that introducing

new models is key to drawing traffic

to their showrooms.

Satyashri Mohanty, Founding Director of Vector Consulting Group

Auto Monitor

S I A M D A T A1241 - 31 JANUARY 2013

I Passenger Vehicles (PVs) A : Passengers Cars - Upto 5 Seats Micro: Seats Upto-4, Length Normally <3200 mm, Body Style-Hatchback, Engine Displacement Normally upto 0.8 Litre Regular: Tata Motors Ltd (Nano) 8,003 1,339 48,500 49,199 7,466 2,202 47,112 49,332 548 40 2,276 42Total 8,003 1,339 48,500 49,199 7,466 2,202 47,112 49,332 548 40 2,276 42Micro: Seats Upto-5, Length Normally <3600 mm, Body Style-Hatchback, Engine Displacement Normally upto 1.0 Litre Regular: General Motors India Pvt Ltd (Spark) 1,240 505 18,804 5,947 1,365 740 18,803 5,967 0 10 54 34Hyundai Motors India Ltd(Santro) 13,270 13,220 115,046 107,668 11,138 11,226 81,008 96,134 2,476 537 26,961 16,383Maruti Suzuki India Ltd (M800, Alto,Wagon R,A-Star) 51,490 40,957 417,948 362,637 38,593 32,797 337,423 296,732 14,042 11,250 78,895 68,861Total 66,000 54,682 551,798 476,252 51,096 44,763 437,234 398,833 16,518 11,797 105,910 85,278Compact: Seats Upto-5, Length Normally 3600-4000 mm, Body Style-Sedan/Estate/Hatch/Notchback, Engine Displacement Normally upto 1.4 Litre Regular: Fiat India Automobiles Pvt Ltd (Palio, Grande Punto) 252 4 8,510 4,930 270 266 7,521 4,658 18 0 1,042 55Ford india Pvt Ltd (Figo ) 7,175 5,324 68,110 68,230 4,114 4,509 48,925 47,539 1,282 4,382 17,776 22,851General Motors India Pvt Ltd (Beat, U-VA) 4,374 2,916 37,068 39,183 4,828 4,155 36,800 39,484 30 9 153 103Honda Siel Cars India ltd (Jazz, Brio) 240 2,641 4,430 30,910 327 2,651 5,343 29,383 0 422 21 1,345Hyundai Motors India Ltd(Getz, i10, i20) 29,753 34,124 289,750 296,547 13,723 12,306 152,761 135,629 15,287 17,000 139,176 159,639Maruti Suzuki India Ltd (Swift, Ritz, Estilo) 21,463 22,750 161,040 184,742 20,653 22,482 154,186 181,407 188 31 7,332 5,036Nissan Motor India Pvt Ltd (Micra) 8,521 7,128 87,932 61,620 1,036 716 12,902 9,035 2,211 6,644 70,013 50,600Renault India Pvt Ltd (Pulse) 111 56 111 3,883 0 515 0 4,224 0 0 0 0SkodaAuto india p.ltd ( Fabia ) 958 246 12,999 2,912 1,471 219 12,287 2,772 0 0 0 0Tata Motors Ltd (Indica,Indica Vista, Indigo CS) 13,135 5,678 121,921 91,694 14,847 8,945 110,546 90,047 42 282 2,480 3,593Toyota Kirloskar Motor Pvt Ltd (Liva) 4,723 3,590 20,803 30,751 4,399 2,010 20,260 19,576 0 1,245 0 12,342Volkswagen India Pvt Ltd (Polo) 1,749 2,202 30,098 27,050 2,835 2,096 28,427 25,640 0 0 0 0Total 92,454 86,659 842,772 842,452 68,503 60,870 589,958 589,394 19,058 30,015 237,993 255,564Super Compact: Seats Upto-5, Length Normally 4000-4250 mm, Body Style-Sedan/Estate/Hatch/Notchback, Engine Displacement Normally upto 1.6 Litre Regular: Hyundai Motors India Ltd (Accent) 2,187 2,900 27,747 24,537 575 267 7,271 2,229 1,670 3,589 20,139 22,795Mahindra & Mahindra Ltd (Verito) 1,033 900 13,213 11,832 1,263 1,026 12,915 11,597 0 0 0 0Maruti Suzuki India Ltd (Dzire) 9,587 15,989 70,556 126,504 9,189 13,076 69,976 114,117 92 1,634 320 10,589Toyota Kirloskar Motor Pvt Ltd (Etios-Sedan) 5,053 2,733 35,829 34,462 5,446 2,157 35,619 28,216 0 1,062 0 6,395Total 17,860 22,522 147,345 197,335 16,474 16,526 125,840 156,160 1,762 6,285 20,459 39,779Super Compact: Seats Upto-5, Length Normally 4000-4250 mm, Body Style-Sedan/Estate/Hatch/Notchback, Engine Displacement Normally upto 1.6 Litre Specialty: Volkswagen India Pvt Ltd (Beetle) 0 0 0 0 1 0 59 1 0 0 0 0Total 0 0 0 0 1 0 59 1 0 0 0 0Mid-Size: Seats Upto-5, Length Normally 4250-4500 mm, Body Style-Sedan/Estate/Hatch/Notchback, Engine Displacement Normally upto 1.6 Litre Regular: Ford India Pvt Ltd (Ford ikon,Fiesta Classic) 1,109 1,373 15,939 13,788 1,748 1,788 15,557 12,610 0 0 640 421General Motors India Pvt Ltd (Aveo) 0 0 923 18 125 1 1,179 323 4 0 85 59Hindustan Motors Ltd (Lancer) 0 0 259 24 29 0 278 24 0 0 0 0Honda Siel Cars India Ltd (City) 559 1,845 20,329 22,141 600 1,442 24,431 20,929 0 0 9 52Hyundai Motors India Ltd (Verna) 3,863 3,850 36,932 45,773 4,002 2,404 36,608 43,537 0 10 0 30Maruti Suzuki India Ltd (SX4) 720 12 13,433 4,337 843 329 12,505 4,577 204 1 578 5Nissan Motor India pvt Ltd (Sunny) 915 3,835 4,719 43,664 533 1,517 3,663 19,047 0 2,149 0 21,813Renault India Pvt Ltd (Scala) 0 28 0 3,423 0 820 0 3,172 0 0 0 0Skoda Auto India pvt Ltd (Rapid) 1,246 1,506 2,551 16,886 1,296 1,890 2,253 15,563 0 0 0 0Tata Motors Ltd (Indigo, Manza) 1,367 156 13,666 6,966 1,348 110 13,353 7,449 18 56 381 578Volkswagen India Pvt Ltd (Vento) 1,011 1,504 27,109 16,666 2,437 1,975 25,842 17,597 826 768 1,273 4,209Specialty: Hindustan Motors Ltd (Ambassador) 125 267 1,722 1,718 102 271 1,719 1,718 0 0 0 0Total 10,915 14,376 137,582 175,404 13,063 12,547 137,388 146,546 1,052 2,984 2,966 27,167Executive: Seats Upto-5, Length Normally 4500-4700 mm, Body Style-Sedan/Estate/Hatch/Notchback, Engine Displacement Normally upto 2.0 Litre Regular: Fiat India Automobiles Pvt Ltd (Linea) 141 7 3,284 1,102 231 103 2,918 1,266 31 0 273 42General Motors India Pvt Ltd (Optra, Cruze) 274 39 8,468 3,605 711 361 8,344 3,407 2 0 26 39Hindustan Motors Ltd (Cedia sports) 0 1 52 61 1 1 42 71 0 0 0 0Honda Siel Cars India Ltd (Civic) 300 0 2,040 420 68 70 1,808 611 0 0 0 0Hyundai Motor India Ltd (Kizashi) 0 350 0 3,508 0 428 0 3,052 0 0 0 0Maruti Suzuki India Ltd (Kizashi) 0 0 0 0 51 45 387 186 0 0 0 0Renault India Pvt Ltd (Renault FLUENCE) 81 0 1,212 877 143 68 841 1,159 0 0 0 0Skoda Auto India Pvt Ltd (Laura) 290 70 4,625 2,044 375 216 4,121 2,302 0 0 0 0Toyota Kirloskar Motor Pvt Ltd (Corolla ) 220 300 6,171 4,405 257 155 6,206 4,214 0 0 0 0Volkswagen India Pvt Ltd (Jetta) 135 455 1,858 3,310 214 293 2,119 2,159 0 0 0 0Specialty: Hindustan Motors Ltd(Lancer EVO X) 0 0 4 0 4 0 8 0 0 0 0 0Total 1,441 1,222 27,714 19,332 2,055 1,740 26,794 18,427 33 0 299 81Premium: Seats Upto-5, Length Normally 4700-5000 mm, Body Style-Sedan/Estate/Hatch/Notchback, Engine Displacement Normally upto 3.0 Litre Regular: Honda Siel Cars India Ltd ( Accord ) 121 150 1,140 210 61 79 978 369 0 0 4 1Hyundai Motors India Ltd ( Sonata ) 5 10 106 250 11 20 106 279 0 0 0 0Nissan Motor India Pvt Ltd (Teana) 0 0 128 24 9 2 86 42 0 0 0 0Skoda Auto India Pvt Ltd (Superb) 66 30 2,832 1,269 470 199 2,434 1,467 0 0 0 0Toyota Kirloskar Motor Pvt Ltd (Camry ) 0 30 0 303 0 19 140 271 0 0 0 0Volkswagen India Pvt Ltd (Passat) 225 0 1,147 955 111 96 1,168 785 0 0 0 0Specialty: Toyota Kirloskar Motor Pvt Ltd (Prius ) 0 0 0 0 1 5 7 11 0 0 0 0Total 417 220 5,353 3,011 663 420 4,919 3,224 0 0 4 1Luxury: Seats Upto-5, Length Normally Over 5000 mm, Body Style-Sedan/Estate/Hatch/Notchback, Engine Displacement Normally upto 5.0 Litre Regular: BMW india pvt Ltd (BMW - All Models) 1,177 0 8,049 5,860 679 0 7,224 6,129 0 0 0 0Mercedes-Benz India Pvt Ltd ( S-Class Mercedes-Benz All Models) 158 278 5,089 3,883 729 751 5,289 5,006 0 0 0 0Tata-JLR (Tata-JLR All Models) 0 43 0 516 0 176 0 1,597 0 0 0 0Volkswagen - Audi (A8, Audi-All Models) 0 0 0 0 519 1,011 4,534 6,901 0 0 0 0Volkswagen India Pvt Ltd (Phaeton) 0 0 0 8 0 1 6 2 0 0 0 0Volkswagen-Porsche (Porche-All Models) 0 0 0 0 0 76 0 220 0 0 0 0Total 1,335 321 13,138 10,267 1,927 2,015 17,053 19,855 0 0 0 0Coupe: Roadster - 2 Doors; 2/4 seater, retractable/firm roof Regular: Nissan Motor India Pvt Ltd (370Z) 0 0 0 0 0 0 2 0 0 0 0 0Total 0 0 0 0 0 0 2 0 0 0 0 0Total Passenger Car 198,425 181,341 1,774,202 1,773,252 161,247 141,083 1,386,300 1,381,771 38,971 51,121 369,907 407,912B: Utility Vehicles (Uvs) B: Utility Vehicles / Sports Utillty Vehicles; 2x4 or 4x4 offroad capability; Generally ladder on frame; 2 box ; 5 seats or more but upto 10 Seats UV1: Length<4400 mm, Price Upto Rs. 15 Lakh Force Motors Ltd (Trax-GAMA) 37 46 290 237 28 36 279 222 0 0 1 0Mahindra & Mahindra Ltd (Bolero, ST) 8,457 