Two-Wheeler Sales Skid After Government’s Currency Purge

At a time when one has to stand in queue for hours to withdraw cash from ATMs or a bank branch, and yet walk out with a maximum of Rs 2,000, purchasing a two-wheeler is likely to be low on the priority list.

Retail sales trends at two-wheeler dealerships across the National Capital Region (NCR) have shown a sharp decline since the demonetisation of Rs 500 and Rs 1,000 currency notes came into effect on the midnight of November 9. Authorised dealers of some of the biggest two-wheeler manufacturers such as Hero MotoCorp Ltd., Honda Motorcycle and Scooter India Pvt. Ltd., TVS Motor Company Ltd., Bajaj Auto Ltd., Eicher Motors Ltd.’s Royal Enfield, and the premium player, Harley-Davidson India had a similar story to tell.

"We used to sell 20 vehicles per day earlier, and since the demonetisation move, sales have fallen to 2-3 units per day. The footfalls for enquiry have also drastically dropped."
 - Rohit Gaur, General Manager, Jasodha Auto (an authorised dealership of Hero MotoCorp)

Typically, two-wheelers purchases, particularly in the commuter segment, are carried out through cash, and the temporary cash liquidity crunch seems to have had a drastic impact on the fortunes of dealers.

“It may be a good move in the long term, but for now sales have stopped. Close to 95 percent of our customers pay by cash, and only a handful use other means such as credit cards. With only Rs 2,400 in their hand, it is not surprising that they aren’t buying two-wheelers,” said a representative of a Honda Motorcycle dealership, who did not wish to be quoted.

Hero MotoCorp and Honda Motorcycle are the two largest two-wheeler manufacturers in India, and dealers of both companies said sales were down to one-fifth of what they were before November 8.

A TVS Motor dealer said he managed to sell only one vehicle in the first two days after demonetisation came into effect. His average daily volume was around 8-10 units per day before the government’s latest move to fight black money.
Segments above the commuter category fared only a little bit better.

"We have seen a drop in sales volumes, yes, but the number hasn’t been drastic. Against daily sales of around 3-4 units, the number has fallen to roughly 2-3 units a day."

Tapan Sharma, Dealer Principal, Aman Automobiles (an authorised dealership of Royal Enfield

He added though that the situation was much worse for after sales works such as repairs and servicing, and said the decline in that space was nearly 60 percent.

Things worsened again at the top of the pyramid. Harley-Davidson, a premium motorcycle manufacturer, has seen sales drop to almost zilch. “Sales have fallen to almost nothing over the past week. This month has been the worst in the year so far. The few customers that did turn up, brought with them bundles of notes of Rs 500 and Rs 1,000 denomination which we could not accept. The very few sales that we did manage to make were all via alternate sources of payment such as debit cards,” said a representative of a Harley-Davidson dealership in south Delhi.

"This sort of a fall was expected. With limited cash in the market, people’s priorities have changed…it is more about running the house now. This is expected to last for at least a quarter. November is expected to be weak in terms of sales, as also December."

- Abduj Majeed, Partner-Assurance, PricewaterhouseCoopers India

Typically, December is a slow month in terms of vehicle sales as buyers choose to wait for a month to get a vehicle which is manufactured in the new year. November, which is a festive month and usually sees high sales, has been hit this time around.

“It is likely that manufacturers would cut production. It is unlikely that they will pile up inventory with this being the end of the year. The situation is expected to improve only by February-March,” Majeed added.

The industry lobby group, Society of Indian Automobile Manufacturers (SIAM), also said it had expected a temporary fall in numbers. “We had expected this temporary fall, but things will improve soon,” said Sugato Sen, Deputy Director General, SIAM. Sen added that a downward revision in the sales forecast for the financial year has not been made yet.

Given the prevailing sentiment in the market, with the common man scrambling to arrange for funds for essential commodities, a substantial fall in November two-wheelers sales figure is almost a certainty.

(SOURCE : http://www.bloombergquint.com/business/2016/11/18/two-wheeler-sales-skid-after-governments-currency-purge)

Driverless cars to hit auto parts biz

Matsatsugo Horie/ Bloomberg
Source : Financial Chronicle

A Japanese company that once revolutionized the auto industry by inventing electric power-steering now finds itself on the wrong side of the latest technology innovation: driverless cars.

