Renault and Mahindra to build vehicle plant in India

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Issue No.105 December 2006 In this issue Asia"South America"Africa"Middle East"Central Europe"Eastern Europe AUTOMOTIVE EMERGING MARKETS MAHINDRA & Mahindra and Renault have announced plans for a 500,000upa vehicle plant on a greenfield site in India, with the first vehicles due in mid 2009. The announcement was made jointly by company leaders Anand Mahindra and Carlos Ghosn. The site will be shared between the two partners and will have an initial capacity of 300,000 units per year.

Renault also has plans to set up a powertrain factory. Neither locations nor details of the vehicles that will be built there, nor the amounts to be invested, were revealed. Both companies plan to minimise production costs and will also pool purchas- ing.

Renault will take the lead in engineer- ing, manufacturing and what it calls 8adap- tation to meet customer requirements 9, while Mahindra 9s understanding of the Indian market and its supplier base will be invaluable assets, the companies stated. The latest announcement comes as preparations continue for the production of the firms 9 first joint venture vehicle. A Mahindra-built and badged version of the Dacia Logan is due to be launched in India in the first half of 2007.

PSA Peugeot Citroën aims to double ... more. less.

its Chinese build capacity by 2008 and add a further 150,000 units the following year. The announcement came as the company laid the foundation stone for its second plant in Hubei province. The new facility will be constructed next to PSA 9s existing factory in Wuhan. The cornerstone-laying ceremony was attended by French President Jacques Chirac who was on a four-day visit to the country, as well as PSA Peugeot Citroën 9s chief execu- tive officer, Jean-Martin Folz, and Xu Ping, chairman of Dongfeng Motor. The new PSA-Dongfeng joint venture factory is expected to begin operations in 2009 and have a two-shift 150,000 upa capacity. The plant will house a body-in- white unit, a paint shop and an assembly line dedicated to production of upper mid- range vehicles built on Peugeot 9s PF3 plat- form. The existing Wuhan plant, which employs around 9,000 workers, currently builds eight different models and is in the process of doubling capacity to 300,000 units annually by 2008. The joint venture sold around 140,000 units last year and is aiming to sell 200,000 cars in 2006. Sales have been strong so far this year with 145,500 cars sold in the first six months, a 38% increase year-on-year. The French vehicle manufacturer has introduced three new models in China this year, each designed specifically for the local market: the Peugeot 206 and Citroën C-Triomphe are four-door sedan versions of existing five-door hatchbacks, while the Renault and Mahindra to build vehicle plant in India PSA confirms plans for China Continued on page 2 Asia Pacific China: FAW sales rise by 12.4%. . . . . . 2 India: Hyundai exports 300,000th car. 12 Malaysia: Automotive market declines further in October. . . . . . . . . . . . . . . . 20 Central & South America Brazil: Ford negotiating to buy Troller. . . 23 Venezuela: Iran Khodro to begin Samand assembly in December. . . . . . . . . . . . . 24 Central & Eastern Europe Bosnia & Herzegovina: First Volvo Truck Centre opens. . . . . . . . . . . . . . . . . . . 24 Russia Audi to set up chain of automotive centres. . . . . . . . . . . . . . . . . . . . . . . . 28 Middle East Iran: Saipa to export Volvo trucks to Africa. . . . . . . . . . . . . . . . . . . . . . . . 31 Lebanon: Car sales rebound in October. . . . . . . . . . . . . . . . . . . . . . . 32 Africa Nigeria:Switch to CNG could save US$3.6bn annually. . . . . . . . . . . . . . . 33 South Africa: Tariffs to and from EU to be lowered or abolished. . . . . . . . . . . . . 35 Features The Chinese puzzle. . . . . . . . . . . . . . . . 36 Hub or hubris? The automotive industry response to the AMP in India. . . . . . . . 37 2 A utomotive E merging M arkets NEWS/ASIA PACIFIC December 2006 Citroën C2 is not the same model as its French market name- sake but rather a restyled and rebadged Peugeot 206 five-door. A further 11 new models are due for local launch between 2007 and 2009. Dongfeng Peugeot Citroën Automobiles (DPCA), which returned to profit in the first-half of this year, expects to increase profitability into 2007, despite the large investments needed for its planned doubling of production capacity by 2008, Reuters has reported, citing a senior company executive. DPCA, a joint venture between PSA Peugeot Citroën and Dongfeng Motor Group, announced a net profit of Yuan 191m (US$24.24m) for the first-half of 2006, reversing a loss of Yuan 636m (US$80.72m) in the same period of the previous year. According to Claude Vajsman, deputy general manager, the company is currently running three shifts to meet increased demand for its vehicles. The joint venture plans to enhance its unit sales by 40% to 200,000 units in 2007. The dealer network will be expanded to cope; from 80 by the end of this year, to 110 by the end of next year. China: FAW sales rise by 12.4% FAW Group remained at the top of the Chinese automotive market in August, with sales reaching 98,267 units, represent- ing an increase of 12.4% over July. At end of August, the group 9s cumulative sales rose by 23.97% year-on-year to 749,000 vehicles, translating into a market share of 16.5%. In terms of value, sales