The Japanese government has added India and Bangladesh to the list of relocation destinations that would make companies eligible for benefits in an effort to cut dependence on China and encourage firms to diversify manufacturing sites across Southeast Asian countries.
“Many companies in China are relocating or putting plants in other countries to cover geo-political risk.
We should bring those investments to India or tie-up with them to produce in India. I will make efforts to organize some business exploration meetings with manufacturers of Japan to increase Make in India. Similarly we could do with other countries like Europe or Korea or USA”, said Ayukawa at the 60th Annual Convention of the Automotive Component Manufacturers’ Association (ACMA).
Emphasising there is “opportunity in adversity”, Ayukawa urged component makers to maximise localisation of auto parts in the country. The SIAM sourcing group, he said, has identified four categories of components where imports should be converted to local. These are electronics, some grades of steel, tooling and electric vehicle components. Ayukawa informed, “ If we are able to achieve this, India will become very powerful for exports also. If there are challenges, I am sure Niti Aayog and government will try to help us, as it is an important national objective also.”
He added while it is important that component makers adhere to safety protocols pertaining to Covid-19, they should also work at increasing production to meet customer demand. He also urged component makers to take extreme care of quality and safety in manufacturing operations. “Because of social distancing norms and implementing SOPs, it may be possible to miss some steps in some processes. These could lead to quality problems or safety hazards. There is no compromise on quality and safety”, said Ayukawa.
Ayukawa held the auto and component makers is having a “difficult year” because of the Covid-19 pandemic, but they have to work towards sound development of the industry by maximising production, sales, exports, local content and capability.
Ayukawa requested Niti Aayog CEO Amitabh Kant that if the government is happy with the efforts being put in, it should support the industry in creating demand by introduction of a PLI Scheme for exports, GST reduction and incentive-based vehicle scrappage scheme.
Niti Aayog CEO Amitabh Kant said the crisis on account of the pandemic is massive and recovery in the country can be led by the local automotive industry. “The V shaped recovery from this crisis the finance industry is talking about, this will have to be led by the automobile and the auto component manufacturers. We need to work in very close partnership with automobile and auto component manufacturers”, said Kant.
Kant assured stakeholders from the automobile industry that he will push in for PLI for auto components and automobiles. The vehicle scrappage policy is also at a very advanced stage of interministerial discussion.
Road Transport Minister Nitin Gadkari confirmed the vehicle scrappage policy is likely to be announced as early as next month. Gadkari said, “We want to make the Indian auto industry the number one manufacturing hub in the world.”
Kant also urged auto and component makers to reduce imports and manufacture more locally. “India imports about $15 billion of auto components. I analyzed what are these components and the component: imported included gearboxes, radiators and axles among others. I personally do not see any technological impediment localization of these components. These are all products where India provides the necessary skills. And there’s no rationale for importing”, said Kant.
Kant explained when the Prime Minister talks about Atmanirbhar Bharat, he’s not talking about anti globalization. “He’s talking about native Indian companies excelling, he is talking about the opportunity to use the domestic market as a springboard for exports”, said Kant.
Hero MotoCorp Chairman Pawan Munjal concurred that the Indian Automobile industry has the potential to become a global hub in the near future and for that the industry has to invest in technology and digitisation. The government, he said, can support the industry by facilitating regulatory approvals and helping reducing logistics costs. He said that since reopening Hero MotoCorp itself has seen good demand in pockets, particularly in rural areas. In urban markets too the company has seen a marked shift on consumer preference for personal mobility amid the pandemic. “Post Covid reality is not a detour but can be a highway to faster growth by means of connecting, communicating and collaborating”, said Munjal.
Car makers deliver over two lakh cars during festive season, post 20-30% jump in retail sales
With safe personal mobility goals dwarfing other consumer priorities in the Covid backdrop, sales of sedans, hatchbacks and SUVs climbed a fifth this Navratri and Dussehra as more than 200,000 buyers reached out for their cheque books.