Jtekt Corp.’s innovation almost three decades ago outperformed the traditional hydraulic technology and allowed the company to become one of the biggest suppliers to Toyota Motor Corp. and other carmakers. It’s now made more than 100 million of the units and claims a quarter of the global market.

Tetsuo Agata, president of the Osaka-based company, is afraid that if his company doesn’t come up with a product for cars with no steering wheel it could end up supplying no one.
“We’re going to lose the foundation of our business,” Agata, 62, said in an interview in Nagoya City. “We’re going to go under if we fail to catch up. I have a strong sense of crisis.”
Steering is one of the links in the vast auto-parts supply chain that’s having to adapt to survive the new technologies and companies that are upending the auto industry.

Traditional manufacturers like Toyota and Nissan Motor Co. now compete with new entrants such as Tesla Motors Inc., Google Inc. and Uber Technologies Inc. Toyota and Nissan are racing to develop limited hands-free expressway driving as early as next year, while Google and Uber are competing to put driverless autos on public roads.

“A lot of parts suppliers will be affected by the move to autonomous driving,” said Goro Tanamachi, an analyst with IHS Automotive. As well as steering, brakes, transmissions and other drive-train parts could all be shaken up, he said.

Gujarat auto component makers focus on exports

Slowdown in domestic demand forces auto makers to eye export revenues
Sohini Das  |  Ahmedabad  April 10, 2014 Last Updated at 20:35 IST

With demand from domestic original equipment manufacturers (OEMs) in slow lane, auto-component makers in Gujarat are eyeing the exports market to keep afloat in these tough times. It is estimated that exports from the Rajkot-based autoparts hub of Gujarat during 2013-14 was about Rs 200-250 crore, up by around 20-25 per cent from last year.

Rajkot houses as many as 500 small and medium scale component makers, of which around 50 odd firms supply directly to OEMs. With the domestic automotive industry reeling under slowdown in demand, the production at the auto-component hub at Rajkot is down by almost 40 per cent, and the industry feels no immediate relief is in sight.

"While more than 75-80 per cent of our production goes to OEMs in India, people indeed are focussing more on exports to boost their revenues," said Suresh Santoki, managing director of Amul Industries, makers of connecting rods and crankshafts for automobiles. Amul Industries is one of the bigger component makers in the region, with plants at Rajkot and Sanand in Gujarat, apart from Pune in Maharashtra, Hyderabad in Andhra Pradesh, Jamshedpur in Jharkhand, Rudrapur in Uttarakhand, and Ranipet in Tamil Nadu.

It has exported engine components worth Rs 56 crore this fiscal (from its Rajkot plant), which is up by 10 per cent on a year-on-year basis. "The international markets are also tough at the moment, however, we have managed to export to countries like Brazil, Germany, US, Iran, Turkey and a few other West Asian countries. This would be around 25 per cent of our overall turnover," Santoki explained adding that most of the bigger component firms in Rajkot have focussed on exports this fiscal.

Others like Bhavani Indsutries which makes transmission components, and some small bearing makers too have focussed on the export markets this year. A local manufacturer and exporter of bearings said that exports from the region are up by 20-25 per cent, as many companies who have traditionally not been exporting have tapped international clients this year. In Gujarat, majority of the exports have come from Rajkot based component makers, other clusters like Halol, Vadodara, Ahmedabad have mainly catered to the demand of OEMs present in the locality, claimed industry insiders.

Kirti Rathod, chairman and managing director, Delux Bearings and deputy chairman of the Automotive Component Manufacturers Association (ACMA), western region pointed out that companies have been investing in building infrastructure for exports for the past few years.

"On a pan-India basis, between 2011 to 2013, major investments have taken place in the auto-component space, to the tune of Rs 2,500-3,000 crore. This has gone into getting the systems in place, as well as product development," he said adding that exports have been up in the range of 20-35 per cent in recent times. Santoki too said that his firm had invested close to Rs 25 crore in the last few years in plant and machinery as well as product development for the export market. ACMA has sought that in order to make exports more competitive, the government should extend the 5 per cent interest subvention on investments made in capital equipment.

Vinnie Mehta, executive director, ACMA felt that with the domestic industry on a slow lane, and no respite seen anytime soon, several component makers in the country, including the SMEs in Gujarat have focussed on exports this year. ACMA, however, does not collate region-wise data on exports.