for 2006 stand at Yuan 94.7bn (US$11.99bn), a rise of 38.4% year-on-year, while profits climbed by a factor of five to Yuan 1.94bn (US$245.6m). Of the 749,000 total, 558,000 were passenger cars, 133,000 were commercial trucks and 58,000 were buses and coaches, the company said. FAW Group currently stands second in the country 9s top 500 manufacturers of 2006 list, in terms of gross sales, according to the National Bureau of Statistics of China (NBS). The Group manufactures passenger cars, trucks and buses and has major joint ventures with Volkswagen, Toyota and Mazda. For 2005, the group earned net profit of Yuan 1.85bn (US$229.37m). FAW displayed 29 future production, concept and current models at the recent Beijing motor show. Foremost among them was the all-new Hongqi HQ3 or Red Flag. This restyled Toyota Crown Majesta saloon comes with a choice of the same 3.0 litre V6 and 4.3 litre V8s that Toyota offers its Chinese-built version of the car. The HQ3 offers eight airbags, a radar-equipped pre-collision system and a steel-rein- forced structure in order to promote itself as a government car. The current Red Flag series saloons are stretched and updated versions of the 1980s Audi 100 and 200 models. The new Red Flag will be manufactured at FAW 9s Changchun plant in Jilin Province in northern China. FAW will turn out around 13,000 units of the HQ3 from the facility each year. Also on display was the FAW 9s Besturn C301, which features a 2.3-litre DOHC 16-valve four-cylinder engine and five-speed sequential shift automatic transmission. It went on sale in China in August and is a rebodied Mazda 6. The two-door S1 coupe concept, meanwhile, was built as a showcase for the engineering abilities of the Shanghai R&D office of FAW Haima Motor. Following Chang 9an 9s footsteps, which debuted the futuris- tic-looking Xingqing concept at the show, FAW also unveiled its own Hongqi C601 concept vehicle that the company says is based con a Chinese opera mask. d This large saloon is not likely to make production. China: Dalian Diesel begins production of Deutz Euro III- compliant engine FAW has announced that the Dalian Diesel Engine Division of FAW Jiefang Truck has commenced production of Deutz (Euro III emissions level) 260hp (194kW) BF6M1013-26E3 diesel engines. FAW Group 9s Jiefang commercial truck range will offer this engine as an option. On 26 November 2002, FAW Group and Deutz signed a technical transfer agreement, following which the joint venture has introduced a range of diesel engines. Deutz manufactures diesel and gas engines. The Dalian Diesel Engine division of FAW Jiefang Truck is a wholly owned subsidiary of FAW Group and manufactures light-duty, mid- range and high-horsepower diesel engines for commercial trucks, industrial, marine, power generation and agriculture and other applications. China: ZXAuto to export vehicles to the US HEBEI Zhongxing Automobile Company (ZXAuto) has entered into a new joint venture with the Changchun govern- ment that will lead to the production of sedans and crossovers. Vehicles produced under this alliance will be sold through ZXAuto Changchun China, a subsidiary of ZXAuto and exported to North American markets through Chamco Auto. Bill Pollack, Chamco 9s executive vice president of strategic planning and marketing, said that the company will import a mid-sized Continued from page 1 - PSA confirms plans for China 3 December 2006 ASIA PACIFIC sedan as well as SUVs and pickups to the US from China. Pollack claims each vehicle would be cpriced about 20% below comparably equipped models d from other manufacturers. ZXAuto has a 51% share in the new joint venture with production of the new sedans and crossovers expected to commence in late 2008 at its existing plant in Changchun, northern China. Production capacity is planned to eventually reach 300,000upa. The Changchun government will donate additional land for the project and help secure a Yuan 1bn (US$127m) loan that would act as working capital and provide for plant expansion and upgrades. Chamco or China America Cooperative is a New Jersey- based management holding corporation, which imports and distributes Chinese-made vehicles to markets in the US, Mexico and Canada. In September, ZXAuto signed a technical cooperation agreement with Chamco that would see its vehicles distributed under a Chamco-owned subsidiary called ZX Automobile Company of North America (ZXAuto NA). ZXAuto was formed as a result of a joint venture between Taiwan Unite Leading and Hebei Tianye Automobile Group. The company has two assembly plants with an annual produc- tion capacity of 110,000upa and one R&D centre. ZXAuto produces the Landmark, Grandtiger and Admiral models in China. All are based on an obsolete Toyota Land Cruiser Prado platform. China: Chery and Socma reported to be planning 100,000upa Mercosur JV CHERY Automobile is about to sign a joint venture agreement with Argentina 9s Grupo Socma, the Wall Street Journal says, citing a Socma spokeswoman. According to the spokeswoman, about US$100m will be invested in the alliance to assemble SUVs and compact cars for South America 9s Mercosur region. Chery is likely to have 51% in the proposed venture, with Socma taking 49%. The Tiggo SUV and QQ compact car, which are already sold in China by Chery, will be produced at the Sevel Plant in Montevideo, Uruguay, from May 2007, the Journal reported. The venture aims to build 100,000 vehicles a year. The report noted that Mercosur, the Latin