SUZUKI FAN » 2010 Auto Expo

Profit Margins Shrink as Automakers Charge into India

admin — Tue, 12 Jan 2010 02:22:25 +0000

Profit Margins Shrink as Automakers Charge into India

With big foreign players introducing models in the fast-growing Indian market, companies face new price pressure, which weighs on margins

As they prepared to launch their first small car designed for the Indian market, Toyota (TM) engineers knew they had to do some things differently. India is one of the world’s hottest auto markets—and it’s also one of the most competitive. So Toyota needed to design its new India compact, called the Etios, to attract India’s increasingly affluent middle-class consumers who have plenty of other options for low-priced cars. “When you have at least 10 to 12 other manufacturers eyeing the same segment,” explains Sandeep Singh, a deputy managing director at Toyota in India, “you will be under pressure in terms of pricing.”

That’s where Yoshinori Noritake, chief engineer of the Etios, stepped in. He and his team of Toyota engineers decided to rethink some basic systems to lower prices. For instance, a typical air conditioner in a Toyota car uses six major parts, with 12 workers in the factory needed to put them all together. For the Etios, which Toyota will launch later this year, the air conditioner has just four parts and needs just four factory workers for assembly. “India is a price-sensitive market [so] we made sure we designed the car by reducing the number of components needed,” says Noritake.

With sales in the U.S., Japan, and Western Europe slumping, India is a market Toyota and other automakers can’t ignore. At the India Auto Expo, a weeklong show that closed on Jan. 11, automakers like Honda (HMC), Volkswagen (VOW:GR), and General Motors unveiled new cars they plan to launch in India. With good reason: Per capita income has doubled from 2003, rising to $1,700 in the year ended March 2009.
Car Sales Up 19%

As incomes rise, the auto market is growing quickly. Car sales rose 19% last year, to 1.4 million, according to a Bloomberg News calculation of data released by the Society of Indian Automobile Manufacturers on Jan. 8. That puts India well behind China, which last year became the world’s top market, ending a century-long reign by the U.S. Still, India is now Asia’s third-largest market, topped only by China and Japan, and by 2014, annual sales of light vehicles (including cars and light commercial vehicles) will exceed 3 million, according to a report by Ernst & Young that cited a forecast by Global Insight. That’s up from 1.96 million in 2008.

The growing competition is already putting the heat on market leader Suzuki (7269:JP), the Japanese automaker that has long dominated India through its local subsidiary, Maruti Suzuki (MSIL:IN). Tata Motors (TTM) last year launched the most high-profile salvo with its low-priced Nano, with a price tag of around $2,500. Toyota hasn’t revealed the price yet for the Etios, but the hatchback version is likely to compete with Suzuki’s Swift, which sells for $8,800. An Etios sedan will likely compete with Suzuki’s Dzire, which sells for as low as $10,200. Even VW, which is buying a 20% stake in Suzuki, is competing with the market leader by selling its low-cost Polo starting in March. “We are feeling very high pressure” on prices, concedes Shinzo Nakanishi, managing director of Maruti Suzuki.
That sort of price pressure means automakers will no longer be able to count on fat profits from their Indian operations. Typically, India has been a good place to sell cars, with profit margins of around 12%, says Mahantesh Sabarad, an analyst in Mumbai with Centrum Broking. That compares with 8 to 9% elsewhere, he says. Because of the influx of new passenger cars designed for the Indian market, Sabarad sees companies boosting spending on incentives and discounts, with profit margins therefore falling to what they are globally. Automakers “will have to live with a lower profit margin in India,” he says.
Dealing with Profit Erosion

For many foreign players, the goal is to minimize the profit erosion. Honda, for instance, aims to lower its costs by increasing the amount of parts and raw materials it buys in India. “To be competitive, we need local procurement more than before,” says Koichi Kondo, executive vice-president of Honda. The Japanese company plans to boost the amount of steel it buys locally, for example. The new small car that Honda will begin selling in India next year will be more than 80% locally sourced, about 10 percentage points higher than the Honda City, one of its most popular Indian cars.

As a role model, Honda might look to Hyundai. The Korean automaker has pursued localization aggressively and Arvind Saxena, a director of Hyundai India, boasts the company’s Santro hatchback is “92% to 93% localized.” Hyundai is No. 2 in the market, behind only Suzuki, and that size means “I can localize because I have the volume and a huge network of vendors,” says Saxena. Hyundai now is looking to expand that vendor network further. The company has dealers in close to 260 Indian cities and aims to reach 310 by yearend, Saxena says.

There’s only so much automakers can do to maintain margins, though. In the crowded Indian market, “competition can easily imitate the steps you are taking,” says Centrum analyst Sabarad. “Profit margins will slip regardless.”