13,029 67,753 91,524 8,311 11,393 66,965 87,476 21 6 144 106Maruti Suzuki India Ltd (Gypsy, Ertiga) 62 5,426 4,129 59,629 238 5,445 4,514 60,641 11 46 141 168Nissan Motor India Pvt Ltd(EVALIA) 0 425 0 1,365 0 187 0 644 0 0 0 0Renault India Pvt Ltd (Duster) 0 4,230 0 23,771 0 4,485 0 23,731 0 0 0 0Tata Motors Ltd (Sumo) 2,944 1,436 15,055 23,181 3,184 1,449 15,403 24,512 50 75 286 420Total 11,500 24,592 87,227 199,707 11,761 22,995 87,161 197,226 82 127 572 694UV2: Length<4400 - 4700 mm, Price Upto Rs. 15 Lakh General Motors India Pvt Ltd (Tavera) 1,932 930 16,397 15,073 1,917 1,733 16,293 14,861 10 0 70 19International Cars & Motors Ltd (Rhino) 30 0 365 259 30 0 363 260 0 0 6 48Mahindra & Mahindra Ltd (Scorpio, Bolero, HT, Xuv500, Xylo) 10,008 11,469 80,944 108,932 9,767 10,145 76,667 103,976 360 694 2,866 4,073Tata Motors Ltd (Sumo Grande, Safari) 1,020 1,178 13,034 9,964 1,212 1,376 13,737 9,298 10 5 109 94Toyota Kirloskar Motor Pvt Ltd (Innova) 5,946 7,024 38,580 57,005 5,020 6,458 37,713 56,081 0 0 0 0Total 18,936 20,601 149,320 191,233 17,946 19,712 144,773 184,476 380 699 3,051 4,234UV3: Length>4700 mm, Price Upto Rs. 15 Lakh Force Motors Ltd (Trax, Force One) 482 320 3,129 3,460 413 245 2,932 3,257 0 0 0 0Tata Motors Ltd (Aria, Xenon) 220 0 2,681 1,138 251 5 2,683 850 0 0 92 343Total 702 320 5,810 4,598 664 250 5,615 4,107 0 0 92 343UV4: Price Between Rs. 15 to 25Lakh Ford India Pvt Ltd (Endeavour) 75 180 1,980 1,425 117 220 1,985 1,253 0 0 0 0General Motors India Pvt Ltd (Captiva) 0 0 0 0 47 58 1,022 408 0 0 0 0Hindustan Motors Ltd (Pajero, Outlander) 111 211 1,541 1,355 95 208 1,470 1,364 0 0 0 0Honda Siel Cars India Ltd (CRV) 0 0 0 0 16 0 211 186 0 0 0 0Hyundai Motors India Ltd (Santa Fe) 125 50 1,204 552 67 46 1,198 589 0 0 0 0Mahindra & Mahindra Ltd (Rexton) 0 301 0 572 0 197 0 398 0 0 0 0Maruti Suzuki India Ltd (Vitara) 0 0 0 0 0 2 20 11 0 0 0 0Nissan Motor India Pvt Ltd (X-Trail) 0 0 0 0 18 2 191 57 0 0 0 0Renault India Pvt Ltd (Koleos) 7 1 264 237 39 36 262 308 0 0 0 0Skoda Auto India Pvt Ltd (Yeti) 174 34 1,769 466 326 52 1,300 880 0 0 0 0Toyota Kirloskar Motor Pvt Ltd (Fortuner) 850 1,430 7,887 11,608 813 1,260 7,872 11,487 0 0 0 0Total 1,342 2,207 14,645 16,215 1,538 2,081 15,531 16,941 0 0 0 0UV5: Price > Rs. 25Lakh Hindustan Motors Ltd (Mentero) 2 0 57 15 2 0 54 15 0 0 0 0Toyota Kirloskar Motor Pvt Ltd (LC,Prado) 0 0 0 0 12 7 112 111 0 0 0 0Volkswagen India Pvt Ltd (Touareg) 0 0 0 0 2 4 6 45 0 0 0 0Total 2 0 57 15 16 11 172 171 0 0 0 0Total Utillity Vehicles (Uvs) 32,482 47,720 257,059 411,768 31,925 45,049 253,252 402,921 462 826 3,715 5,271C: Vans; Generally 1 or 1.5 box; seats upto 5 to 10 V1: Hard tops mainly used for personal transport, Price Upto Rs. 10 Lakh Mahindra & Mahindra Ltd (Maxximo Minivan VX) 0 1,202 6 6,883 0 976 0 6,084 0 0 0 0Maruti Suzuki India Ltd (Omini,Ecco) 6,894 1,453 107,742 85,892 7,908 7,897 105,881 84,504 149 110 1,203 891Tata Motors Ltd (Venture) 613 4 5,397 2,358 608 98 5,091 2,455 0 0 3 0Total 7,507 2,659 113,145 95,133 8,516 8,971 110,972 93,043 149 110 1,206 891V2: Soft tops mainly used as Maxi Cabs, Price Upto Rs. 10 Lakh Force Motors Ltd (Trip) 0 0 100 0 1 1 137 11 0 0 0 0Mahindra & Mahindra Ltd (Gio, Maxximo Mini Van) 2,597 1,616 18,855 17,676 2,199 1,277 18,381 17,573 6 0 21 45Tata Motors Ltd (Magic, lris) 5,350 10,625 39,334 64,257 5,348 10,484 39,007 64,125 1 40 189 373Total 7,947 12,241 58,289 81,933 7,548 11,762 57,525 81,709 7 40 210 418Total Vans 15,454 14,900 171,434 177,066 16,064 20,733 168,497 174,752 156 150 1,416 1,309Total Passenger Vehicles (PVs) 246,361 243,961 2,202,695 2,362,086 209,236 206,865 1,808,049 1,959,444 39,589 52,097 375,038 414,492II Commercial Vehicles (CVs) M&HCVs A: Passenger Carriers A1: Max. Mass exceeding 7-5 tonnes but not exceeding 12 tonnes (M3(B1)) (b): No. of seats including driver exceeding 13 (M3(B2)) Ashok Leyland Ltd (Lynx) 179 222 1,670 1,918 157 166 1,748 1,978 73 74 421 150Mahindra Navistar Automotives Ltd (Tourister32, Tourister 40) 0 0 0 0 0 0 0 0 4 0 4 0Mahindra Navistar Automotives Ltd (tourister 32 to ) 0 11 436 584 7 16 265 703 0 0 0 0SML Isuzu Ltd (41 Seater, 32 Seater NQR Bus) 57 151 2,172 3,195 392 274 2,332 2,736 0 0 5 7Tata Motors Ltd (LP1112, LP912, Starbus Ultra) 108 251 4,062 4,605 464 343 4,344 4,863 55 73 449 255VE CVs - Eicher (10.90, 11.10, 11.12) 134 89 2,233 2,198 134 135 2,291 2,252 80 10 118 118Total A1 478 724 10,573 12,500 1,154 934 10,980 12,532 212 157 997 530A2: Max. Mass exceeding 12 but no exceeding 16.2 tonnes (M3(C)) (b): No. of seats including driver exceeding 13 (M3(C2)) Ashok Leyland Ltd (Viking, Cheetah, 12M) 2,721 1,666 15,468 14,471 2,274 1,138 12,000 11,138 352 266 3,202 3,297SML Isuzu Ltd (LT Bus) 4 0 60 29 1 2 50 16 0 0 0 1Tata Motors Ltd (LPO1512,LPO1612, Starbus, Divo) 1,284 547 10,271 8,268 1,416 822 9,670 8,451 218 132 1,840 1,276VE CVs - Eicher (20.15) 103 114 688 1,259 86 125 569 1,164 45 0 106 78Volvo Buses India Pvt Ltd (8400 & 9400 4X2) 16 14 174 178 27 12 185 180 0 0 0 3Total A2 4,128 2,341 26,661 24,205 3,804 2,099 22,474 20,949 615 398 5,148 4,655A3: No. of seats including exceeding 13 and max. mass exceeding 16.2 tonnes (M3(D)) Passenger Carrier (D) Volvo Buses India Pvt Ltd (9400 XL) 45 16 307 345 24 21 290 329 0 0 0 4Total A3 45 16 307 345 24 21 290 329 0 0 0 4Total M&HCVs(passenger carriers) 4,651 3,081 37,541 37,050 4,982 3,054 33,744 33,810 827 555 6,145 5,189M&HCVs B: Goods Carriers (c) Max Mass exceeding 7.5 tonnes but not exceeding 10 tons Ashok Leyland Ltd (eComet) 78 32 541 1,148 36 98 294 680 29 44 75 363SML Isuzu Ltd (Super Supereme) 323 183 2,457 1,882 300 265 2,118 1,679 60 30 293 207Tata Motors Ltd (LPT9109) 510 657 5,219 7,402 892 460 6,978 4,448 20 144 794 1,096VE CVs - Eicher (10.80, 10.90, 10.95) 1,157 620 9,011 6,406 1,254 807 8,594 6,459 14 60 156 240Total 2,068 1,492 17,228 16,838 2,482 1,630 17,984 13,266 123 278 1,318 1,906(d) Max. Mass Exceeding 10 tons but not exceeding 12 tons Ashok Leyland Ltd (eComet) 236 235 2,855 4,192 280 370 2,429 3,628 16 22 184 181SML Isuzu Ltd (Samrat Super 12) 220 161 1,275 1,461 231 159 1,257 1,260 0 2 3 23Tata Motors Ltd (LPT1109) 1,156 309 8,976 4,117 2,118 1,195 15,866 12,962 105 59 770 524VE CVs - Eicher (11.10, 11.12) 1,278 940 10,128 9,855 1,379 1,239 9,690 10,262 0 18 142 102Total 2,890 1,645 23,234 19,625 4,008 2,963 29,242 28,112 121 101 1,099 830Total B 4,958 3,137 40,462 36,463 6,490 4,593 47,226 41,378 244 379 2,417 2,736B2: Max Mass exceeding 16.2 tonnes (N3(A)) (a) Max. mass exceeding 12 tonnes but not exceeding 16.2 tonnes (N3(A1)) Ashok Leyland Ltd (4x2 Tipper, 4X2 Haulage) 1,703 1,151 16,770 12,928 1,167 1,079 12,106 11,011 450 140 3,766 1,755Asia Motor Works Ltd (1618 TP) 0 40 0 152 0 32 0 137 0 0 0 0SML Isuzu Ltd (IS12T) 0 0 4 2 0 0 3 21 0 0 0 0Tata Motors Ltd (LPT1613, LPK1616, SK1613) 5,503 3,390 47,614 31,868 3,587 2,347 28,495 21,497 279 181 4,445 2,133VE CVs - Eicher (20.16, Terra 16) 525 392 4,045 3,194 547 398 3,440 2,798 36 172 469 302Total B2 7,731 4,973 68,433 48,144 5,301 3,856 44,044 35,464 765 493 8,680 4,190B3: Max Mass exceeding 16.2 tonnes-Rigid Vehicles (N3(B1)) (a) Max. mass exceeding 16.2 tonnes but not exceeding 25 tonnes Ashok Leyland Ltd (6X2 Mav, 6X4 Mav, 6X4 Tipper) 1,733 685 12,937 9,914 1,481 960 12,178 9,736 68 27 681 486Asia Motor Works Ltd (2518HL, 2516 HL, 2518 TP, 2523TP, 2518TM) 278 419 6,700 4,016 504 409 6,437 3,890 0 0 0 0Mahindra Navistar Automotives Ltd (MN25) 121 54 689 815 152 62 906 948 0 0 0 0Tata Motors Ltd (LPT2518, LPK2518) 5,201 1,932 40,029 26,247 4,606 2,210 36,445 25,378 119 172 1,742 1,675VE CVs - Eicher (30.25, Terra25) 142 71 912 1,313 178 153 846 1,229 3 5 8 40VE CVs - Volvo (fm400) 0 0 0 0 0 0 0 0 0 0 0 0Total 7,475 3,161 61,267 42,305 6,921 3,794 56,812 41,181 190 204 2,431 2,201