American trading bloc that includes Argentina, Brazil, Paraguay, Uruguay and Venezuela, has about 250 million consumers. Recently, Chinese state media, quoting a Chery executive, said the company was considering raising funds for an expan- sion plan through an initial public offering of shares. In the next five to ten years, the company plans to invest Yuan 30bn (US$3.81bn) towards production capacity expansion, Shanghai Securities News reported. China: Chery to set up components joint venture with Johnson Controls CHERY Automobile and automotive components supplier Johnson Controls are establishing a joint venture to manufac- ture automotive interior components in China. The 50/50 joint venture will be based in Wuhu, in eastern China 9s Anhui province, according to the official Xinhua news agency. Yin Tongyao, chairman and general manager of Chery, says the Chinese automotive manufacturer will acquire technical know-how from its US-based partner. Johnson Controls, a supplier of automotive interiors and building temperature control systems, has established ten joint ventures across China and two technology centres in Shanghai and Changchun, Jilin. It has a dominant position in the Chinese market for seating systems, the news agency noted. Chery Automobile, a mid-sized Chinese automotive manu- facturer, is one of the few Chinese companies which produces its own models rather than manufacturing vehicles of foreign origin under licence. The company exports to nearly 30 countries and sold 189,100 units in 2005, an increase of 118% from 2004. China: SAIC to export Roewe- brand vehicles; rules out US Ssangyong sales SHANGHAI Automotive Industry (SAIC) plans to eventually export its Roewe-brand vehicles, AFX News has reported, citing the company 9s executive vice president Philip Murtaugh, the head of SAIC 9s overseas operations. The Roewe 750, which is a re-engineered Rover 75, was unveiled in China on 24 October. The model will be targeted at the mid- to high-end segment of the market. SAIC intends to expand the Roewe brand into global markets once it achieves success in China, Murtaugh stated, at a conference in Beijing. The company is looking to earn US$5bn from exports and overseas operations, including revenues from South Korea 9s Ssangyong, by 2010. While Ssangyong would continue to expand its Korean operations and ship vehicles to China, it would not export vehicles to the US in the near future, Murtaugh stated. Sponsored by SAIC intends to expand the Roewe brand into global markets once it achieves success in China 4 A utomotive E merging M arkets ASIA PACIFIC December 2006 China: Price war hits vehicle quality; Geely and Chery singled out ACCORDING to the 2006 China Automobile Customer Satisfaction Index (CACSI), a price war is affecting the quality of domestically-made cars with 77% of vehicles showing defects during the first six months of ownership, local newspa- per China Daily, reports. The survey, conducted by the China Quality Association, points out that major defects involve tyres, air conditioning and braking systems as well as locks and steering wheels. It is estimated that for every 100 new cars, there were an average of 338 defects, far higher than last year 9s 246. The China Consumers 9 Association says it received 1,038 complaints in the first nine months of this year, up by 21% from 2005, and during the third quarter, the number was 44% higher compared to the second. Industry analysts say that in the past few years price cuts have averaged about Yuan 10,000 (US$1,250) annually, forcing VMs to purchase low quality components to lower costs. In addition, shortened product launch cycles are also taking a toll on vehicle quality due to shorter research, development and testing periods. According to Fan Tianshun, director of the customer affairs office of the China Quality Association, this year alone more than 100 models have been, or will be, launched. Statistics from the China Automobile Industry Association points out that more than 3,000,000 cars were sold in the first 10 months of this year. On the other hand, this year 9s customer satisfaction index has improved, albeit by only 0.1% from last year. Cars with prices ranging between Yuan 50,000 (US$6,359) and Yuan 100,000 (US$12,719) registered improvements. The First Automotive Works-Volkswagen Jetta ranked first and Geely ranked last in the customer satisfaction. The Chery QQ and the Chang 9an Alto also attracted negative comments. The CACSI survey was based on 4,648 participants in 36 cities in 25 provinces. The 16 major domestic brands surveyed accounted for 72% of all cars sold in China in 2005. US: Malcolm Bricklin 9s talks with Chery derail MALCOLM Bricklin 9s company 9s talks with Chery Automobile to introduce an affordable line up of Chery cars to the US market have unraveled, claims a report in US magazine, AutoWeek. Bricklin had long claimed that his company Visionary Vehicles had a deal to import up to 250,000 Chery-produced cars to North America, and had also stated that export volumes would eventually increase, should the demand warrant it in the long term. Talks with the manufacturer appear to have been compro- mised by Chery 9s apparent intentions to work more closely with other established western vehicle manufacturers including Fiat and DaimlerChrysler. Fiat has already announced plans to buy Chery 9s new range of four-cylinder engines, while DaimlerChrysler is in negotiations with Chery to produce a small