Bike-makers, by contrast, weren’t as lucky: Sales of two-wheelers, particularly at the price-sensitive end of the market, have been marginally lower to flat. The impact of flat bike sales was visible on the stocks: Bajaj Auto and HeroMoto both lost about 6% Monday, and were among the biggest losers on the index.
But first, the good news.
Market leader Maruti Suzuki delivered its best performance in about five years by delivering 95,000 cars. Hyundai Motor India, Kia Motors, and Tata Motors, too, registered record numbers, cashing in upon the pent-up demand in the festive season. Toyota Kirloskar delivered a 13% rise in retail sales during the nine-day period.
Bookings through the season were in lockstep with the number of cars delivered, meaning Diwali and Dhanteras would be as sparkling as the Navratras.
Hyundai Motor retailed 26,068 units, a growth of 28% over last year, whereas deliveries were higher at 30,000 units for the same period, climbing a fifth from last Navratri.
Tarun Garg, Director for Sales and Marketing at Hyundai Motor India, said the positive momentum in sales of the last few months continued during Navratri and Dussehra.
“On all parameters, the numbers are very positive. Not only have the deliveries and retails grown by over 25-30% over the same period last year, but the bookings and enquiries also have been very strong, indicating that the rest of the season will be healthy,” added Garg.
The deluxe drive
At the highest end of the spectrum, Mercedes Benz India also broke into the green during Navratri and Dussehtra, delivering as many cars as it did last year. That contrasts with a 40% decline so far in 2020 for the luxury segment.
Rural demand continues to underpin car sales.
Veejay Ram Nakra, CEO for the automotive business at Mahindra & Mahindra, said deliveries were higher than last year for the nine-day festival period. Deliveries could not match demand as supplies are getting streamlined.
“We had a very healthy booking momentum pre-Navratri and Dussehra and we continue to have a very strong pipeline of bookings. Our bookings are up over 40% in SUV’s and at an overall level…, are up about 20% during the nine days of festivals,” said Nakra. “Rural continues to drive strong numbers.”
This year’s Navratri and Dussehra included one day less than the customary 10, and the festivities were preceded by Adhik Maas (or an additional month in Hindu calendar) during which some purchase decisions and deliveries were made.
In 2019, the 10-day festival period was preceded by 15 days of shradh or inauspicious period. People usually defer bookings or don’t take deliveries during the shradh.
Bikes play catch-up
Meanwhile, two-wheeler sales remained tepid in the metros and tier one cities with commuter trains and metros remaining largely out of bounds for the public, thus reducing the need for short-haul commutes from home to the nearest suburban railhead.
Rakesh Sharma, ED, Bajaj Auto, told ET that festive sales now are flat compared to the same period last year. But considering the shutdowns, he said the flat sales growth was not surprising.
“The emphasis on 30 days of festivities is overblown and its extrapolation can be misleading. The real test will be over the next few months when the heat and dust of the season has settled. That period is difficult to predict and unfortunately, we have no other option but to wait, observe and then respond,” added Sharma.
The weekly run-rate of the two-wheelers registration for the week ended October 17, 2020, was 220,029 units, data from the Vahaan platform showed. This implies that daily sales for the week before the Navratri was around 31,432 for two-wheelers.
“Navratri retail volumes may not strictly be comparable with last year’s Navratri as this year, the festival has only a nine-day window compared with ten days in the previous year, and one day in the festival period could add 50,000-52,000 of incremental sales,” said an executive at a leading two-wheeler maker.
A Hero dealer in western UP said that the Navratri sales have been a few units lower than last year’s. Steep price increases in the entry-level segment due to new emission norms and crop payment delays have put a lid on sales in the more price elastic end of the market.
A Honda dealer in Telangana said that bike sales have been surpassing last year’s Navratri volumes, and supply constraints could affect bike volumes ahead of Diwali. Scooter sales remain muted.