PRODUCTION AND SALES FLASH REPORT FOR DECEMBER 2012 Source: SIAM

Category Segment/Subsegment Manufacturer. Production Domestic Sales Exports

For the month of Cumulative For the month of Cumulative For the month of Cumulative

December April-December December April-December December April-December

2011 2012 11-12 12-13 2011 2012 11-12 12-13 2011 2012 11-12 12-13

Auto Monitor

S I A M D A T A 1251 - 31 JANUARY 2013

(b) Max. mass exceeding 25 tonnes Ashok Leyland Ltd (8X2 Haulage, 8X4 Tipper) 1,258 520 9,458 8,642 1,127 400 9,282 7,494 0 0 0 0Asia Motor Works Ltd (3118HL, 3118TP) 42 116 433 524 43 104 358 503 0 0 0 0Daimler India Commercial Vehicles Pvt Ltd 0 0 120 0 0 0 85 0 0 0 0 0Mahindra Navistar Automotives Ltd (MN31) 106 43 484 573 109 70 737 733 0 0 0 0Tata Motors Ltd (LPT3118) 4,110 322 42,098 21,059 3,751 1,593 30,992 20,926 44 0 171 95VE CVs - Eicher (35.31) 121 37 1,076 1,364 205 113 1,052 1,278 0 10 0 12VE CVs - Volvo (FM400) 11 44 367 421 100 89 339 441 0 0 0 0Total 5,648 1,082 54,036 32,583 5,335 2,369 42,845 31,375 44 10 171 107Total B3 13,123 4,243 115,303 74,888 12,256 6,163 99,657 72,556 234 214 2,602 2,308B4: Max. Mass exceeding 16.2 tonnes-Haulage Tractor (Tractor-Semi Traller/Traller)(N3(B2)) (b) Max. mass exceeding 26.4 tonnes but not exceeding 35.2 tonnes Ashok Leyland Ltd (4x2 Tractor 4X4 Tipper) 211 96 1,819 1,801 198 175 1,860 1,788 20 0 114 43Asia Motor Works Ltd (3518 TR) 0 0 65 60 0 0 38 53 0 0 0 0Mahindra Navistar Automotives Ltd (MN35) 6 12 13 84 5 15 5 81 0 0 0 0Tata Motors Ltd (LPS3518) 2 277 974 4,078 565 378 5,696 3,846 5 0 7 1Total 219 385 2,871 6,023 768 568 7,599 5,768 25 0 121 44(c) Mass exceeding 35.2 tonnes but not exceeding 40 tonnes Ashok Leyland Ltd 0 179 0 204 0 95 0 96 2 0 0 1Asia Motor Works Ltd 0 0 0 0 24 0 24 0 0 0 0 0Mahindra Navistar Automotives Ltd (MN40) 71 14 354 191 37 40 278 220 0 0 0 0Total 71 193 354 395 61 135 302 316 -2 0 0 1(d) Max. mass exceeding 40 tonnes but not exceeding 49 tonnes Ashok Leyland Ltd (4X2 Tractor) 103 43 1,487 954 113 98 1,440 1,015 0 2 0 2Asia Motor Works Ltd (4018TR, 4923TR) 14 26 496 312 22 30 472 311 0 0 0 0Tata Motors Ltd (LPS4018, LPS4023, LPS4928) 212 225 4,146 6,694 849 518 8,884 6,807 0 14 86 101VE CVs - Eicher (40.40) 13 4 87 123 9 14 90 103 0 0 0 2Total 342 298 6,216 8,083 993 660 10,886 8,236 0 16 86 105(e) Max. mass exceeding 49 tonnes and Above Ashok Leyland Ltd (6X4 TRACTOR) 78 14 1,057 406 110 76 1,301 517 0 0 0 0VE CVs - Volvo (FM400HD, FH520) 13 1 163 78 23 0 162 34 0 0 0 0Total 91 15 1,220 484 133 76 1,463 551 0 0 0 0Total B4 723 891 10,661 14,985 1,955 1,439 20,250 14,871 23 16 207 150Total M&HCVs (Goods Carriers) 26,535 13,244 234,859 174,480 26,002 16,051 211,177 164,269 1,266 1,102 13,906 9,384Total M&HCVs 31,186 16,325 272,400 211,530 30,984 19,105 244,921 198,079 2,093 1,657 20,051 14,573LCVs A: Passenger Carriers A1: Max. Mass upto 5 tonnes (a): No. of seats including driver exceeding 13 (M2(A2)) Force Motors Ltd 1,253 565 8,575 8,712 883 673 7,791 8,211 42 3 113 111Mahindra Navistar Automotives Ltd (Tourister15) 2 0 1,185 358 231 165 1,977 1,712 0 0 0 0Tata Motors Ltd (SFC407, CityRide) 250 47 3,855 2,983 327 199 3,820 3,353 19 2 125 59Total 1,505 612 13,615 12,053 1,441 1,037 13,588 13,276 61 5 238 170A2: Max. Mass exceeding 5 tonnes but not exceeding 7-5 tonnes (M3(A)) (b): No. of seats including driver exceeding 13 (M3(A2)) Ashok Leyland Ltd (Stag) 0 0 904 1,129 0 0 237 328 0 0 303 404Force Motors Ltd 0 48 24 310 1 47 49 209 0 0 0 0Mahindra & Mahindra Ltd (Tourister 25) 0 0 0 0 0 0 0 0 0 9 9 35Mahindra Navistar Automotives Ltd (Tourister 25) 227 243 1,880 2,437 24 31 1,164 1,181 0 0 0 0SML Isuzu Ltd (20,32,26,24 Seater Bus) 332 102 2,705 1,869 260 242 2,420 1,650 0 0 19 45Tata Motors Ltd (LP709, SFC410, LP410) 593 410 11,065 10,151 925 648 9,454 9,250 146 127 2,379 1,940VE CVs - Eicher (10.50, 10.60, 10.75) 93 138 2,341 3,163 156 186 2,363 3,061 51 33 137 285Total A2 1,245 941 18,919 19,059 1,366 1,154 15,687 15,679 197 169 2,847 2,709B2: Max. Mass upto 5 tonnes (b): No. of seats including driver not exceeding 13 (M2(A1)) Force Motors Ltd( Toofan, Crusier, T1) 497 592 4,465 4,114 371 417 4,235 3,832 0 3 5 3Tata Motors Ltd (Winger Platinum, Winger 10 Seats) 102 370 933 3,734 400 372 2,163 3,160 0 18 20 77Total B2 599 962 5,398 7,848 771 789 6,398 6,992 0 21 25 80Total LCVs (Passenger Carriers) 3,349 2,515 37,932 38,960 3,578 2,980 35,673 35,947 258 195 3,110 2,959LCVs B: Goods Carriers (a) Max. Mass not exceeding 2 tons-Mini Truck Segment Force Motors Ltd (Trump 15 PU) 0 0 196 0 27 5 173 41 0 0 0 0Mahindra Navistar Automotives Ltd (Gio, Maxximo) 6,228 2,765 44,585 33,620 4,513 2,789 39,745 31,048 900 640 3,932 4,602Piaggio Vehicles Pvt.Ltd (Ape Truck, ApeTruck Plus, Ape Mini Truck)) 668 120 8,865 2,664 771 107 8,736 2,175 5 0 15 424Tata Motors Ltd (ACE, ACE Ex, ACE Zip) 22,824 20,010 157,894 139,004 17,124 18,679 131,273 150,057 3,200 900 18,116 12,400Total 29,720 22,895 211,540 175,288 22,435 21,580 179,927 183,321 4,105 1,540 22,063 17,426(b) Max. Mass not exceeding 2 but no exceeding 3.5 tons-Pick Ups Ashok Leyland Ltd (Dost) 1,042 2,850 2,793 24,626 1,099 2,064 2,700 23,885 0 0 0 8Force Motors Ltd 501 179 4,673 2,317 336 195 4,230 2,554 16 4 87 19Hindustan Motors Ltd 4 27 132 175 15 9 118 149 0 0 0 0Mahindra & Mahindra Ltd 8,293 10,924 64,030 88,033 7,045 8,664 52,604 72,698 1,419 1,535 10,427 14,020Tata Motors Ltd (Super ACE, Tata 207, Xenon, WingerDV) 3,008 6,306 23,349 37,237 2,170 5,439 15,963 31,244 219 746 3,821 7,627Total 12,848 20,286 94,977 152,388 10,665 