Auto companies in a rush| Murad Ali Baig

New Delhi: It is not just the monsoons. Auto companies are flooding the Indian market at such a dizzy speed that buyers are thoroughly confused. Unlike the bad old days of ‘Licence Raj’ where the scenario was confined to being a two-car race, buyers today can choose between 40 different models that offer nearly 200 options in petrol and diesel engines and trim levels.
India has clearly become the flavour of the year among auto companies. Although China is a bigger and faster growing market, the 22% growth profile of the Indian car market in 2006-07 is impressive enough for foreign companies to prefer doing their business in India where language, food and living is relatively easier.
While Maruti, or rather Suzuki, still rules the roost with half the passenger car market, their command has been in the small car segment and their stable of seven cars and four utility vehicles has not given them a real bite in the growing market of bigger cars. Till the peppy new SX4 was launched recently to offer a car that was a little bigger than it’s `C’ Segment (4 to 4.5 metre long) competitors and almost as big as the smallest car in the `D’ Segment (4.5 to 4.75m).
India’s second largest company, Hyundai also has a successful small Santro. They have similarly added their spacious and powerful new Verna with a similar objective, hoping to gradually replace their ageing Accent.
Close behind them is Tata Motors who are firmly lodged in the Indian space with their well priced models based on a 1405 cc, which is predominantly diesel engine. They have now allied with the ailing Fiat Company in India to set up a new plant near them in Pune to first make the petrol Palio and later larger models from Fiat’s stable.
Mahindra and Mahindra, who dominate India’s utility vehicles segment, have been making vigorous efforts to get into passenger cars. Their Scorpio may be a spacious and comfortable vehicle but it is not a car. Which is where their recently launched Logan, a product of their new alliance with France’s biggest carmaker Renault, hopes to plug the gap.
Japan’s Honda has done well too with their Honda City and Accord as also their new Civic that is positioned in between these two models. But they have no footprint in the smaller hatchback segment that still commands over 75% of the Indian market. They will soon dip into their arsenal and offer either a smaller `hatch’ version of the City or a completely new small car… or perhaps both,to be represented in all segments.
Their main global rival, and Japan’s largest automaker, Toyota commands the personal utility vehicles with their successful Innova though it has a tiny presence with the Corolla and imported Camry. They too are planning to set up a new plant to make a small car perhaps adapted from the stables of their subsidiary company Daihatsu which specializes in small cars.
Japan’s second largest car company Nissan has been a late starter and has only had a few imports like the XTrail SUV and the luxurious Tienna that competes with the Accord or Camry. As they have an alliance with Renault, the further link with Mahindras means that all three will be making small cars in a new plant in Tamil Nadu, to be sold under their various names.
Europe is the main technology base of smaller cars from GM and Ford although GM now sources most of its products from their newly acquired Daewoo plants in Korea from where we have their spacious Optra, the smaller Aveo and their new small Spark that evolved from the Daewoo Matiz.
The U-VA is a shortened hatchback version of the Aveo, positioned just above the Spark. Ford made India its base for a brand new Ikon platform and is doing the same for the slightly bigger Fiesta models that includes a semi sports Fusion. But we can expect a smaller and cheaper variant of a hatchback Fiesta to widen its footprint.
The Skoda Octavia has also been a success story among bigger cars despite the fact that few buyers associated it with its parent company Volkswagen. Now VW that owns Audi, is in the process of setting up a new plant in Maharashtra. Car sale estimates for the months of March-April in India give a more micro picture.
The Luxury car segment, dominated by German brands, is attracting attention since this segment is growing too. If India has a fast growing number of ‘dollar millionaires’, who were recently estimated at 100,000, there is ample scope for these models to thrive.
Mercedes Benz had been the first having sold over 2,000 cars last year. Now BMW has set up a plant and Audi is set to follow suit. Local assembly brings down costs of base models, in addition to selling fully imported top models. Among imports are exotic cars from Porsche, Lamborghini, Ferrari and others.
Despite the growth and opportunity, competition has been so fierce that car prices have not really risen much over the past five years. But with estimates pointing that India will have a domestic demand of roughly 1.5 million personal cars and utility vehicles in 2007-08, it is not surprising to find all auto majors wanting a chunk of that pie.

source : www.livemint.com

Driver's license law hits auto dealers

Jose Genao sells used cars for a living, but lately he's had to turn away customers from his Smyrna dealership.

Genao used to sell about 15 vehicles a week, mostly Ford F-150 or Silverado pickups to a Mexican clientele. Now he sells only two or three.
Half a dozen customers have returned cars because they can't register them.

"They bring the key and tell me, 'Jose, I'm leaving,' " Genao said.

Genao is feeling the fallout from a new state law, effective July 1, that requires a valid Georgia driver's license or ID card to register a car in Georgia.

The law is cutting deep into traffic for many auto dealers and tag and title services catering to the state's growing immigrant community. Illegal immigrants can't get driver's licenses because to do so, they must prove they're in the country legally.