Dodge-branded car in China. Sources suggest that DaimlerChrysler might have convinced Chery to break off talks with Bricklin, as the manufacturer could be considering importing selected Chery models branded as Dodge units to the US. Bricklin however, has not commented on the breakdown of talks. Visionary Vehicles, which introduced both Subaru and Yugo to the US, now plans to conceive its own line-up of models. AutoWeek says the company will commission another Chinese vehicle manufacturer to produce them in a low-cost factory in China for export to the US and other markets, includ- ing, possibly Europe. It is widely believed that Chery may still be among the Chinese automotive companies Bricklin is in talks with, owing to his strong ties with the company 9s president, Yin Tongyao. A source close to Bricklin claims the other contenders to be FAW (First Automobile Works) Group, SAIC and Geely Automobile Global, the report stated. China: Bird forms joint venture with Changfeng ONE of China 9s leading mobile phone companies, Bird, is set to enter the automotive market after beginning talks with Hunan-based Changfeng Motor. Shanghai Daily reported that the mobile phone manufac- turer is looking to establish a joint venture with Changfeng. Both companies have reportedly initially agreed on taking an equal stake in the new joint venture, named Hunan Changfeng Automobile Technology. The joint venture would begin produc- tion of small MPVs, known as the AM-08, by the beginning of next year, said a spokesperson for Changfeng, although he declined to provide details on the exact manufacturing location or production volume. Changfeng is a subsidiary of the Changfeng Group based in the central Chinese province of Hunan and produces mainly SUVs. The company sold 24,597 SUVs in 2005, accounting for 12% of China 9s total SUV sales. Changfeng has two manufac- turing plants and four component production bases in a number of cities in Hunan. Recent media reports also indicate that the vehicle manufac- turer is close to finalising a new agreement with Mitsubishi, with the Japanese company expected to invest around 5 December 2006 ASIA PACIFIC US$125m in Changfeng. This is not the first time that Bird has expressed an interest in the automotive industry. Back in 2004, it had halted plans to invest in Nanjing Automotive, and last year it failed in its bid to win government approval for building its own cars. China: Ricardo and Lifan enter into technology collaboration Chongqing Lifan Industry Group (Lifan) of China has signed an agreement with Ricardo to develop a new family of car engines and transmissions. Yin Mingshan, chairman of Chongqing Lifan Holding, and Marcus Beresford, chairman of Ricardo, signed the Heads of Agreement. The aim of the collaboration is to design and develop a completely new family of car engines of 0.8- to 2.4- litres displacement, new transmissions featuring technologies such as AMT (automated manual transmission) and DCT (dual clutch transmission) and support in the manufacturing imple- mentation of these products. The first contract under the terms of this Heads of Agreement is expected to be placed imminently. With these new products, Lifan expects to be able to compete internation- ally and continue its expansion. Wang Yan Hui, president of Chongqing Lifan Passenger Vehicle, expects Ricardo to offer Lifan a 8one stop shop 9 for both engines and transmissions. In August 2003, Lifan entered the automotive sector. In early 2006, the company manufactured its first passenger car, the Lifan 520. Ricardo offers powertrain, driveline and transmission tech- nology and has technical centres in the UK, Germany and the US, with offices in Shanghai and Tokyo. China: Lotus to engineer cars for CV maker Youngman LOTUS 9 engineering division says it will become the lead engi- neering and development consultant for Chinese manufacturer Jinhua Youngman Automobile Manufacturing company. The managing director of Lotus Engineering, Albert Lam, says the division has been working with Youngman on a number of projects over the past two and a half years, establishing a sound working relationship. cIt is on these foundations that we will be working with Youngman 9s engineers on the design and development of new vehicles to help them to establish their new brand in the Chinese automotive industry. d Youngman is predominantly a commercial vehicle manufac- turer which is now diversifying into the passenger car segment. The company, like most Chinese manufacturers, has aggressive plans for its brand in the domestic market as well as an export strategy. Models will be launched over a planned five-year period. The first vehicle will be a four-door saloon with develop- ment work expected to begin early next year at Lotus Engineering 9s Hethel headquarters in the UK as well as its other centres around the world. Lotus is working with a number of Indian and Chinese clients, including helping Nanjing Automobile with the re-engineering of former MG models. It already has an office in China and will soon open one in India. China: Chang 9an Auto posts profits in the third quarter A statement filed with the Shenzhen Stock Exchange shows that Chongqing Chang 9an Automobile Company earned net profits of Yuan 98.03m (US$12.44m) in the third-quarter. This reflects a significant improvement from the Yuan 77.3m (US$9.81m) net loss a year ago, thanks to strong sales from its joint venture with Ford and Mazda. The manufacturer sold 397,480 