16,371 75,615 130,530 1,654 2,285 14,335 21,674(a) Max Mass exceeding 3.5 tons but not exceeding 6 tonnes Ashok Leyland Ltd 0 0 0 0 0 0 0 1 0 0 0 0Force Motors Ltd 90 91 1,083 935 90 88 1,060 957 1 1 16 3Mahindra & Mahindra Ltd (DI3200 CRX, Load King CRX) 0 0 0 0 0 0 0 0 0 66 94 151Mahindra Navistar Automotives Ltd (DI3200 CRX, Load King CRX) 478 305 4,283 2,817 455 193 4,034 2,664 0 0 0 0SML Isuzu Ltd (Cosmo) 11 9 70 132 7 8 63 102 0 0 0 0Tata Motors Ltd (SFC407, LPT407) 3,520 1,151 25,531 12,758 2,727 1,490 21,506 16,110 469 402 3,566 2,319VE CVs - Eicher (10.50, 10.55) 38 30 902 611 53 63 889 559 102 39 201 103Total 4,137 1,586 31,869 17,253 3,332 1,842 27,552 20,393 572 508 3,877 2,576(b) Max Mass exceeding 6 tons but not exceeding 7.5 tonnes Ashok Leyland Ltd 10 0 10 0 0 0 0 0 0 0 0 0Mahindra Navistar Automotives Ltd (Load King CRX Sherpa) 0 74 243 357 29 39 140 293 0 0 0 0SML Isuzu Ltd (Sartaj, Prestige Premium) 187 164 1,327 1,219 153 166 924 1,059 119 35 321 109Tata Motors Ltd (SFC709, LPT709) 583 848 6,107 9,418 479 338 3,912 3,893 48 414 591 2,382VE CVs - Eicher (10.59, 10.60, 10.75) 634 451 4,797 3,831 511 365 3,663 3,073 208 87 1,008 547Total 1,414 1,537 12,484 14,825 1,172 908 8,639 8,318 375 536 1,920 3,038Total LCVs (Goods Carriers) 48,119 46,304 350,870 359,754 37,604 40,701 291,733 342,562 6,706 4,869 42,195 44,714Total LCVs 51,468 48,819 388,802 398,714 41,182 43,681 327,406 378,509 6,964 5,064 45,305 47,673Total Commercial Vehicles 82,654 65,144 661,202 610,244 72,166 62,786 572,327 576,588 9,057 6,721 65,356 62,246IV Two Wheelers A: Scooter/Scooterettee : Wheel size less than or equal to 12” A1: Engine Capacity less than 75cc Mahindra Two Wheelers Ltd (Kine) 233 63 3,326 1,818 402 80 4,105 1,593 0 0 6 0TVS Motor Company Ltd (teenz, Pep) 839 24 12,318 490 714 24 11,969 570 0 0 0 0Total 1,072 87 15,644 2,308 1,116 104 16,074 2,163 0 0 6 0A2: Engine Capacity 75cc and less than equal to 90cc TVS Motor Company Ltd (Pep+, Streak) 24,707 17,221 233,179 202,136 21,928 15,180 222,006 192,852 1,613 612 16,128 7,570Total 24,707 17,221 233,179 202,136 21,928 15,180 222,006 192,852 1,613 612 16,128 7,570A3: Engine Capacity >90 cc and less than equal to 125cc Hero MotoCorp Ltd (HERO PLEASURE, HERO MAESTRO) 43,135 57,669 331,113 403,400 35,941 55,502 296,580 392,924 3,293 2,071 31,221 18,081Honda Motorcycle & Scooter India (Pvt) Ltd (Activa, Dio, Aviator) 109,531 108,240 868,193 1,094,728 110,282 104,537 855,157 1,062,838 2,515 6,715 14,375 36,744India Yamaha Motor Pvt Ltd (Ray) 0 12,995 0 42,700 0 7,895 0 34,109 0 0 0 12Mahindra Two Wheelers Ltd (Duro/Duro DZ, Rodeo, Flyte) 8,224 5,912 111,621 89,202 5,830 5,112 102,324 83,508 286 374 1,553 3,615Piaggio Vehicles Pvt.Ltd (Vespa LX125) 0 1,903 0 25,927 0 3,033 0 25,641 0 0 0 4Suzuki Motorcycle India Pvt Ltd (Access, Swish) 23,528 27,558 195,248 247,678 23,544 27,421 195,262 247,344 44 220 139 1,012TVS Motor Company Ltd (Wego) 23,231 14,603 162,664 142,901 19,728 13,559 151,697 136,830 821 1,018 9,735 5,918Total 207,649 228,880 1,668,839 2,046,536 195,325 217,059 1,601,020 1,983,194 6,959 10,398 57,023 65,386Total Scooter/Scooterettee 233,428 246,188 1,917,662 2,250,980 218,369 232,343 1,839,100 2,178,209 8,572 11,010 73,157 72,956B: Motor cycles/Step-Throughs : Big Wheel size more than 12” B2: Engine Capacity 75cc and above but less than 125cc Bajaj Auto Ltd (Boxer CT, Platina, Discover) 131,126 133,698 1,490,500 1,535,129 73,520 85,766 867,321 941,411 56,460 56,600 642,605 611,929Hero MotoCorp Ltd 444,208 414,701 3,721,377 3,446,957 414,662 387,569 3,613,821 3,395,488 10,340 6,288 88,533 73,495Honda Motorcycle & Scooter India (Pvt) Ltd 19,961 34,442 140,137 260,214 15,253 28,914 111,541 230,031 5,085 6,505 28,835 29,946India Yamaha Motor Pvt Ltd (Crux, YBR110) 8,143 671 59,433 49,398 6,450 2,953 49,262 40,634 1,336 1,176 8,912 9,803TVS Motor Company Ltd 41,057 40,908 460,836 379,524 29,511 28,497 365,682 300,403 10,253 9,056 103,372 83,724Total 644,495 624,420 5,872,283 5,671,222 539,396 533,699 5,007,627 4,907,967 83,474 79,625 872,257 808,897B3: Engine Capacity 110cc and above but less than 125cc Bajaj Auto Ltd (Boxer, Platina, Discover, KTM) 41,043 67,580 457,159 512,250 36,414 51,648 379,368 424,712 8,554 13,455 79,685 90,468Hero MotoCorp Ltd 54,000 70,307 376,998 516,212 48,490 64,370 360,544 494,702 2,797 3,317 13,563 20,358Honda Motorcycle & Scooter India (Pvt) Ltd 41,707 49,191 339,741 484,827 39,747 46,391 321,449 466,746 2,773 1,795 18,831 18,113India Yamaha Motor Pvt Ltd (SS 125, Enticer, YD125) 6,535 201 54,984 20,359 2,852 1,095 25,941 15,034 2,880 0 27,067 5,024Suzuki Motorcycle India Pvt Ltd (Hayate, Slingshot) 2,402 7,249 32,556 66,234 1,954 5,658 31,216 63,286 88 132 355 631TVS Motor Company Ltd (Victor GLX, Flame, STAR CITY 125) 3,951 8,402 20,721 39,530 42 9,323 1,140 27,349 3,595 2,116 19,871 23,392Total 149,638 202,930 1,282,159 1,639,412 129,499 178,485 1,119,658 1,491,829 20,687 20,815 159,372 157,986B4: Engine capacity > 125 cc but less than equal to 150 cc Bajaj Auto Ltd (Boxer,Discover, Pulsar) 70,998 64,952 764,662 596,171 45,955 42,975 568,726 391,170 23,048 20,208 196,901 215,230Hero MotorCorp Ltd 22,911 19,040 229,312 119,258 19,128 16,276 207,691 110,590 1,892 2,363 15,553 9,501Honda Motorcycle & Scooter India (Pvt) Ltd 14,200 21,300 125,977 192,261 14,308 18,961 106,400 171,259 746 2,910 20,071 21,110India Yamaha Motor Pvt Ltd (FZ, Fazer, SZ, R15 32,135 13,919 263,436 249,128 23,981 13,176 197,076 175,363 7,470 21,184 54,107 84,323Suzuki Motorcycle India Pvt Ltd (GS150R) 2,038 291 