The law also has the potential to cut into sales taxes and county ad valorem tax revenues, though metro area counties say it's too early to measure that effect.

The bill's sponsor, Sen. Chip Rogers (R-Woodstock) said he did not target immigrants.

"Yes, this will impact people who are here illegally, but my biggest focus is public safety," he said.

"If [car dealers and tag services] have built their business on people who are here illegally, I'm sorry, but at some point they had to realize that was not going to continue," Rogers said.

The license plate law closes a window that gave motorists 30 days to get Georgia driver's licenses after moving to the state. In the interim, a driver could register a car with an out-of-state or international license.

Also effective July 1 was a separate, 2006 law requiring increased verification of legal status in Georgia for a variety of other purposes, including to work in some jobs or qualify for welfare.

While no one knows how many illegal immigrants are in Georgia, a government estimate put the number around 470,000. Nationally, most illegal immigrants are from Mexico, followed by El Salvador, Guatemala, India and China, according to a 2005 Department of Homeland Security report.

Genao, 34, has a green card and has lived in the United States eight years. If business doesn't pick up, he might return to his native Dominican Republic to tend to a car dealership there.

"If they don't do something, a lot of businesses are going to close," he said.

Tony Brooks, an insurance agent who caters to the Hispanic community in Marietta, said business for his tag and title service has dropped off about 80 percent since the law went into effect.

"It's definitely slowing things down, that's for sure," Brooks said.

He's had to turn away 30 to 40 people wanting tags in the last two weeks because they don't have Georgia driver's licenses.

His main business is auto insurance, which hasn't suffered, but he's worried immigrant customers won't buy insurance either if they can't register their cars.

Cobb County's tag offices have seen a "significant decrease" in the volume of applications submitted by tag and title services in the last two weeks, said Stewart Manley, manager of Cobb County's tag offices.

The county has also turned away about 40 people per day, Manley said, out of an average 1,900 customers served daily. Some are people who have moved from other states and don't have Georgia driver's licenses yet, Manley said. "They're complaining mildly," he said.

Tax collectors in Cobb, Gwinnett and DeKalb said it is too early to tell how the new license plate law would affect tax collection.

"You really won't see the effect economically for six months," said Brent Bennett, director of vehicle registrations for DeKalb County.

Loopholes exist even with the new law.

An illegal immigrant can still mail in a tag renewal or go online and avoid the need to show a driver's license.

That's what Raul Hernandez plans to do. He is an illegal immigrant from Mexico who came here legally but overstayed his visa and so has a Georgia driver's license. He doesn't have to worry about the tag problem, but his friends do.

"People have asked me to get tags for them in my name. Right now I said 'No, it's not worth the risk. If they get tickets, they'll be sent to me,' " he said in Spanish.

"Right now people are scared, but it will settle down and go back to normal," Hernandez predicted.

Isaias Zavala, 33, an illegal immigrant from Mexico who works construction, said he has no license but his wife does, so he registers their car through her. Still, he worries because he has to drive to work.

"This all seems very bad to me," he said in Spanish of the new law.

Perimeter Insurance Agency used to process 25 tags per week in one Cobb County location. Since July 1, they've done only three renewals, said Jose Mendez, part owner of the business.

His co-owner, Rick Craddock, said he appreciates his immigrant customers.

"We love these people," Craddock said.

But he acknowledges there is a problem with illegal immigration. "We have to secure the border and slow the influx," he said. "The solution is not to kick out all the people who are already here."

source : www.ajc.com

Labor pledges to review car import tariffs

A Labor government will review plans to cut car import tariffs as part of a plan to save Australia's ailing auto industry amid reports that hundreds of Ford jobs are under threat.

Up to 600 jobs are under threat as the car maker considers closing its V6 engine plant at Geelong because of decreasing demand for larger cars.

Labor's treasury spokesman Wayne Swan today called on the government to step in to help save the Ford jobs, and indicated a Labor government would be prepared to review the scheduled tariff reduction.

A 10 per cent tariff currently applies to car imports, but the federal government is reducing this to five per cent by 2010.

"We're not making a commitment to stop that reduction in tariffs, but we are happy to sit down and talk with the industry about all of the issues that are challenging them at the moment," Mr Swan told the Nine Network.

"We are certainly prepared to discuss that with the industry, but in the context of a wider plan and a longer term plan for the industry."

Federal Industry Minister Ian Macfarlane has ruled out reviewing tariff cuts on vehicle imports.

"The reality is that by lowering tariffs and providing the industry with $7.3 billion worth of assistance, we have allowed that industry to become internationally competitive," he told ABC Radio yesterday.

Ford yesterday said no decision had yet been made on whether to close the engine plant but the company was looking at changes across its business as the popularity of large cars dipped.

"I think the government needs to sit down with a matter of urgency with Ford and work their way through that problem," Mr Swan said today.

"There's no doubt that the motor industry faces very considerable challenges; globalisation is impacting in a way on the motor industry that's got particular challenges for domestic companies.