minivans, compact cars and sedans in the first nine months of this year, up 18% from 335,910 units a year earlier. Net profits for the January-September period leapt by 146% to Yuan 533.33m (US$67.7m) from Yuan 216.52m (US$27.48m) in the corresponding period of 2005, while the company 9s core revenues totalled Yuan 18.23bn (US$2.31bn), up 36% from Yuan 13.4bn (US$1.7bn). Looking ahead at the full year 2006, the manufacturer expects its net profits to more than double over 2005, thanks to significant growth in sales and profits at Chang 9an Ford Mazda Automobile. Chang 9an Automobile, China 9s fourth-largest vehicle manufacturer, has a 50-50 joint venture with Ford 9s Chang 9an Ford Automobile. China: Shanghai Automotive 9s Q3 profits decline SHANGHAI Automotive (SAIC) has announced a 17% decline in third-quarter earnings. The fall is the result of increased costs associated with the development of new car models, according to a Reuters report. Net profit for the period fell to Yuan284m (US$36m), while quarterly turnover was up by 16% to Yuan 2.22bn (US$281.78m). Most of Shanghai Automotive 9s earnings come from the its joint venture with GM, the report noted. GM 9s China sales rose by 36.7% to 645,680 cars in the April-September period, while the overall market experienced growth of 31.39% in the same period. According to Reuters 9 estimates, SAIC 9s net profits are likely to be up by as much as 70% for the full-year, totalling Yuan 1.89bn (US$239.89m) Sponsored by 6 A utomotive E merging M arkets ASIA PACIFIC December 2006 China: Geely and Manganese Bronze sign agreement to build taxi and two saloons GEELY has formally signed an agreement with UK-based Manganese Bronze Holdings that will see London 9s iconic black cabs being produced in China for the first time. Total investment in the joint venture is £53m (US$101.15m), which will be utilised towards new press tools, body-in-white facilities and assembly operations. Geely will invest a further £33m (US$62.98m) in purchasing land and constructing build- ings, including paint facilities. The joint venture will commence production of the black cabs sometime in the middle of 2008, according to a statement from Manganese Bronze. Around 10,000 black cabs and 30,000 other cars, including a limousine version of the London cab and two large saloons, will be produced by Shanghai Maple, which will have the rights to sell the black cabs in Asia. Most of the vehicles produced are intended for the Chinese market though some might make their way to export markets in other parts of the world. Manganese Bronze said that the joint venture was necessi- tated by the fact that production costs in the UK are rising and China offers a cheap, viable option as a low-cost manufacturing base. Tim Melville-Ross, the chairman of Manganese Bronze said that the agreement with Geely would allow the company to become a multi-vehicle manufacturer and distributor. Geely produces some of China 9s cheapest cars but the company 9s chairman Li Shufu said that quality would not be compromised and the quality and technology of the cabs would be the same as those produced in the UK. The deal benefits Geely, he added, as the company now gains access to advanced manufacturing technology and know-how. China: BorgWarner and SAIC subsidiary sign transmission technology agreement BORGWARNER has announced that it will supply its DualTronic transmission technology to Shanghai Automobile Gear Works (SAGW), a subsidiary of Shanghai Automotive Industry (SAIC), to develop China 9s first dual-clutch transmis- sion. This is SAGW 9s first project with BorgWarner. BorgWarner will develop and supply five production modules - the dual clutch, torsional vibration damper, hydraulic controls with shift actuation, synchronisers and hydraulic pump. The transmission assembly will be jointly developed by SAGW and German engineering company, GIF, while trans- mission assembly production will be by SAGW. The technology will first feature in the new Roewe 750 (SAIC 9s version of the former Rover 75 sedan), according to Yang Chunbao, vice president, Shanghai Automotive Industry and president, Shanghai Automobile Gear Works. BorgWarner 9s DualTronic technology enables a conven- tional gearbox to function as a fully automatic transmission. It does this by eliminating the torque-interruption that occurs when a manual transmission shifts gears, while delivering performance and fuel economy that are claimed to rival that of a manual transmission. China: Mazda3 production resumes AFTER months of delay, Chinese production of the Mazda3 was finally restarted on 30 October. Build had been suspended on 7 April, due to a flaw in the process of acquiring government approval for the model 9s production and sale. It was found that part of the application which covered Mazda3 sales by another local joint venture was incomplete. Mazda3 production is part of a joint venture between Ford, Mazda and Changan in China. Sales and distribution of the model are handled through a joint venture between First Automotive Works and Mazda. The Japanese vehicle manufac- turer was granted permission last year to form the sales distrib- ution channel, which it claimed was the first of its kind in the country. The sales company began operations soon after, selling the Mazda6, manufactured at FAW 9s plant, and the imported RX-8. China: Ferrari doubles sales, expects yet more growth FERRARI has more than doubled its Chinese sales during the past