11,790 4,137 1,041 212 6,166 4,098 560 88 4,884 404Total 142,282 119,502 1,395,177 1,160,955 104,413 91,600 1,086,059 852,480 33,716 46,753 291,516 330,568B5: Engine capacity >150cc and less than equal to 200 CC Bajaj Auto Ltd (KTM, Pulsar) 8,561 19,817 105,393 147,149 6,605 10,374 70,335 94,349 3,156 8,413 38,710 54,156TVS Motor Company Ltd (Apache) 16,047 11,508 158,130 124,390 9,645 7,286 106,364 93,009 3,616 3,932 52,288 34,581Total 24,608 31,325 263,523 271,539 16,250 17,660 176,699 187,358 6,772 12,345 90,998 88,737B6: Engine capacity >200cc and less than equal to 250 CC Bajaj Auto Ltd (Pulsar, Avenger, Ninja) 9,525 8,714 93,859 72,001 6,990 7,542 64,375 55,830 2,996 1,278 29,015 17,909Hero MotorCorp Ltd (HERO KARIZMA) 4,654 3,983 36,398 30,591 3,701 3,658 35,434 30,667 32 201 238 424Honda Motorcycle & Scooter India (Pvt) Ltd (CBR 250R) 476 657 14,995 6,258 266 433 14,244 4,179 346 350 536 2,110Total 14,655 13,354 145,252 108,850 10,957 11,633 114,053 90,676 3,374 1,829 29,789 20,443B7: Engine capacity >250cc and less than equal to 350 CC Royal Enfield (Unit of Eicher Ltd) 5,285 10,513 51,494 80,625 3,994 9,481 49,963 78,355 77 55 375 647Total 5,285 10,513 51,494 80,625 3,994 9,481 49,963 78,355 77 55 375 647B8: Engine capacity >350cc and less than equal to 500 CC Bajaj Auto Ltd (KTM) 0 0 0 34 0 0 0 0 0 0 0 0Royal Enfield (Unit of Eicher Ltd) 831 1,497 7,448 10,689 631 1,347 5,444 8,406 302 168 1,874 2,125Total 831 1,497 7,448 10,723 631 1,347 5,444 8,406 302 168 1,874 2,125B9: Engine capacity >500cc and less than equal to 800 CC Bajaj Auto Ltd (Ninja) 1 120 128 280 1 89 116 244 0 2 0 2Total 1 120 128 280 1 89 116 244 0 2 0 2B10: Engine capacity >1000cc and less than equal to 1600 CC H-D Moto Company Ltd 0 15 87 504 32 46 109 511 0 0 0 0Honda Motorcycle & Scooter India (Pvt) Ltd 16 0 65 0 1 1 50 58 0 0 0 0India Yamaha Motor Pvt Ltd (R1, FZ1) 0 0 0 0 7 4 45 37 0 0 0 0Suzuki Motorcycle India Pvt Ltd (VZ 800, GSX -R-1000) 0 0 0 0 0 8 1 18 0 0 0 0Total 16 15 152 504 40 59 205 624 0 0 0 0B11: Engine capacity >800cc and less than equal to 1000 CC H-D Moto Company Ltd 0 27 11 277 9 30 30 230 0 0 0 0Honda Motorcycle & Scooter India (Pvt) Ltd 1 0 1 0 0 0 3 12 0 0 0 0Suzuki Motorcycle India Pvt Ltd (Hayabusa) 0 0 0 0 0 14 4 73 0 0 0 0Total 1 27 12 277 9 44 37 315 0 0 0 0B12: Engine capacity >1600cc (TW) H-D Motor Company India Pvt Ltd ( Fat Boy, Fat Boy Special) 0 0 0 0 8 16 10 68 0 0 0 0Suzuki Motorcycle India Pvt Ltd (Intruder) 0 0 0 0 0 0 2 21 0 0 0 0Total 0 0 0 0 8 16 12 89 0 0 0 0Total Motor Cycles/Step-Throughs 981,812 1,003,703 9,017,628 8,944,387 805,198 844,113 7,559,873 7,618,343 148,402 161,592 1,446,181 1,409,405C: Mopeds: Engine capacity less than 75cc & with fixed transmission, big wheelsize>12” Engine Capacity<75cc Mopeds TVS Motor Company Ltd (MOPED) 65,403 61,144 576,607 580,363 65,179 60,692 570,003 580,259 1,260 435 7,735 2,061Total 65,403 61,144 576,607 580,363 65,179 60,692 570,003 580,259 1,260 435 7,735 2,061Total Mopeds 65,403 61,144 576,607 580,363 65,179 60,692 570,003 580,259 1,260 435 7,735 2,061Total Two Wheelers 1,280,643 1,311,035 11,511,897 11,775,730 1,088,746 1,137,148 9,968,976 10,376,811 158,234 173,037 1,527,073 1,484,422III Three Wheelers A: Passenger Carriers A1:No. of seats including driver not exceeding 4 & Max.Mass not exceeding 1 tonnes Atul Auto Limited 1,348 1,594 10,417 12,934 1,224 1,475 10,109 12,816 20 40 196 163Bajaj Auto Ltd 38,593 45,646 381,306 346,783 15,963 19,385 144,166 163,374 25,494 26,060 245,494 192,458Force Motors Ltd 0 0 0 0 0 0 9 1 0 0 0 0Mahindra & Mahindra Ltd 5,369 4,884 39,814 37,147 4,350 3,596 36,906 35,838 122 24 2,538 981Piaggio Vehicles Pvt.Ltd 10,943 11,836 110,404 108,365 10,219 10,627 96,234 100,754 1,354 437 14,179 7,113Scooters india Ltd 443 434 3,901 3,250 364 380 3,520 3,389 0 0 0 0TVS Motor Company Ltd 2,345 4,413 34,838 33,684 1,200 1,404 9,995 12,513 1,323 3,082 20,930 22,381Total 59,041 68,807 580,680 542,163 33,320 36,867 300,939 328,685 28,313 29,643 283,337 223,096A2: No.of seats including Driver exceeding 4 but not exceeding 7 & Max.Mass exceeding 1.5 tonnes Force Motors Ltd 77 126 363 687 0 0 0 0 0 0 406 644Mahindra & Mahindra Ltd 0 0 0 0 0 0 209 0 0 0 0 0Scooters india Ltd 376 224 2,220 2,144 339 175 2,382 2,032 0 0 0 0Total 453 350 2,583 2,831 339 175 2,591 2,032 0 0 406 644Total Passenger Carrier 59,494 69,157 583,263 544,994 33,659 37,042 303,530 330,717 28,313 29,643 283,743 223,740B: Goods Carriers B1: Max.mass not exceeding 1 tonnes Atul Auto Limited 1,111 1,367 9,247 10,463 1,123 1,312 9,217 10,591 0 8 26 19Bajaj Auto Ltd 440 63 5,549 2,542 534 151 5,576 2,678 0 0 0 0Mahindra & Mahindra Ltd 976 1,778 10,976 12,704 1,188 1,496 10,515 12,423 38 16 508 677Piaggio Vehicles Pvt.Ltd 4,736 4,128 45,202 38,968 4,741 4,001 44,382 37,881 167 210 794 1,190Scooters india Ltd 444 527 4,495 3,782 408 419 4,165 3,940 0 0 0 0Total 7,707 7,863 75,469 68,459 7,994 7,379 73,855 67,513 205 234 1,328 1,886B2: Others Mahindra & Mahindra Ltd 325 200 3,612 1,843 206 117 3,484 1,804 0 0 0 0Piaggio Vehicles Pvt.Ltd 35 0 146 38 0 0 0 0 36 0 150 48Scooters india Ltd 369 265 2,154 2,249 365 180 2,262 2,092 0 0 0 0Total 729 465 5,912 4,130 571 297 5,746 3,896 36 0 150 48Total Goods Carrier 8,436 8,328 81,381 72,589 8,565 7,676 79,601 71,409 241 234 1,478 1,934Total Three Wheelers 67,930 77,485 664,644 617,583 42,224 44,718 383,131 402,126 28,554 29,877 285,221 225,674Grand Total of all Categories 1,677,588 1,697,625 15,040,438 15,365,643 1,412,372 1,451,517 12,732,483 13,314,969 235,434 261,732 2,252,688 2,186,834