"There is no instant solution here but in the past we have worked successfully with the car companies to meet that threat and I think we are going to have to do it again."

source : www.theage.com.au

Labor calls for Aust car industry review

Speculation that Ford might shed 600 jobs from its engine factory in Geelong has again focused attention on the sorry state of Australia's car industry. Labor is calling for the Government to rethink its plans to drop some of its support for the industry but an observer says the industry needs less mollycoddling, not more.

Australian car makers are struggling to stay afloat, even though they survive behind a tariff wall that adds 10 per cent to the cost of foreign cars and enjoy billions of dollars in tax breaks and government subsidies.

Profits and local market share are falling, a higher dollar is making exports more expensive and big cars are hard to sell in a market hungry for smaller, greener models.

At stake are the 81,000 jobs directly tied up in the car and component industry, as well as perhaps 400,000 more that feed off the industry.

Car making is vital to the economies of Victoria and South Australia. The stakes are so high that governments, particularly the Federal Government, provide massive support through the 10 per cent tariff wall and as Industry Minister Ian Macfarlane points out, billions of dollars in tax relief and handouts.

"By lowering tariffs and providing the industry with $7.3 billion worth of assistance, we've allowed that industry to become internationally competitive, which in the long term will be the difference between the industry surviving and not surviving," he said.

Mr Macfarlane says the Federal Government's assistance has developed a Camry or a rear-wheel drive GMH that can be sold anywhere in the world.

"The money that we provided last year to Ford as extra assistance is specifically targeted at developing a left-hand drive vehicle along with the fact that, of course, right-hand drive vehicles can be exported as well," he said.

Inquiry pledged

But Labor industry spokesman Senator Kim Carr says it is time to recast the Government's plan to lower the tariff barrier from 10 to 5 per cent by 2010.

"What we're saying is upon that election, we will immediately establish an inquiry into all aspects affecting competitiveness of the industry," he said.

"This is something that the Government should do right now but the Government has refused to do.

"We had a parliamentary inquiry last year that on a bipartisan basis said it was time to have a look at restructuring the assistance packages.

"This Government has sat on its hands and has assumed that things that worked in the past are going to work in the future. The world is a very different place.

"The Government has already legislated for tariff reductions and the Government has said that there's no need for change. We're saying that there is a need for change and to look at the full package."

'Mollycoddling'

Institute of Public Affairs work reform unit director Ken Phillips believes that the Australian car industry has a future but what it needs is less support, not more.

"If an industry is going to survive, it survives because it's got its act together and it's not relying on government to get its act together," he said.

Mr Phillips says the future of the car industry lies within niche markets.

"China and India are just throwing all concepts of manufacturing, of business, throwing everything of the last 100 years out the door and putting it into a different scale. All we need to do in the manufacturing area is to discover niche markets," he said.

"With the scale of the markets overseas, the niche market, any niche market that you can pick is larger than the entire Australian market.

"So the future for the car sector is discovering, like everyone else, those niche markets.

"I'm not underestimating the scale of the problems they've got at the moment but if you look out into the future, there's no reason why the industry shouldn't have a long-term viable future."

source : abc.net.au

No review of car tariff cuts - Macfarlane

INDUSTRY Minister Ian Macfarlane has ruled out reviewing tariff cuts on vehicle imports, despite reports Ford plans to stop building the Falcon six-cylinder engine at its Victorian plant.
Up to 600 jobs could be lost under Ford's plan to import V6 engines which will comply with new Euro IV exhaust emissions laws to be phased in during the next three years, Fairfax reported today.

There is a 10 per cent tariff on car imports, but the federal government is reducing this to five per cent by 2010.

Mr Macfarlane today said now was not the time to resort to protectionist policies.

"No, we certainly shouldn't be doing anything that would make the industry think that we're moving away from ensuring that Australia produces a world-competitive car,'' he said.

"If we left our tariffs at 40 to 50 per cent there's no way we'd be exporting over 100,000 vehicles a year.

"The reality is that by lowering tariffs and providing the industry with $7.3 billion worth of assistance, we've allowed that industry to become internationally competitive which, in the long term, will be the difference between the industry surviving and not surviving.''

He insisted there was a future for Australian car manufacturing and rejected suggestions that hefty government assistance demonstrated the industry was not viable.

"It's not doomed,'' Mr Macfarlane said.

"What we're seeing in Australia is a growing reliance on export markets.

"That's always going to be the future for Australia's industry.

"If it's going to grow, if it's going to compete with imports it not only has to produce a world-class car at a world-class price but it also needs to export that vehicle into other markets.''

He distanced the government from Ford's plans, saying any decision on job cuts at the manufacturer's Geelong plant would be a decision for the company to make in consultation with its workforce.

"There are emission changes that come into effect for Ford in 2010 and on that basis they're obviously considering various options,'' he said.

"But other than that it's a decision for Ford and they'll make those decisions in consultation with their workers at the appropriate time.''

Ford has been making six-cylinder engines such as the Falcon's in Geelong since 1926.

source : www.theaustralian.news.com.au