Archive for India

I think we now know why Maruti’s low cost car was revealed to the banks earlier this month, they were probably pitching it to the banks to see if they would grant loans for people who want to buy it!

Banks in India are saying that they would only grant loans to buy the Tata Nano to second time car buyers instead of motorcycle owners who are looking to upgrade to a car. “We will not look to finance the purchase of the Tata Nano for those who already own a motorcycle but are stretching their budgets to buy a car. We have faced numerous problems of motorcycle loan defaults,” said an unnamed banker in an interview with Business Standard in Mumbai.

Rates to finance the Tata Nano are also expected to be higher at 18 to 19% instead of a usual new car interest rate of 13 to 14%, although it is still lower than the usual used car interest rate of 22%. This is because usually low income owners that buy such cars usually have their finances stretched to the limits every month, especially in the wake of astronomical fuel prices. This is also why Proton cars usually have higher interest rates than foreign makes in Malaysia.

Bajaj Auto already has a joint venture with Nissan and Renault to develop the low-cost Bajaj ULC for the Indian market, but Bajaj Auto’s managing director Rajiv Bajaj says that by July another agreement will be signed to explore additional products to be added to the Bajaj-Renault-Nissan portfolio such as larger cars and MPVs.

“There’s no way one can compete with a single product in any market, be it cell phones or motorcycles or cars. We are planning a portfolio of products. There would be different products, not just variants of the same product at different price points,” said Rajiv Bajaj.

I think its safe to say that Renault-Nissan’s new partner in the Indian market is Bajaj Auto. They’ve been said to be on a lookout for a new partner ever since the collaboration with Mahindra to produce the Renault Logan in India did not take off very well.

Even in the recent story on Proton in India by the Economic Times of India, it was mentioned that talks between Proton and Mahindra aren’t going so well because Mahindra wanted to stay away from the passenger vehicle market for awhile after the Logan’s unsuccessful run.

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Banks and other financial institutions have been given a sneak preview of Maruti Suzuki India’s upcoming low-cost car (possibly to work out financing deals?), which is expected to get a price tag of Rs 1.2 lakh to Rs 1.5 lakh. The car will not be a new car, but will be a stripped down version of the Maruti 800 hatchback.

The Maruti 800 is a rebadged Suzuki 800, and used to be India’s best selling car until it was overtaken by the newer Maruti Alto. It is a car from the 1980s, but have been given several facelifts over the years… this all sounds very familiar. The cheapest Maruti 800 is currently about Rs 0.75 lakh more expensive than the target price that Maruti has set for the new low cost stripped down version.

The 5-door hatchback weighing around 650kg is powered by a 37 horsepower 796cc inline-3 engine engine, hence the 800 model name taken from an engine displacement rounded up to 800cc.

The Maruti 800 has an advantage over all the new players rushing into the low-cost car market such as the Tata Nano and the Bajaj ULC as the Indian public are already very familiar with the Maruti 800 and know what what they’re in for, while its competitors are basically a big question mark.

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The Indian government has just introduced an additional tax for cars, MPVs and SUVs with engine displacements from 1,500cc and above, a segment that sees nearly 400,000 vehicles sold annually.

Cars with engine displacements between 1,500cc and 1,999cc will be taxes an additional Rs 15,000 (roughly RM1,125), and cars with engine displacements above 2,000cc will be taxed an additional Rs 20,000 (about RM1,498).

“This hike was unforseen and unexpected. It will have an impact on demand and we will have to revisit our production forecasts and margins, which are already under pressure. There is nothing to suggest that just because a car has a bigger engine, it will consume more fuel,” said Ankush Arora, vice president (marketing and sales) at GM India.

Of the three Proton cars that the Economic Times reported will see an Indian market launch sometime next year, only the Proton Persona with a 1.6 liter engine will be affected by this increase in tax, as the other two cars are 1.3 liters and below.

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India’s The Economic Times reveals that Proton has finalised its India plans and is set to enter the Indian market initially with a 3 model line-up comprising of the Proton Savvy 1.2 liter, the Proton Saga 1.3 liter and the Proton Persona 1.6 liter.

They will be introduced in phases with the first to hit the market in early 2009. The cars are currently undergoing trials and technical evalutations - India’s homologation rules are quite stringent from what I’ve heard.

There is also some new news regarding Proton’s talks with a JV partner in India. Apparently talks with Mahindra & Mahindra have fell through, according to an unnamed senior executive from Indian company Proton Motors Ltd.

“We were close to striking a deal with M&M, but they have preferred to distance themselves from the car market after the Logan sedans not too successful run. We are now looking for a possible joint venture with other Indian automobile companies, particularly with a strong focus on marketing,” the senior executive revealed.