Category Segment/Subsegment Manufacturer. Production Domestic Sales Exports

For the month of Cumulative For the month of Cumulative For the month of Cumulative

December April-December December April-December December April-December

2011 2012 11-12 12-13 2011 2012 11-12 12-13 2011 2012 11-12 12-13

* Exports of Ford indicate CKDs

Auto Monitor

N O R T H A M E R I C A N A S S E M B LY1 - 31 JANUARY 2013

126

North America Assembly Tracking 11-2012 (Tracking by Brand & Nameplate)AUTOFACTS Global Automotive Outlook

PricewaterhouseCoopers LLP

November 2012 Last 3 Months Year to Date Ownership Org/ YOY Assembly YOY YOY Assembly YOY YOY Assembly YOY Brand & Nameplate Volume % Chg Share % Share Chg Volume % Chg Share % Share Chg Volume % Chg Share % Share Chg

AutoAlliance International (USA) - -100.0% - (-0.9) - -100.0% - (-0.9) 103,581 -3.1% 0.7% (-0.2)Ford Mustang - -100.0% - (-0.5) - -100.0% - (-0.5) 66,015 -9.4% 0.5% (-0.1)Mazda Mazda6 - -100.0% - (-0.5) - -100.0% - (-0.4) 37,566 10.4% 0.3% (-0.0)BMW (Germany) 25,478 3.2% 1.9% (-0.2) 80,488 6.5% 2.0% (-0.1) 280,920 9.3% 2.0% (-0.2)BMW X3 11,964 5.4% 0.9% (-0.1) 38,041 10.6% 0.9% (-0.0) 140,483 24.5% 1.0% 0BMW X5 9,452 -2.1% 0.7% (-0.1) 29,710 -2.3% 0.7% (-0.1) 98,779 -4.6% 0.7% (-0.2)BMW X6 4,062 10.4% 0.3% (-0.0) 12,737 18.5% 0.3% 0 41,658 2.4% 0.3% (-0.0)Chrysler Group LLC (USA) 208,577 13.8% 15.7% 0 609,730 18.2% 15.2% 0.8 2,209,434 20.6% 15.4% 0.2Chrysler 200 13,207 26.7% 1.0% 0.1 37,193 24.8% 0.9% 0.1 140,223 24.2% 1.0% 0Chrysler 300 6,939 12.3% 0.5% (-0.0) 19,565 36.7% 0.5% 0.1 76,202 52.1% 0.5% 0.1Chrysler Town & Country 11,316 18.4% 0.9% 0 33,857 23.7% 0.8% 0.1 112,418 12.3% 0.8% (-0.0)Dodge Avenger 9,206 26.1% 0.7% 0.1 32,725 57.9% 0.8% 0.2 104,093 50.2% 0.7% 0.2Dodge Caliber - -100.0% - (-0.4) - -100.0% - (-0.3) - -100.0% - (-0.4)Dodge Caravan 19,382 27.4% 1.5% 0.2 54,720 31.7% 1.4% 0.2 186,443 20.6% 1.3% 0Dodge Challenger 4,310 2.7% 0.3% (-0.0) 13,190 23.2% 0.3% 0 45,091 11.5% 0.3% (-0.0)Dodge Charger 9,274 -9.3% 0.7% (-0.2) 27,136 21.7% 0.7% 0.1 90,568 6.5% 0.6% (-0.1)Dodge Dakota - - - - - - - - - -100.0% - (-0.1)Dodge Dart 14,101 - 1.1% 1.1 37,817 - 0.9% 0.9 60,707 - 0.4% 0.4Dodge Durango 6,087 17.4% 0.5% 0 16,439 29.6% 0.4% 0.1 49,272 -27.3% 0.3% (-0.2)Dodge Journey 12,426 34.7% 0.9% 0.1 33,484 11.9% 0.8% 0 119,669 17.9% 0.8% (-0.0)Dodge Nitro - -100.0% - (-0.2) - -100.0% - (-0.2) - -100.0% - (-0.2)Fiat 500 4,260 -21.1% 0.3% (-0.1) 21,014 28.5% 0.5% 0.1 77,686 48.4% 0.5% 0.1Fiat Freemont 3,727 -22.3% 0.3% (-0.1) 10,513 -10.9% 0.3% (-0.1) 48,421 67.5% 0.3% 0.1Jeep Compass 8,299 -10.6% 0.6% (-0.2) 24,221 0.4% 0.6% (-0.1) 99,668 5.0% 0.7% (-0.1)Jeep Grand Cherokee 19,394 23.6% 1.5% 0.1 56,261 10.7% 1.4% (-0.0) 220,006 38.9% 1.5% 0.2Jeep Liberty - -100.0% - (-0.6) - -100.0% - (-0.6) 78,695 15.0% 0.5% (-0.0)Jeep Patriot 7,178 -12.2% 0.5% (-0.2) 22,837 30.4% 0.6% 0.1 87,756 19.6% 0.6% 0Jeep Wrangler 5,266 -12.4% 0.4% (-0.1) 16,751 -3.5% 0.4% (-0.1) 67,882 19.4% 0.5% 0Jeep Wrangler Unlimited 10,121 7.7% 0.8% (-0.0) 33,061 17.8% 0.8% 0 114,720 22.5% 0.8% 0Lancia Flavia 34 - 0.0% 0 360 - 0.0% 0 2,125 - 0.0% 0Lancia Grand Voyager 450 -48.3% 0.0% (-0.0) 1,596 -60.5% 0.0% (-0.1) 7,112 76.1% 0.0% 0Lancia Thema 2,135 190.5% 0.2% 0.1 6,020 87.1% 0.2% 0.1 11,838 267.9% 0.1% 0.1Chrysler Group LLC (USA) 208,577 13.8% 15.7% 0 609,730 18.2% 15.2% 0.8 2,209,434 20.6% 15.4% 0.2Ram Cargo Van 777 -8.4% 0.1% (-0.0) 1,876 17.6% 0.0% 0 9,352 377.6% 0.1% 0Ram Pickup 40,688 39.5% 3.1% 0.6 109,094 18.9% 2.7% 0.2 390,825 26.2% 2.7% 0.2Volkswagen Routan - -100.0% - (-0.1) - -100.0% - (-0.1) 8,662 -38.3% 0.1% (-0.1)Daimler AG (Germany) 15,699 -6.0% 1.2% (-0.2) 48,493 -2.5% 1.2% (-0.2) 179,219 21.0% 1.2% 0Freightliner Sprinter 774 10.1% 0.1% (-0.0) 2,397 10.7% 0.1% (-0.0) 8,571 12.4% 0.1% (-0.0)Mercedes-Benz GL-Class 5,573 74.2% 0.4% 0.1 17,016 66.5% 0.4% 0.1 45,265 40.9% 0.3% 0Mercedes-Benz GL-Class AMG 28 - 0.0% 0 85 - 0.0% 0 124 - 0.0% 0Mercedes-Benz M-Class 9,032 -19.0% 0.7% (-0.3) 27,987 -14.2% 0.7% (-0.2) 109,896 19.8% 0.8% 0Mercedes-Benz M-Class AMG 45 2.3% 0.0% (-0.0) 140 12.9% 0.0% 0 551 146.0% 0.0% 0Mercedes-Benz R-Class 247 -84.6% 0.0% (-0.1) 868 -81.2% 0.0% (-0.1) 14,812 -9.7% 0.1% (-0.0)Ford Motor Company (USA) 240,507 6.4% 18.1% (-1.2) 765,331 8.9% 19.1% (-0.5) 2,528,525 4.9% 17.6% (-2.4)Ford C-MAX 4,712 - 0.4% 0.4 12,391 - 0.3% 0.3 16,406 - 0.1% 0.1Ford Crown Victoria - - - - - -100.0% - (-0.1) - -100.0% - (-0.5)Ford Edge 18,194 6.8% 1.4% (-0.1) 52,423 10.5% 1.3% (-0.0) 170,063 7.3% 1.2% (-0.1)Ford Escape 31,079 15.3% 2.3% 0 98,328 14.4% 2.5% 0.1 303,927 2.2% 2.1% (-0.3)Ford E-Series 10,356 -7.2% 0.8% (-0.2) 27,543 4.2% 0.7% (-0.1) 125,991 2.7% 0.9% (-0.1)Ford Expedition 5,493 -6.6% 0.4% (-0.1) 17,134 -4.0% 0.4% (-0.1) 62,591 15.9% 0.4% (-0.0)Ford Explorer 18,270 12.5% 1.4% (-0.0) 58,755 16.9% 1.5% 0.1 195,381 24.1% 1.4% 0.1Ford Fiesta 12,958 9.3% 1.0% (-0.0) 38,887 7.7% 1.0% (-0.0) 129,686 11.4% 0.9% (-0.1)Ford Flex 2,746 -14.2% 0.2% (-0.1) 8,354 -5.2% 0.2% (-0.0) 30,531 6.6% 0.2% (-0.0)Ford Focus 22,267 5.8% 1.7% (-0.1) 74,194 4.5% 1.9% (-0.1) 262,983 30.4% 1.8% 0.2Ford F-Series 67,248 10.7% 5.1% (-0.1) 226,407 14.9% 5.6% 0.1 771,775 16.0% 5.4% (-0.1)Ford Fusion 28,603 8.9% 2.2% (-0.1) 80,325 -0.4% 2.0% (-0.2) 264,451 -2.6% 1.8% (-0.4)Ford Mustang 2,629 - 0.2% 0.2 21,320 - 0.5% 0.5 21,320 - 0.1% 0.1Ford Ranger - -100.0% - (-0.7) - -100.0% - (-0.7) - -100.0% - (-0.8)Ford Taurus 8,794 32.9% 0.7% 0.1 29,673 35.5% 0.7% 0.1 93,405 29.5% 0.6% 0.1Lincoln Mark LT 90 15.4% 0.0% 0 204 68.6% 0.0% 0 428 6.5% 0.0% (-0.0)Lincoln MKS 956 -34.6% 0.1% (-0.1) 3,683 4.7% 0.1% (-0.0) 13,839 20.5% 0.1% 0Lincoln MKT 730 13.9% 0.1% 0 2,341 23.6% 0.1% 0 7,622 45.5% 0.1% 0Lincoln MKX 4,102 4.7% 0.3% (-0.0) 10,184 1.6% 0.3% (-0.0) 29,781 -8.8% 0.2% (-0.1)Lincoln MKZ 627 -82.9% 0.0% (-0.3) 871 -92.4% 0.0% (-0.3) 19,911 -39.5% 0.1% (-0.1)Lincoln Navigator 653 1.2% 0.0% (-0.0) 2,314 -6.2% 0.1% (-0.0) 8,434 -8.1% 0.1% (-0.0)Ford Motor Company (USA) 240,507 6.4% 18.1% (-1.2) 765,331 8.9% 19.1% (-0.5) 2,528,525 4.9% 17.6%Lincoln Town Car - - - - - - - - - -100.0% -Mazda Tribute - - - - - - - - - -100.0% -Mercury Grand Marquis - - - - - - - - - -100.0% -Fuji Heavy Industries (Japan) 22,941 -8.2% 1.7% (-0.4) 71,064 1.6% 1.8% (-0.2) 260,161 19.0% 1.8%Subaru Legacy 4,499 -4.9% 0.3% (-0.1) 13,596 -3.3% 0.3% (-0.1) 47,139 11.9% 0.3%Subaru Outback 10,496 -6.1% 0.8% (-0.2) 32,833 -2.6% 0.8% (-0.1) 121,782 23.1% 0.8%Subaru Tribeca 343 -47.9% 0.0% (-0.0) 1,035 -46.5% 0.0% (-0.0) 3,825 -36.6% 0.0%Toyota Camry 7,603 -9.7% 0.6% (-0.1) 23,600 16.3% 0.6% 0 87,415 22.1% 0.6%General Motors Company (USA) 282,788 11.0% 21.3% (-0.5) 836,103 5.8% 20.9% (-1.2) 3,040,397 5.6% 21.1%Buick Enclave 5,091 59.3% 0.4% 0.1 13,676 0.1% 0.3% (-0.0) 57,448 -13.4% 0.4%Buick LaCrosse 5,715 8.2% 0.4% (-0.0) 17,225 1.5% 0.4% (-0.0) 56,515 -6.1% 0.4%Buick Lucerne - - - - - - - - - -100.0% -Buick Regal 2,288 -39.1% 0.2% (-0.1) 5,922 -34.0% 0.1% (-0.1) 19,809 -0.5% 0.1%Buick Verano 5,052 224.5% 0.4% 0.2 16,608 756.1% 0.4% 0.4 54,853 2727.5% 0.4%Cadillac ATS 6,805 - 0.5% 0.5 18,697 - 0.5% 0.5 21,096 - 0.1%Cadillac CTS 1,989 -66.7% 0.2% (-0.4) 8,446 -52.2% 0.2% (-0.3) 45,982 -22.7% 0.3%Cadillac DTS - - - - - - - - - -100.0% -Cadillac Escalade 1,579 116.0% 0.1% 0.1 4,286 9.1% 0.1% (-0.0) 15,401 -4.0% 0.1%Cadillac Escalade ESV 1,065 71.2% 0.1% 0 2,978 48.6% 0.1% 0 8,789 20.7% 0.1%Cadillac Escalade EXT 237 48.1% 0.0% 0 731 31.2% 0.0% 0 2,404 7.5% 0.0%Cadillac SRX 6,607 -10.0% 0.5% (-0.1) 23,166 3.1% 0.6% (-0.0) 85,029 6.6% 0.6%Cadillac STS - - - - - - - - - -100.0% -Cadillac XTS 4,567 - 0.3% 0.3 12,890 - 0.3% 0.3 25,544 - 0.2%Chevrolet Avalanche 3,780 85.6% 0.3% 0.1 9,217 60.0% 0.2% 0.1 26,426 12.0% 0.2%Chevrolet Aveo 6,912 -2.7% 0.5% (-0.1) 23,275 11.4% 0.6% (-0.0) 79,186 22.1% 0.6%Chevrolet C2 - -100.0% - (-0.1) - -100.0% - (-0.3) - -100.0% -Chevrolet Camaro 10,529 45.2% 0.8% 0.2 28,992 25.5% 0.7% 0.1 92,420 -5.8% 0.6%