year, with 120 cars sold in the first ten months, versus 62 units for all of 2005. The company, which has imported an example of its most expensive model, the 599 GTB, for display at the Beijing motor show, expects China to become one of the brand 9s top five markets within the next two or three years. To further augment sales in Asia, Ferrari has opened a new Asia-Pacific sales divi- sion, which controls 12 markets in the region. At present, Ferrari 9s largest markets are in the US, UK, Germany, Italy and Japan. China: Chery to supply engines to Fiat CHERY Automobile Co. Ltd. and Fiat Auto have signed a memorandum of understanding for the Chinese maker to supply Fiat with 1.6- and 1.8-litre I4 gasoline engines. Fiat CEO Sergio Marchionne said it would receive 8more 7 December 2006 ASIA PACIFIC than 100,000 9 units annually and would fit them to both its Chinese and overseas-built models, adding that this may be the first part of a larger powertrain alliance. Full details of the deal, including financial terms, are expected to be revealed before the end of the year. China: Volvo to open research centre to study traffic accidents VOLVO Car Corporation (VCC) and Volvo AB are jointly establishing a Traffic Accident Research Centre in China. Both companies hope to gather information and expertise to develop safer vehicles and also to contribute to safer road traffic in China. Knowledge gained from China 9s increasingly dense traffic volumes is expected to ensure that the truck and bus maker 9s high-tech systems function optimally, according to P O Boström, Volvo Group 9s director of Traffic Safety. His counterpart at VCC, Ingrid Skogsmo, director of Volvo Cars 9 Safety Centre, concurred. cKnowledge about what actu- ally happens to the vehicle and its occupants in a collision has been an enormous asset in our product development over the decades, d she said. cIn recent years we have focused even more intensively on what happens in the seconds before a collision takes place. This has created better potential for devising preventive systems that help our customers avoid accidents d. Since the early 1970s, from a centre in Göteborg, Sweden and with local operations in the US and Thailand, both Volvo companies have built up a joint database of facts of almost 40,000 accidents involving more than 50,000 passengers. The new centre in China will conduct research encompass- ing cars, trucks and buses in cooperation with local organisa- tions and universities, while the operation 9s foundation will remain at VCC 9s headquarters in Sweden. China: 2006 automotive output expected to reach seven million units THE Society of Automotive Engineers of China has updated its forecast of annual vehicle output to more than seven million units for calendar 2006. Xinhua also quoted the director general of the Society, Zhang Xiaoyu, as saying that he anticipates China 9s annual production to surpass eight million units next year and reach ten million vehicles by 2010. The report added that production at the big three (SAIC, Dongfeng, and FAW) would exceed one million units this year. China 9s automotive makers posted 63.87% profit growth year-on-year between January and the end of August, according to data released by the China Association of Automobile Manufacturers. Passenger car exports during the same period also jumped to 14,400 units with truck exports increasing by 52.2% to 95,600 vehicles. China: GM expects to retain top spot THE president of General Motors 9 Asia Pacific operations, Nick Reilly, has told Reuters that GM intends to be China 9s largest foreign-owned vehicle seller by volume in 2006, retain- ing the position it had in 2005. In the first nine months of this year, GM and its two joint venture partners sold a combined 645,680 vehicles in China, a rise of 36.7%, according to the China Association of Automobile Manufacturers. According to Auto consultancy JD Power-ARA Automotive, China is likely to outpace Japan to become the world 9s second largest market in terms of sales volume this year. GM also expects its worldwide production to be flat this year with output levels roughly matching that of 2005. Reuters quoted the chief executive officer of GM, Rick Wagoner, as saying that he anticipates the company 9s over- seas production to climb over the next ten years, superseding domestic output in the process. cLast year, we produced about 9.2 million units globally, and I would suspect that this year we will end up with the same number of vehicles, d he said. Wagoner was speaking in Shanghai where he was on a tour of GM 9s facilities. He admitted that although the company is struggling to retain much of its market share in its traditional US stronghold, the company is focussing on emerging markets with great potential such as China, where it overtook Volkswagen as the country 9s top foreign car manufacturer (by volume) last year. GM has two manufacturing units in China, which are jointly run in collaboration with Chinese companies. The president of GM 9s Asia-Pacific operations, Nick Reilly, added that the company would continue to invest significantly in China and expects new plants and products to be planned shortly for the region. China: Chrysler 300 assembly starts at Beijing plant CHINESE production of the Chrysler 300 (V6) and 300C (V8) saloon has started at the joint venture Beijing-Benz DaimlerChrysler, plant in Beijing. The rear-wheel drive sedan is being offered with the same 2.7- and 3.5 litre V6 and 5.7 