#India

Renault is using their Dacia subsidiary to produce cheap cars for Eastern Europe and other emerging markets (such as Germany, where Dacias had been snapped up during the Abwrackprämien-orgy.) Meanwhile, Renault’s Japanese twin Nissan is starting to feel a little left out. Yes, they have the Nissan Pixo, which is a rebadge of the Suzuki A-Star, which is built in India (and was recalled recently), but Nissan seems to want something of their own and they want the Indian truck manufacturer Ashok Leyland to help. Sounds easy enough …

Last November, Suzuki received a fuel leakage complaint on three cars in Europe and one in India. Suzuki did what Suzuki was required to do: Send owners of the “A-Star” (A.K.A, Suzuki Alto, Nissan Pixo) an invitation to go to their dealer and have the fuel pump fixed. As usual, this story received next to no media attention. In the years BT (before Toyota,) who cared about a yet another recall?

That was then, this is AT. Today, someone said “Suzuki has a recall” on the floor of the New Delhi stock exchange. Holy cow!

As a car company, closing out 2009 with a profit is a commendable feat. Generally, you count yourself amongst the blessed if you are still alive (or bailed-out by friendly governments.) Let’s look at two companies that made money in 2009. At least, at some time in 2009.

Everybody who’s ever worked in China knows that some things take some time. Nothing that is announced today, happens tomorrow. There are applications to be made, documents to be “chopped.” Sometimes, this process takes forever, as it seems to be the case with Hummer. Sometimes, things move a bit faster. Last December, we reported that GM would sell a crucial one percent of the 50:50 holdings of GM China to their joint venture partner SAIC to bring the shareholdings to 51 percent SAIC, 49 percent GM.

As China’s new year (that of the tiger) came around, China’s biggest automaker SAIC Motor Corp has won regulatory approval to acquire the crucial 1 percent stake in Shanghai GM, Shanghai Daily reports today via Gasgoo. The matter has been officially filed to the Shanghai Stock Exchange yesterday. It’s official now. General Motors officially has been relegated to minority shareholder in its key venture in the world’s largest auto market. SAIC is now calling the shots.

GM and Chrysler were already culling dealers before their bankruptcies, which hastened the process. Many of those dealerships were profitable businesses, often family owned, whether or not they were ultimately an asset to the parent automakers. Dealers have established regional brand equity, being major advertisers in their markets. The dealers losing their franchises have explored what few options they have. There are lobbying efforts at the state and national levels to protect the affected dealers with some kind of legislation. Some have signed up with Hyundai & Kia, as the low priced Korean automakers thrive in the recession. Others, recognizing that new car sales are often a wash, and that repair service and used car sales are profit centers, have stayed in business as used car dealerships or automotive service centers.

Now Sears Roebuck & Co. has offered some of those culled dealers another lifeline. Banking on the reputation of its DieHard battery brand as well as being one of the country’s leader tire retailers, Sears is launching the Independent Sears Auto Center franchise program, starting with a former Chrysler dealer in New Jersey, the Coleman Auto Group. Participating stores will offer Sears’ full automotive product line of batteries, tire, accesories as well as repair services and replacement parts.

Last November, we reported that Carl-Peter Forster had stepped down as CEO of General Motors Europe, in protest over GM’s interruptus of the Opel/Magna deal. We also reported that Forster may take a job at Tata in India. All in due time …

David Smith, CEO of Jaguar Land Rover has left the company for reasons that JLR and parent firm Tata refuse to elaborate upon beyond telling the Beeb that Smith’s departure is “not linked to the recent breakdown of talks with unions over pay and pensions.” Since the sale to Tata, Jaguar has been negotiating a two-tier wage system and pension reform with workers at its four British plants, but talks stumbled to a halt just days ago. So, that’s definitely not why Smith left suddenly.

Optimism is a rare commodity in the auto industry these days, and nearly all of it comes from the so-called BRIC nations of Brazil, India, China and (to a lesser extent) Russia. India in particular is being targeted as one of the few growth opportunities for the industry’s global players. Nissan/Renault, Volkswagen, Honda, Ford and GM have all recently announced major initiatives to target growth in India’s entry-level market, and GM even gave up control of its Chinese operations in order to beef up its Indian presence. But, as the Hindu Business Line reports, India could be staring down the kind of overcapacity that is causing so many headaches for automakers in mature markets.

A report about the automotive industry in the BRIC countries, released by the Boston Consulting Group, throws cold water on the low cost production story:

“In manufacturing, companies are generally paying a premium of 5 to 15 percent to manufacture in the BRIC countries, mainly because of diseconomies of scale and higher quality-assurance costs than they incur in the more developed markets; only in Brazil do they actually save money on manufacturing.”

Ooops.

Apart from this astounding revelation, the rest of the report is full of platitudes and comes 20 years too late:

The prospect of US launches by Chinese and Indian auto brands like Tata and BYD have at least one of the established US-market players in a paranoid froth. Honda VP John Mendel revealed a few of the nightmare scenarios that keep him up at night to USA Today [UPDATE: more on Mendel’s fears at Automotive News [sub]]. One, inspired by BYD’s plans for a 2010 US launch without a distribution channel in place, is that newcomers could skip the dealer model altogether. Mendel worries that “warehouse stores or electronics stores” ( sound familiar?) could be used to cut dealers out of the loop, “blowing up” business-as-usual for US distribution strategy.

The world’s supposedly cheapest car ($2,500 apiece) will cost $220,000 when Mumbai-based D.C. Design is through with it. They will keep the car’s snub-nosed shape, everything else has to go.

The standard two-cylinder 624cc, 33-horsepower engine will be replaced by a 1600cc engine. To make room for the motor, the back seats will be removed. The car will get new brakes, new suspension, and bigger 20-inch wheels to allow for the top speed of 200 kilometers per hour (124 mph).

The news coming out of India has been dominated by talk of the booming small car market, there’s another development which deserves some attention. The Economic Times of India reports that after two years of testing, India’s government is about to roll out a star rating system for (get this) fuel efficiency. The star rating system is voluntary for the first year, but starting next year the system becomes mandatory. The ET explains:

The proposed label will not only suggest the new car’s ideal mileage but also tell the buyer how the car performs compared to other models in the same category. The categories would be created on the basis of the vehicle’s weight. The best performer would be given 5 stars and the others would get fewer stars depending on their mileage. At the moment, sources in the government suggest not many cars are able to hit the top category.

Quick, someone bring me the forms I need to fill out to register my displeasure!

Business Week reports that Toyota are planning to capture 10% of the Indian market. “India will play a pivotal role in Toyota’s global expansion plans,” Vice Chairman Kazuo Okamoto said today at the Delhi Auto Show. “The time has come for us to strategically accelerate our growth here.” Toyota is using the Delhi Auto show to showcase the cars which will lead the assault for 10% of the Indian market, the most important of which is Toyota Etios (which will also be produced in Brazil). Autocar.co.uk reports that Etios is 90% production ready and that it will go on sale in India at the end of 2010 (with first-year sales projected at 70k units). Because of the price (around $10000) it’ll go head to head with the Maruti Swift, the very boys who hold a huge chunk of the Indian car market. To help combat Maruti, a larger and better quality interior is key to the Etios. Autocar also reports that in order to keep costs under control, Toyota went on a cost cutting exercise. Measures taken include, limited sound proofing, a hard, but durable, interior and one windscreen wiper. But before you cry “Toyota are turning into GM”, don’t be fooled. Toyota tried the same thing with the Aygo in Europe and the end result was a good car which sells very well.