(Source : http://www.business-standard.com/article/companies/gujarat-auto-component-makers-focus-on-exports-114041001218_1.html)

Volatility a new lesson for Indian auto sector - ACMA

Volatility has impacted organisations of all sizes, across all major industries but most significantly the MSMEs. The industry is under constant pressure from what is termed as VUCA forces, i.e. Volatility, Uncertainty, Complexity and Ambiguity, which continue to characterise the business environment.

VUCA has affected the market such that there is a slowdown coupled with other adversities in macro-economic factors that have created negative sentiments in the industry. However, every cloud has a silver lining and this holds true for the Auto industry as well.

In light of above, ACMA with the Ministry of Micro, Small & Medium Enterprises jointly organised 3rd MSME summit in New Delhi on March 21st 2013. mr Ajay Shankar, Member Secretary of National Manufacturing Competitiveness Council inaugurated the summit, with Mr N K Maini, Deputy MD of SIDBI as the Guest of Honour and Mr Sudam Maitra, COO (Supply Chain) of Maruti Suzuki India Limited as the Keynote Speaker.

The summit was organised to assess the current business scenario and how component manufacturers, especially the small and medium enterprises can harness this challenging environment to their benefit. Mr N K Maini, redefined VUCA as Vision, Understanding, Communication and Agility and urged the industry to strategize such that the adversity turns into an advantage.

During his inaugural address Mr Shankar, referring to volatility as intrinsic to human civilisation said that “While we have seen growth come to a standstill due to uncertainty and lack of confidence, the challenges for the future are equally daunting. Lack of availability of power, poor managerial bandwidth and low return on investments add to the challenge of unutilised capacity, especially for small Tier 2 and Tier 3 manufacturers. The industry has a lot more ground to cover and become cost competitive, while the Government needs to ensure a dependable and competitive ecosystem and infrastructure, the industry needs to focus on internal efficiencies and opportunities other than the conventional to keep their heads above water.”

At the event Mr Sudam Maitra, referred to VUCA as the ‘New Normal’. To mitigate volatility, MSMEs must strategically design a long term road map, have effective financial planning, prudently manage manpower, work smarter & leaner and focus on limited dedicated yet diversified customers without any compromise on quality. It is imperative that for the auto component industry to be globally competitive, the Tier-1s must hand hold Tier -2/3s to build their capabilities including technology and skilling of personnel.

Further, it is critical that the industry explores tools and best practices such as diversification to newer segments, globalisation, technology absorption, hedging forex, effective cash-flow management and continually innovate, along with working on concepts such as Practical Improvement in Sales and Marketing, improvising quality through innovation, better inventory management, re-examining suppliers credit processes and exploring external markets for increasing business returns to mitigate volatility.

On the occasion Mr Ramesh Suri, Vice President of ACMA said that “The purpose of this summit was to understand the dynamics of the Indian automotive market with focus on MSMEs, the factors affecting their de-growth and what could be the possible strategies to manage the volatility in the industry. The industry and the government will need to collaborate in helping companies manage the challenges especially handholding the Tier 2/3s, the weakest link in the entire automotive value chain”.

At the plenary sessions, the discussions revolved around the need for the auto component manufacturers to be innovative and being able to create higher value addition.

Source – Strategic Research Institute, Steel Guru

http://www.automobileguru.in

<source : http://www.steelguru.com/indian_news/Volatility_a_new_lesson_for_Indian_auto_sector_ACMA/335643.html>

Bhansali Engineering Forms JV With Nippon

By : Pranav Puri | 20 May 2013

Bhansali Engineering Polymers has formed a 50:50 JV with Nippon A&L Inc, to manufacture Nippon’s specialized grades of ABS polymer approved by the Japanese automobile manufacturers globally, ET states.

With this deal, all the buyers of BEPL could source their entire ABS requirement from a single source and Nippon would also direct its Indian customers to buy ABS from them.

This JV shall equip BEPL with rights to use intellectual property of Nippon and to use technical assistance from Nippon in manufacture, make and sell the licensed products.

It will also provide recipes, compounds, sales support, R&D support, new application development for manufacturing ABS and other resins.

Currently, country's annual ABS demand is currently estimated at 1.5 lac tonne, 25% is met through imports, mainly from Japan and JV plans to capture 50% of total imports.

This JV will become an integrated part of auto OEM's supply chain and help them procure ABS (Acrolynotrile Butadine Styrene) of international standard locally in a cost effective manner, he added

BEPL is a vertically integrated petrochemical company that manufacturs ABS which acts as a raw material for leading companies dealing in automobiles, home appliances, telecommunications, luggage, bus body and various other applications.