He also added that Proton will be looking at the high fuel efficiency niche as part of its Indian strategy, and there is also the possibility of introducing Protons there with the ability to use Compressed Natural Gas as fuel.

Related Posts:
Proton and the Indian automotive industry

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Indian automaker Mahindra & Mahindra Limited, a company popular for their SUVs and trucks is putting a firm foot into the opposite end of the vehicle range with their recent acquisition of Engines Engineering S.p.A., an Italian engine design and manufacturing firm.

Mahindra through its unit Mahindra Systech will begin R&D of small and fuel efficient engines for cars such as the Tata Nano and the upcoming Nissan-Renault-Bajaj ULC. Engines Engineering S.p.A. started off designing motorcycles, and some of its motorcycle clients include Ducati, Honda, and Yamaha.

Mahindra did not say if it already had any clients who are looking for small engines or whether it is already in discussions with potential clients, but if there are no takers Mahindra can always build a small car themselves, since it is all the rage now.

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Hyundai Motor India managing director HS Lheem announced that Hyundai will be developing a Rs 1.5 lakh (RM11,360) car for the Chinese and Indian markets.

The car will be developed in India at R&D facilities in Hyderabad and Chennai with support from Korea, with a target launch set somewhere in 2011 or 2012. Hyundai is the number two car manufacturer in India and their cheapest car is the Hyundai Santro (Hyundai Atos) which sells for Rs 2.7 lakh (RM20,450).

India is a market where both the Hyundai i10 (rebadged 2008 Picanto) and the Hyundai Santro are offered, but the more expensive i10 are slowly eating into Santro sales because the Indian market is maturing, and at that price point they’d rather pay a little bit more in terms of monthly installment to get something that looks better and more modern.

According to a report by Marinews, it seems that the impending launch of the Tata Nano has had a bad effect on the used car market in India, with used car sales dipping between 15 to 30 percent because buyers are waiting for the Tata Nano to be launched before deciding whether to buy a Nano or a used car.

Even used car values are affected, with cars like a 6-year old Maruti 800 dipping in value by 30% from 110,000 rupees to 75,000 rupees and a 5-year old Hyundai Santro’s 200,000 rupee value down to 165,000 rupees. Values of small cars that are usually purchased by budget-concerned buyers are generally hit the most, because of the fear of an impending rise in fuel prices. Some of these buyers would have to go back to bikes.

The Tata Nano is a no-frills car, but one of the more well-equipped, pricier versions of the Tata Nano will feature dual front airbags. And with luck, they’ll only increase the cost of the car by a minimum. Autoliv IFB India on the request of Tata is trying to develop a US$10 airbag for the Tata Nano, less than 10 times the price of airbags in other compact cars which cost around US$150 per airbag.

Swedish-American company Autoliv currently supplies 28% of the world’s airbags. In our market, an Autoliv joint venture with a Japanese company called Autoliv Hirotako Sdn Bhd supplies airbags for Proton, and the upcoming Perodua MPV.

Given that even these normally priced airbags sometimes do not work completely as intended and may end up injuring or killing occupants rather than saving them, are US$10 airbags really safe to use?

Related Posts:
Tata Nano: how did they do it? Cost-cutting secrets exposed
Tata Nano: the name of the Tata 1-lakh car

The Renault-Nissan Alliance and Bajaj Auto will form a new joint-venture in India, held 50% by Bajaj Auto, 25% by Renault and 25% by Nissan. The new joint venture will develop and produce a new low cost car called the ULC, which would have a price tag of USD2,500 onwards. Not sure what ULC stands for at this moment, but I’m guessing something to the lines of Ultra Low Cost.

The Bajaj ULC will most likely be a production version of the Bajaj Lite concept car (shown above) displayed at the New Delhi Auto Show earlier this year. The Bajaj Lite concept featured a 2-cylinder engine and driven to the wheels via what Bajaj says is a new type of transmission that is a cross between a manual and an automatic.

That sounds like a manual with a computer controlled clutch like the Savvy’s AMT gearbox to me, but we’ll see what Bajaj has up its sleeves. Could a centrifugal clutch like a bike’s (Bajaj is a bike maker) be used on a car? Actually, it has been used in the past, but we’re talking about cars from the 1930s here.

Bajaj managing director Rajiv Bajaj was quoted referring to the Lite concept to say, “It will be priced competitively but not sell on the pricing. Offering the customer twice the fuel economy is more effective than offering half the price.”

Two more photos of the Bajaj Lite concept after the jump.

Click here to read the rest of Renault-Nissan and Bajaj team up for USD2,500 car