Auto Monitor

N O R T H A M E R I C A N A S S E M B LY1 - 31 JANUARY 2013

127

Chevrolet Captiva 4,048 -38.0% 0.3% (-0.3) 13,752 -11.1% 0.3% (-0.1) 54,038 39.8% 0.4%Chevrolet Colorado - -100.0% - (-0.3) - -100.0% - (-0.3) 32,266 -15.5% 0.2%Chevrolet Corvette 1,404 15.4% 0.1% 0 3,904 22.9% 0.1% 0 13,704 12.2% 0.1%Chevrolet Cruze 22,329 14.3% 1.7% 0 73,489 -0.1% 1.8% (-0.2) 267,034 -0.8% 1.9%Chevrolet Equinox 24,272 5.4% 1.8% (-0.1) 71,070 16.2% 1.8% 0.1 237,767 10.5% 1.7%General Motors Company (USA) 282,788 11.0% 21.3% (-0.5) 836,103 5.8% 20.9% (-1.2) 3,040,397 5.6% 21.1% (-2.7)Chevrolet Express 7,449 35.7% 0.6% 0.1 15,715 -21.1% 0.4% (-0.2) 82,850 11.7% 0.6% (-0.0)Chevrolet HHR - - - - - - - - - -100.0% - (-0.2)Chevrolet Impala 12,326 -21.3% 0.9% (-0.4) 40,099 -8.8% 1.0% (-0.2) 161,477 -8.6% 1.1% (-0.3)Chevrolet Malibu 19,976 5.3% 1.5% (-0.1) 63,020 18.9% 1.6% 0.1 227,579 15.3% 1.6% (-0.1)Chevrolet Silverado 42,669 20.1% 3.2% 0.2 116,923 -1.6% 2.9% (-0.4) 469,267 2.0% 3.3% (-0.5)Chevrolet Sonic 14,243 78.5% 1.1% 0.4 44,644 92.4% 1.1% 0.5 116,202 305.5% 0.8% 0.6Chevrolet Suburban 4,255 -29.3% 0.3% (-0.2) 14,987 -3.6% 0.4% (-0.1) 56,439 2.2% 0.4% (-0.1)Chevrolet Tahoe 8,658 -4.6% 0.7% (-0.1) 28,629 10.9% 0.7% (-0.0) 100,829 5.7% 0.7% (-0.1)Chevrolet Traverse 10,710 84.4% 0.8% 0.3 30,348 8.3% 0.8% (-0.0) 92,729 -17.5% 0.6% (-0.3)Chevrolet Trax 4,365 - 0.3% 0.3 6,654 - 0.2% 0.2 6,654 - 0.0% 0Chevrolet Volt 2,259 11.3% 0.2% (-0.0) 5,149 -22.3% 0.1% (-0.1) 22,528 74.3% 0.2% 0GMC Acadia 2,927 -62.0% 0.2% (-0.4) 10,821 -53.9% 0.3% (-0.4) 70,825 -15.3% 0.5% (-0.2)GMC Canyon - -100.0% - (-0.1) - -100.0% - (-0.1) 7,064 -42.1% 0.0% (-0.1)GMC Savana 2,231 2.1% 0.2% (-0.0) 4,104 -31.1% 0.1% (-0.1) 27,000 13.9% 0.2% (-0.0)GMC Sierra Pickups 18,676 5.1% 1.4% (-0.1) 52,236 -8.6% 1.3% (-0.3) 208,650 6.2% 1.5% (-0.2)GMC Terrain 10,656 -6.8% 0.8% (-0.2) 32,397 5.4% 0.8% (-0.0) 112,088 9.4% 0.8% (-0.1)GMC Yukon 4,561 13.8% 0.3% 0 12,957 0.4% 0.3% (-0.0) 44,415 -6.4% 0.3% (-0.1)GMC Yukon XL 2,493 -27.3% 0.2% (-0.1) 8,748 -9.5% 0.2% (-0.1) 31,392 -5.7% 0.2% (-0.1)Holden Volt 46 - 0.0% 0 80 - 0.0% 0 80 - 0.0% 0Opel-Vauxhall Ampera 19 -91.4% 0.0% (-0.0) 268 -70.8% 0.0% (-0.0) 6,618 231.6% 0.0% 0Saab 9-4X - - - - - -100.0% - (-0.0) - -100.0% - (-0.0)Honda Motor Company (Japan) 142,053 67.5% 10.7% 3.4 427,851 29.8% 10.7% 1.5 1,578,136 58.0% 11.0% 2.7Acura CSX - - - - - - - - - -100.0% - (-0.0)Acura ILX 1,372 - 0.1% 0.1 12,599 - 0.3% 0.3 29,403 - 0.2% 0.2Acura MDX 5,755 51.4% 0.4% 0.1 16,324 17.5% 0.4% 0 66,061 40.5% 0.5% 0.1Acura RDX 4,443 76.4% 0.3% 0.1 12,900 85.1% 0.3% 0.1 34,226 94.5% 0.2% 0.1Acura TL 2,699 35.9% 0.2% 0 8,368 -23.8% 0.2% (-0.1) 36,123 14.7% 0.3% (-0.0)Acura ZDX 60 - 0.0% 0 184 -80.2% 0.0% (-0.0) 936 -47.7% 0.0% (-0.0)Honda Accord 35,143 147.6% 2.7% 1.4 100,951 56.7% 2.5% 0.7 371,322 77.3% 2.6% 0.8Honda Civic 31,940 18.5% 2.4% 0.1 89,856 4.6% 2.2% (-0.2) 369,013 60.9% 2.6% 0.7Honda Crosstour 1,917 53.0% 0.1% 0 3,726 -31.7% 0.1% (-0.1) 23,380 44.2% 0.2% 0Honda CR-V 31,597 111.0% 2.4% 1.1 96,446 55.3% 2.4% 0.7 333,907 68.8% 2.3% 0.7Honda Motor Company (Japan) 142,053 67.5% 10.7% 3.4 427,851 29.8% 10.7% 1.5 1,578,136 58.0% 11.0% 2.7Honda Element - - - - - - - - - -100.0% - (-0.1)Honda Odyssey 10,863 9.1% 0.8% (-0.0) 35,132 -13.1% 0.9% (-0.3) 148,587 25.0% 1.0% 0Honda Pilot 13,688 85.1% 1.0% 0.4 43,207 31.1% 1.1% 0.2 146,354 33.8% 1.0% 0.1Honda Ridgeline 2,576 45.6% 0.2% 0 8,158 47.7% 0.2% 0 18,824 64.7% 0.1% 0Hyundai Motor Company (South Korea) 63,108 14.8% 4.8% 0 198,512 19.2% 5.0% 0.3 673,039 18.7% 4.7% (-0.0)Hyundai Elantra/i30 13,517 77.7% 1.0% 0.4 41,316 66.3% 1.0% 0.3 128,647 19.5% 0.9% 0Hyundai Santa Fe - -100.0% - (-0.4) - -100.0% - (-0.4) 48,324 -44.2% 0.3% (-0.4)Hyundai Santa Fe/ix45 9,622 - 0.7% 0.7 30,391 - 0.8% 0.8 43,297 - 0.3% 0.3Hyundai Sonata/i40 19,083 -6.3% 1.4% (-0.3) 59,435 -4.4% 1.5% (-0.3) 209,601 0.1% 1.5% (-0.3)Kia Optima 11,498 1.9% 0.9% (-0.1) 34,494 25.1% 0.9% 0.1 120,420 336.6% 0.8% 0.6Kia Sorento 9,388 -15.9% 0.7% (-0.2) 32,876 -8.7% 0.8% (-0.2) 122,750 -9.6% 0.9% (-0.3)Mitsubishi Motors Corp (Japan) 