The month-long period between the start of Navratri and Diwali typically accounts for about double the monthly average of the year for two- and four-wheeler sales. A large part of this demand is in the North and East, which together account for 50-55% of total sales of two-wheeler and passenger cars. At its peak, though, the festive season would report 3.5-4 times the usual monthly run-rate.
Cummins India completes BS-IV emission standard certification tests for wheel equipment
The latest engine can easily be scaled up to BS-V emission norms and beyond, it said.
“As India looks to boost its economy through infrastructure growth, we are all set to evolve from mechanical to new generation, fully electronic engine systems,” said Cummins India Managing Director Ashwath Ram.
He added that these new engine systems will be powered by Cummins’ best-in-class technology and will ensure higher uptime, better total cost of ownership, easy installation and cleaner emissions and, hence, will deliver superior value to end-users.
Cummins India Vice-President (Engine and Component Business) Anjali Pandey said this new four-cylinder, 4.5-litre CEV BS IV-compliant engine system will further help Cummins enhance its presence in the construction segment while meeting stringent emissions standards and providing value to the customers.
Globally, more than one million Euro-VI/BS-VI equivalent and higher emission vehicles are running with Cummins’ engine and after-treatment system, the company said.
gst: Govt support in GST cut to aid entire PV industry: Tata Motors
In an interview with PTI, Tata Motors President, Passenger Vehicles Business Unit, Shailesh Chandra said the reduction in vehicle prices would even help end customers who have been facing various pressures owing to the current state of the economy.
“Due to this transition from BS IV to BS VI, there has been a significant escalation in cost. In these trying times customers are not very confident about the outlook how the future is going to be including their salaries and jobs.
“On top of that there has been an increase in vehicle prices. It definitely impacts the industry immensely and any support by the government to reduce GST to offset some of the price increase will definitely boost the whole PV industry,” Chandra noted.
He was replying to a query whether lowering of GST would help revive the industry.
The Indian automobile industry leapfrogged to BS VI emission standards from BSIV from April 1 this year.
While auto companies put in around Rs 40,000 crore to upgrade their facilities and products, the auto components industry chipped in with an investment of Rs 30,000 crore for the same.
Chandra said there has been a significant escalation in cost due to the transition from BS IV to BS VI emission regime.
“It (reduced GST) will help consumers who are going through low buying sentiments because of uncertain and precarious outlook for the economy and their source of income. So definitely it will be helpful to boost the volumes for the passenger vehicle industry,” he said. Currently, automobiles attract GST of 28 per cent with additional cess ranging from 1 per cent to 22 per cent.
When asked about the electric vehicle segment, Chandra said the government has done its part and it was now up to the ecosystem players to participate in the process.
“As far as the government is concerned, the trust they have been bringing to electrification is something which very few governments across the world have done. Significant capital has been diverted towards the FAME scheme and others including charging infrastructure and R&D,” Chandra said.
It is now up to the manufacturers now to scale up their operations, he added.
“Government has done a lot and the only thing that the government can consider is giving FAME scheme benefits to the personal car segment as well. Incentives currently are being directed towards shared mobility and it is not gaining traction as during the pandemic the fleet segment has got impacted a lot,” Chandra said.
Personal car segment is 90 per cent of the industry and even a lower penetration of this 90 per cent segment would bring more visibility to the electric segment in the country, he added.
“Demand can be triggered through personal segment. Keeping that in mind if FAME incentives are also provided to personal segment electric cars which meet the criteria of price, localisation, range it will just accelerate the process of electrification in the country,” Chandra noted.
Tata Motors currently sells Nexon EV and two trims of Tigor with different range outputs. During the July-September quarter, the company has sold over 900 electric vehicle units. Since January, over 1,500 units of the Nexon EV have been sold.
“We believe in the future of electric mobility. We already have two versions of Tigor, we have Nexon EV, and we have announced Altroz EV, something which we are working on. There will be additional versions and products which will come in the coming years,” Chandra said.
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