litre V8 gasoline engines as the Canadian-built original. The Mercedes-Benz turbodiesel V6 version which is sold in Europe will not be offered in China. Sponsored by 8 A utomotive E merging M arkets ASIA PACIFIC December 2006 China: Honda targets 10% market share; expands Acura range HONDA is aiming for cat least 10% d of the Chinese new vehi- cle market by the end of the decade. Its forecast for 2006 is 7.5%, with its vehicle sales expected to reach 1 million units by 2010, according to a report by Reuters , which quotes Honda 9s CEO for China. Atsuyoshi Hyogo, senior managing director and chief oper- ating officer of Honda 9s China operations, says the company wants at least a double digit market share but added that achiev- ing the next 3% will be tough. Honda plans to sell about 350,000 vehicles in China this year, a rise of 36% year-on-year. Honda manufactures vehicles at three joint venture plants. These operations with Guangzhou Automobile Group and Dongfeng Motor have a combined annual production capacity of 480,000 units. Honda says that existing capacity can rise to 720,000 units with additional investment. Honda has also anounced plans to expand its Acura luxury vehicle range in China. It started RL and TL imports earlier this year and expects 3,000 sales for 2006. At the Beijing motor show, the company announced plans to add a third vehicle - the MDX SUV- to go on sale during the first half of 2007. China: DaimlerChrysler to acquire 24% stake of Beiqi Foton DAIMLERCHRYSLER is expected to buy a 24% stake in Chinese vehicle manufacturer Beiqi Foton Motor, claims a report in Xinhua, citing the business newspaper 21st Century Business Herald. According to the publication, Beiqi Foton will issue an unspecified number of new shares to DaimlerChrysler, for a deal that is expected to give Beiqi Foton access to DaimlerChrysler 9s expertise in heavy-duty truck manufactur- ing. No other details of the transaction were divulged. Beiqi Foton 9s largest shareholder at present is Beijing Automotive Industry Holding with a 32% stake. Trading in Beiqi Foton shares has been suspended pending an announce- ment. Truck joint venture talks between Beiqi Foton Motors and DaimlerChrysler, the manufacturer 9s third such joint venture in the country, were suspended in March 2006 due to regulatory hurdles. China 9s current policy allows foreign vehicle manufac- turers to set up only two passenger car and/or two commercial vehicle joint ventures. DaimlerChrysler presently has a commercial vehicle venture, DaimlerChrysler Vans China, with Fujian Motor Industry Group and Taiwan-based China Motor and another China venture, Yaxing Benz, with Jiangsu Yaxing Motor & Coach Group. China: DaimlerChrysler chief admits discussions with Chery for Dodge small cars DAIMLERCHRYSLER CEO Dieter Zetsche was asked if the company 9s preferred partner for a small car joint venture is Chery Automobile. Reuters reports him replying, d It 9s fair to say. d Zetsche told reporters in Beijing that he was optimistic that a decision would be reached in the cnot so far future d. However, he added that he could provide no timetable cbecause you can only talk about your own position. It takes two to tango. d If the talks are successful, the proposed joint venture would see Dodge-branded small cars built in China and shipped to Western Europe, Mexico and Canada, with the US to follow later. The Chrysler Group has been criticised for not offering smaller, more fuel-efficient cars in the US as demand for SUVs and larger models has waned this year. DaimlerChrysler has an existing joint venture with Hyundai that sees the Indian-built Santro minicar shipped to Mexico where it is sold as the Dodge Atos, while the larger Getz hatch- back has been assembled in Caracas, Venezuela since July. It is sold there as the Dodge Brisa. China: MAN opens new head office for sales and servicing MAN Nutzfahrzeuge has officially opened its first 8Trucknology 9 centre for MAN trucks and buses in Beijing. The truck and bus centre employs 40 people and acts as head office for all MAN sales and service outlets in China. Besides being able to service 20 vehicles per day, it also includes a spare parts store and training facilities for sales personnel, MAN says. By early 2007 an additional Trucknology centre is scheduled to go into operation in Shanghai, according to the company. The MAN Group has been operating in the commercial vehicle sector in China since 1984. In 2004, MAN Nutzfahrzeuge founded its subsidiary MAN Truck and Bus (China) in Beijing. China: Ford to double parts procurement from China FORD has said that it will double its purchasing of components from China this year as part of its efforts to reduce production costs, reports Bloomberg News. The vehicle manufacturer, reeling from its biggest loss in 14 9 December 2006 ASIA PACIFIC years, said that it would source around US$2.5bn to US$3bn in automotive components from China this year in order to meet its goal of reducing US$6bn in operating costs by 2010. Ford bought around US$1.6bn to US$1.7bn worth of components from China last year. cChina is the key to our global sourcing strategy, d commented chairman Bill Ford. The manufacturer reported a US$5.8bn third-quarter loss as sales slumped in the US. The company procures steering systems, suspensions, brakes, batteries and windshield glass from China. More vehicle manufacturers are likely to source an increas- ing amount of components from China, with manufacturing