BEPL is among the country's largest producer of ABS with 51,000 tonne per annum capacity manufactured in Abu Road in Rajasthan and Satnoor in Madhya Pradesh.

The company also produces 600 tonne per month SAN (Styrene Acrylonitrile) and enjoys 40% market in this segment.

BEPL is planning to increase its capacity to 70,000 tonnes by April, 2014 and to 1,25,000 tonnes by September, 2015, with a total capex estimated at about R300 Cr, for which funds will be raised through a mix of equity and external commercial borrowing (ECB).

NIPPON A&L INC. was incorporated as a JV capitalized by Sumitomo Chemical Co., Ltd. and Mitsui Chemicals,INC.,by integrating the ABS resin business and SBR latex business of both Sumika A&L Inc. and Mitsui Chemicals, Inc.

Acrylonitrile Butadiene Styrene (ABS) is an engineering polymer, which finds application in home appliances as well as automobiles. Being a light weight material it typically replaces metal.

With automobile manufacturers using more of speciality polymers and expanding their domestic capacities, the demand for ABS is expected to grow in double digits in 3-5 years.

Last year in November, Auto component firm Anand India entered into a JV with Mando Corporation by acquiring a stake in Mando’s Indian arm Mando Steering Systems India.

Later in December, Japanese air brake component maker, Nabtesco Automotive Corporation, entered into a 49:51 JV with Uno Minda.

(Source : http://www.dealcurry.com/20130520-Bhansali-Engineering-Forms-JV-With-Nippon.htm)

Bosch opens new automotive parts facility in India

ABR Staff Writer
Published 16 May 2013

German auto-parts maker and engineering firm Bosch has opened a new automotive parts manufacturing plant at Oragadam, Chennai in India with an investment of INR350m ($6.39m).

The new 9000sqm facility is built on a land of area 40,000sqm to replace the previously rented facility in order to address the increasing demands.

Bosch Group India president Steffen Berns said the company has expanded its presence beyond its existing automotive component manufacturing sites in Bangalore, Nashik, Chakan and Jaipur with the Chennai plant.

"From the new plant, we will support all Indian automotive customers with our innovative products from electrical drives," Berns added.

The new facility includes design, development and testing, in addition to the production of actuation, thermal and wiper systems for the Indian automotive market.

The company makes components including window lift drives, engine cooling modules, blower modules, wiper linkages, arms and blades for car makers including Hyundai, Ford, General Motors, Mahindra, Renault, Nissan and Volkswagen in India.

(Source: http://www.automotive-business-review.com/news/bosch-opens-new-automotive-parts-facility-in-india-160513)

Windsor Machines to acquire Italian auto component firm Italtech

BY  BHAWNA GUPTA
Thursday, April 25, 2013 - 18:42 IST


The deal is being routed through a European joint venture with Geoplast, a part of Italy’s Pegoraro Group.

Thane-based Windsor Machines is acquiring Italian auto component firm Italtech through an overseas joint venture Wintech S.r.l. for an undisclosed amount, as per a stock market disclosure.

Windsor’s wholly owned Dutch arm Wintech B.V. will hold 80 per cent stake in Wintech while the remaining 20 per cent stake will be held by its Italian joint venture partner Geoplast S.p.a. Wintech in turn will acquire Italtech, an existing technology partner for Windsor.

Italtech manufactures injection moulding machines for moulding of plastics. It is the owner of 'Two-Platen' technology used extensively in the injection moulding industry, especially for production of large size plastic components for automobiles. Its clientele portfolio includes Fiat, Renault, Nissan and their tier I vendors.

This acquisition will enable Windsor to upgrade and develop advanced technology machines to meet European standards and also provide access to the global auto majors who are setting up their operation in India.

Windsor Machines was set up in 1964 under collaboration from R.H. Windsor of U.K. In 1984, it became a part of worldwide operations of Klockner-Werke, Germany and renamed as Klockner Windsor India Limited. It was acquired by Dilip Piramal (of VIP Group) in 1994 and later renamed as Windsor Machines.

The firm came under Kundalias few years ago and has become a key player in the plastic processing machinery industry.

(Source : http://www.vccircle.com/news/engineering/2013/04/25/windsor-machines-acquire-italian-auto-component-firm-italtech)