5,206 183.9% 0.4% 0.2 14,991 204.1% 0.4% 0.2 32,545 -7.4% 0.2% (-0.1)Mitsubishi Eclipse - - - - - - - - - -100.0% - (-0.1)Mitsubishi Endeavor - - - - - -100.0% - (-0.0) - -100.0% - (-0.1)Mitsubishi Galant - -100.0% - (-0.2) - -100.0% - (-0.1) 14,224 -18.4% 0.1% (-0.0)Mitsubishi Outlander Sport 5,206 - 0.4% 0.4 14,991 - 0.4% 0.4 18,321 - 0.1% 0.1Nissan Motor (Japan) 112,693 7.7% 8.5% (-0.5) 325,729 1.2% 8.1% (-0.9) 1,212,785 14.8% 8.4% (-0.3)Infiniti JX Series 3,199 5935.8% 0.2% 0.2 9,846 7904.9% 0.2% 0.2 29,838 24158.5% 0.2% 0.2Nissan Altima 31,040 8.1% 2.3% (-0.1) 92,265 3.4% 2.3% (-0.2) 307,647 4.5% 2.1% (-0.3)Nissan Armada 1,604 -18.9% 0.1% (-0.0) 4,934 -12.1% 0.1% (-0.0) 19,538 1.8% 0.1% (-0.0)Nissan Frontier 61 -98.9% 0.0% (-0.5) 715 -95.8% 0.0% (-0.5) 65,984 19.1% 0.5% 0Nissan March 6,754 -7.8% 0.5% (-0.1) 20,933 4.5% 0.5% (-0.0) 67,110 70.6% 0.5% 0.1Nissan Maxima 5,643 9.1% 0.4% (-0.0) 18,239 27.7% 0.5% 0.1 66,792 10.2% 0.5% (-0.0)Nissan NV-Series 669 -25.4% 0.1% (-0.0) 2,083 -14.5% 0.1% (-0.0) 7,102 -45.7% 0.0% (-0.1)Nissan Pathfinder 11,047 244.9% 0.8% 0.6 23,209 145.5% 0.6% 0.3 52,226 58.7% 0.4% 0.1Nissan Pickup 7,599 103.0% 0.6% 0.3 24,481 99.1% 0.6% 0.3 78,195 78.4% 0.5% 0.2Nissan Sentra 16,032 26.7% 1.2% 0.1 38,410 -2.6% 1.0% (-0.1) 144,614 -2.1% 1.0% (-0.2)Nissan Tiida 9,103 -35.6% 0.7% (-0.5) 28,993 -36.6% 0.7% (-0.6) 136,092 15.7% 0.9% (-0.0)Nissan Titan 1,813 -16.7% 0.1% (-0.0) 5,566 -16.8% 0.1% (-0.0) 27,589 12.7% 0.2% (-0.0)Nissan Tsuru 3,106 -18.2% 0.2% (-0.1) 10,183 -16.8% 0.3% (-0.1) 37,634 -31.4% 0.3% (-0.2)Nissan Versa 14,487 10.0% 1.1% (-0.0) 45,168 10.5% 1.1% (-0.0) 150,595 16.3% 1.0% (-0.0)Nissan Xterra 536 -71.8% 0.0% (-0.1) 544 -90.6% 0.0% (-0.1) 20,359 -7.4% 0.1% (-0.0)Nissan Motor (Japan) 112,693 7.7% 8.5% (-0.5) 325,729 1.2% 8.1% (-0.9) 1,212,785 14.8% 8.4% (-0.3)Suzuki Equator - -100.0% - (-0.0) 160 -72.4% 0.0% (-0.0) 1,470 -27.6% 0.0% (-0.0)Tesla Motors (USA) 1,070 686.8% 0.1% 0.1 1,953 331.1% 0.0% 0 2,193 27.9% 0.0% 0Tesla Model S 1,070 - 0.1% 0.1 1,953 - 0.0% 0 2,193 - 0.0% 0Tesla Roadster - -100.0% - (-0.0) - -100.0% - (-0.0) - -100.0% - (-0.0)Toyota Motor Corporation (Japan) 142,018 11.0% 10.7% (-0.3) 427,071 15.0% 10.7% 0.3 1,578,580 47.8% 11.0% 2.1Lexus RX Series 7,890 4.5% 0.6% (-0.1) 22,758 5.8% 0.6% (-0.0) 81,213 36.9% 0.6% 0.1Toyota Avalon 6,606 139.3% 0.5% 0.3 11,473 -5.9% 0.3% (-0.1) 36,672 0.8% 0.3% (-0.0)Toyota Camry 22,083 -28.1% 1.7% (-1.0) 76,418 4.6% 1.9% (-0.1) 341,580 69.9% 2.4% 0.7Toyota Corolla 33,656 52.5% 2.5% 0.6 98,393 57.3% 2.5% 0.7 341,352 80.7% 2.4% 0.8Toyota Highlander 10,722 12.0% 0.8% (-0.0) 33,988 13.5% 0.8% 0 123,750 32.4% 0.9% 0.1Toyota Matrix 1,137 -1.7% 0.1% (-0.0) 3,563 -17.6% 0.1% (-0.0) 17,411 6.8% 0.1% (-0.0)Toyota RAV4 16,239 -0.5% 1.2% (-0.2) 46,866 1.2% 1.2% (-0.1) 168,734 48.7% 1.2% 0.2Toyota Sequoia 2,581 12.4% 0.2% (-0.0) 8,197 25.1% 0.2% 0 25,079 39.9% 0.2% 0Toyota Sienna 11,820 -0.7% 0.9% (-0.1) 35,836 -5.9% 0.9% (-0.2) 128,998 11.0% 0.9% (-0.1)Toyota Tacoma 14,602 24.0% 1.1% 0.1 48,419 24.6% 1.2% 0.1 154,869 48.3% 1.1% 0.2Toyota Tundra 8,936 0.4% 0.7% (-0.1) 24,425 5.2% 0.6% (-0.0) 103,147 37.4% 0.7% 0.1Toyota Venza 5,746 97.3% 0.4% 0.2 16,735 13.1% 0.4% 0 55,775 21.9% 0.4% 0Volkswagen (Germany) 63,046 26.4% 4.8% 0.5 200,257 32.8% 5.0% 0.8 697,492 38.0% 4.9% 0.7Volkswagen Beetle 9,569 150.9% 0.7% 0.4 27,475 112.5% 0.7% 0.3 95,387 403.4% 0.7% 0.5Volkswagen Bora - -100.0% - (-0.0) - -100.0% - (-0.0) - -100.0% - (-0.0)Volkswagen Golf/Jetta Variant 12,533 4.7% 0.9% (-0.1) 40,913 14.4% 1.0% 0 141,087 2.8% 1.0% (-0.2)Volkswagen Jetta 29,244 4.7% 2.2% (-0.2) 95,469 14.4% 2.4% 0.1 329,212 2.8% 2.3% (-0.4)Volkswagen Passat 11,700 91.8% 0.9% 0.4 36,400 97.3% 0.9% 0.4 131,806 364.3% 0.9% 0.7Total Light Vehicle 1,325,184 13.7% 100.0% - 4,007,573 11.9% 100.0% - 14,377,007 19.0% 100.0% -

November 2012 Last 3 Months Year to Date

Ownership Org/ YOY Assembly YOY YOY Assembly YOY YOY Assembly YOY Brand & Nameplate Volume % Chg Share % Share Chg Volume % Chg Share % Share Chg Volume % Chg Share % Share Chg

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