Even an optimist like Hyundai’s Saxena admits there’s no escaping the price pressure that all automakers in India are facing. “Yes,” he concedes, “profitability will be thinner than what one enjoyed five years back.”
source : Bloomberg News

With Eeco, Maruti seeks to fill Omni gap

admin — Sat, 09 Jan 2010 00:56:15 +0000

Maruti Suzuki launch EEco

Maruti Suzuki is betting big on the multi-purpose vehicle (MPV) segment, and to make a mark in this space it has launched a family car Eeco— a step forward from its Omni, which with time has become more of a cargo carrier than a passenger vehicle.

Through Eeco, Maruti seeks to fill the gaps left by Omni. I V Rao, managing executive officer (engineering), said there were certain things we could not include in Omni such as air-conditioning and more-than-basic interiors.

Maruti Suzuki launch EEco

“By introducing Eeco, we will see many people upgrading from Omni, so to that extent there will be elementary-level cannibalisation,” Rao said.

Maruti Suzuki launch EEco

Mayank Pareek, executive officer (marketing and sales), said that cannibalisation would be to the extent of 7-8%. Omni sells around 8,000 units a month.

But this is not worrying Maruti as the company has been following the strategy of introducing multiple products in the same segment.

Maruti Suzuki launch EEco

In the MPV segment for commercial usage so far there is Tata Magic, and during the Auto Expo, the company launched Magic Iris, the upgraded version of Magic, and an MPV, Tata Venture.

Maruti Suzuki launch EEco

Soon, Nissan will also drive in with an MPV codenamed NV200. Pareek said it’s important to be in this segment as it is a growing, “but our attempt is to create a completely new segment which is more of a passenger car than a cargo carrier, which is the case with Magic. So far in the personal MPV category, there are no players.”

He said the company is hopeful of gaining good volumes and stronghold in this segment which was dying down due to Omni fading popularity.

Maruti Suzuki launch EEco

Shinzo Nakanishi, managing director and CEO, Maruti Suzuki, said, “Eeco performs the twin objectives of being a spacious family car and a dependable vehicle to run businesses.”

Eeco is built on the Versa platform with a new 1.2 litre engine, which is a derivative of the G-series engine and has features of the K-series engine. Rao said it is a fuel-efficient and low-cost derivative of the G- and K-series engines.

But Mahantesh Sabarad, senior analyst, Centrum Broking said Maruti is trying to get a product premium to Omni (Eeco is priced at Rs 60,000 more than Omni) and tap the cab-on-call segment where so far only high-priced sedans exist.

Maruti Suzuki launch EEco

“So far India does not have a low-priced MPV and this is the market Maruti may be trying to capture. But what plays to its disadvantage is that Eeco is available only in petrol variant, whereas a diesel variant is preferred in this segment. I think this product will do well in class A cities and metros, and will find application in the cab-on-call segment,” Sabarad said.

However, Pareek said the product is meant for customers belonging to SEC A/B. Sticking to its strategy of introducing more than one product per segment, Maruti is developing another MPV, RIII, which is 100% India-made, right from design, development and engineering.

short press release

Maruti Suzuki launch EEco

Maruti Suzuki, the country ’s number one automobile manufacturer, has launched Eeco, an all-new spacious family car.

The Maruti Suzuki Eeco is a five-door, C segment vehicle, which has been specifically designed for India by the auto-major.

Eeco comes with a new, powerful and highly fuel efficient 1200 cc engine. This new engine delivers 73 bhp of raw power @6000rpm, a high torque of 101Nm@3000rpm specifically designed to meet the Indian driving conditions.

Maruti Suzuki launch EEco

source: dna india and Suzuki

Maruti Suzuki launch EEco

Maruti Suzuki rolls out low-priced family car ‘Eeco’

admin — Fri, 08 Jan 2010 00:50:58 +0000

Maruti Suzuki, India’s top carmaker, said on Thursday it had priced newly launched five-seater multipurpose car Eeco at 259,000 rupees ($5,640), as competition for low-cost vehicles heats up.

In the face of growing competition in the low-priced small car segment in the country, Maruti Suzuki, on Thursday, launched its family car Eeco –– aimed at targeting the low middle income group, priced at around Rs 2.59 lakh.The vehicle comes with an option of 7-seater (Rs 2.71 lakh, non-a/c) or 5-seater (Rs 2.89 lakh, with a/c), with a further option of six colours.

“Eeco is a multi-purpose family car specifically designed for India by our own engineers and has It has been priced very competitively,” Maruti Suzuki Managing Director and CEO Shinzo Nakanishi said.

The Eeco –– fitted with 1200 cc engine –– is a five-door C-segment car, he said adding “Maruti Suzuki engineers have specially developed the Eeco, its new powerful engine palce and front ,front wheel drive, and a new transmission system to meet the diverse consumer aspirations that look for a vehicle that fit a large family and at the same time provides flexibility for dual use.” Eeco is the fourth model from the Maruti stable that meet the stringent BSIV norms well ahead of the April 2010 deadline, Nakanishi said.

The Eeco is expected to initially sell 40,000 units annually,The segment is currently very small with close to 1.3 lakh units sold annually, but with the increasing demand from semi urban and rural India, it is expected to grow at a faster pace.

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Maruti Suzuki targets 50% output hike by 2015 and may use VW’s diesel technologies

admin — Wed, 06 Jan 2010 01:18:20 +0000

Maruti Suzuki targets 50% output hike by 2015 and may use VW’s diesel technologies

By 2015, the Indian market is expected to reach the three million mark.

“When the market is three million units, we will have to make and sell 1.5 million vehicles in order to keep our market share (50%) intact,” Maruti Suzuki managing director Shinzo Nakanishi said.

Nakanishi said he hoped to add capacity of another 300,000 units between now and 2015. “By adding about 300,000 units at Manesar plant and through increased efficiencies, we should be able to produce 1.5 million units by 2015”.

on the exports front, Maruti does not seem to be too ambitious. Nakanishi expects exports to stay flat at about 150,000 units per year by 2015. It plans to close 2009-10 with 130,000-140,000 units in exports, of which about 45,000 should be on account of the contract manufacturing order from Nissan.

A recent global partnership between VW and Suzuki Motor Corp. would take some time to play out in the Indian market, Nakanishi said.

Among the options that could potentially be looked at are contract manufacturing by Maruti Suzuki for the Volkswagen Group and making use of VW’s diesel technologies, he added.

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Suzuki R3 comcept gallery

admin — Tue, 05 Jan 2010 06:32:43 +0000

more pic http://autoten.com/2010/01/05/suzuki-r3-mpv-concept-picture-interior-and-exterior

Suzuki WagonR Spyshots

admin — Fri, 01 Jan 2010 01:53:08 +0000

Suzuki WagonR spyshots.the new WagonR will lauch in March 2010
feathering new Kb-series engine. you can find more infomation in our
website.

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toyota to annouce Toyota Etios (codename EFC or 801L) to compet with Swift ans Swift Dzire

admin — Thu, 31 Dec 2009 10:50:36 +0000

Toyota had recently announced that it will unveil its small car codenamed as “Entry Family Car or EFC Or 80

1L” at the Delhi Auto Expo. It has christened the new car as Toyota Etios, meaning ‘the origin of’. The car will be placed in the most competing small car segment and will be priced around Rs. 4.5 lakh or $10,000. The car will compete with the popular small car of India – Maruti Swift. Toyota will introduce both notchback and hatchback models at the Delhi Auto Expo. Toyota intends to maintain the quality of its cars, thus it will introduce its notchback model first. The hatchback model, which will sell in volumes, will come later.

Toyota has squeezed out costs wherever possible to make it price-competitive in India and has made it stand at par with Maruti Swift. Etios will be come with two engine options – a 1.4-liter diesel that powers the Yaris and a 1.2- or 1.3-liter gasoline unit. Toyota also has 1.3L petrol engine (K3 series) but has not made it clear whether it will be downsized to 1.2L to meet the small car regulation norms to save on excise duty.

India will be the lead plant in the world for the Etios, followed by Brazil, thus further consolidating India as a global hub for small cars. The new Entry Family concept car is expected to be 90 percent same to the production version that will be on sale end of 2010

source: autocar india

Suzuki to showcase SX4 hatchback,Kizashi and many orther at Auto Expo

admin — Tue, 29 Dec 2009 03:41:42 +0000

Suzuki to showcase SX4 hatchback,Kizashi and many orther at Auto Expo

The Auto Expo in New Delhi will be a platform for the bigger companies to muscle their strength with latest models and Maruti intends to display its existing strength of 17 vehicle.

Apart from the Eeco and R III concept, Maruti will also showcase much popular SX4 hatchback. But there would not be launch of this version in India, said an official from the company. Visitors to the Expo can have a sight of Suzuki Kizashi import sedan also at auto Expo are R3 mpv conccept,new launches the Eeco with CNG

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GM-SAIC JV may launch $3,500 small car in India

admin — Tue, 15 Dec 2009 23:29:04 +0000

ShanghGM-SAIC JV may launch $3,500 small car in India

China’s auto giant SAIC Motor and its U.S. partner General Motors have recently set up a Hong Kong-based joint venture to focus on India and other Asian markets. The 50:50 new venture, General Motors SAIC Investment Ltd (GMSIL), may launch an entry-level low-cost car for the Indian market, said India’s leading auto news source Wheels Unplugged.