costs there among the cheapest. Labour costs in China are around 5% of those in high-cost Germany and 20% of those in eastern Europe. DaimlerChrysler had stated back in June that it would buy more than US$840m in Chinese components by 2008, up from the US$100m it will spend this year. Volkswagen is also raising the value of its imports from US$100m last year to US$1bn. China: Sales up by 25.69% in October DATA from the China Association of Automobile Manufacturers (CAAM) showed an increase of 25.69% year- on-year, to 5.77 million vehicle sales for the year to the end of October, according to a Xinhua news agency report. In October alone, vehicle sales were up by 27.55% year-on- year, recording 576,300 units. Of this, passenger cars contributed 410,000 units, up by 28.15% and commercial vehi- cles added 166,300 units, up by 26.1% year-on-year. SAIC led the market for the year-to-date, with sales increas- ing by 39.96% year-on-year to 994,500 units. This was followed by FAW with 946,700 units, up by 23.56%, Dongfeng Motors with 742,200 units, Beijing Automotive Group with 555,500 units and Changan Automotive with sales of 553,000 units. Meanwhile, China 9s year-to-date vehicle production reached 5.89 million units, up by 27.56% year-on-year. Looking ahead, CAAM expects vehicle sales and production volumes to cross the seven-million-units mark for the full year at the January- October growth rate. This compares with about six million units last year. China: Toyota sees major growth for pickup sector TOYOTA expects China to emerge as a major market for pick- ups as incomes rise among the country 9s rural population, according to Reuters , which cites a senior Toyota executive. cWe have to start studying [the market], d said executive vice president Yoshimi Inaba, Toyota 9s highest-ranking official in charge of Chinese operations, at an industry conference in Beijing. Toyota wants to raise its market share in the country 9s passenger car market to 10% by 2010 from the current 4%. The company also proposes to shrink its costs by sourcing more components from local suppliers. Toyota, which has local joint ventures with FAW and Guangzhou Automotive Group, believes it will sell 278,000 cars in China this year, up by 52% from 183,000 units in 2005. China: Volkswagen expecting ¬ 75m profit; sees 2% market share for Skoda VOLKSWAGEN is confident of posting full year operating profits of about ¬ 75m (US$96.27m), bouncing back from an operating loss of ¬ 119m (US$152.75m) for 2005. The company also expects to surpass its sales target of 600,000 units for calendar 2006. According to Winfried Vahland, president and chief execu- tive officer of Volkswagen Group China, the group 9s vehicle sales rose to 581,797 units in the first ten months of this year. Vahland expects 30% growth for the full year and a market share of 17.5%. cWe have made great strides towards reaching international quality standards (in China). We have thus been able to stop the downward trend and even make a turnaround, d Reuters quoted Wolfgang Bernhard, Volkswagen Group chairman, as saying. Volkswagen had reported an operating loss of ¬ 119m (US$152.75m) in 2005 as sales dropped by 11.7% due to intense price competition. In the first six months of 2006, the company 9s operating profits improved to ¬ 37m (US$47.5m). Volkswagen runs manufacturing joint ventures with both Shanghai Automotive Industry Corp (SAIC) and First Automotive Works Corp (FAW) - the two top Chinese vehicle manufacturers. In a move to strengthen its market position, the German vehicle manufacturer is planning to introduce up to 14 new models in China by 2010, all designed more specifically for the local market. The company introduced the Sagitar saloon (NAFTA and European markets Jetta) in April and the Polo Jinqing and Jinqu (facelifted Polo) compact vehicle models in June. Skoda Auto is expected to play an important role in Volkswagen Group 9s Chinese sales in the future, with the intro- duction of the locally-assembled Octavia model next year serv- ing as an important building block, Vahland added. The company has signed up 65 dealers to sell Skoda cars and expects a market share of approximately 2% for the brand in the long term. Sponsored by 10 A utomotive E merging M arkets ASIA PACIFIC December 2006 China: Nissan aiming to reduce costs by increasing local content NISSAN aims to reduce production costs at its Chinese joint venture plants by raising the content of locally sourced compo- nents to about 80% from 70% at present, Reuters has reported Katsumi Nakamura, president of Dongfeng Motor, as saying. Dongfeng Motor, an equal joint venture between Nissan and Dongfeng Motor Corp, has already increased its local content rate by establishing a plant in Huadu, Guangzhou province, to manufacture engines for the Tiida/Qida hatchback and the Tiida/Yida sedan, the news agency noted. The annual produc- tion capacity of this engine plant is due to double to 360,000 units by 2008. According to Nakamura, the company is still importing trans- mission components, so there is scope to increase local content. He added that with local content at 70%, production costs are roughly equal to those in Japan and the joint venture enjoys margins of more than 10%. Dongfeng Motor will focus above all else on increasing profits in the years to come, Nakamura said. Dongfeng Motor, which sells trucks and buses under the Dongfeng brand, aims to be the largest Chinese commercial vehicle manufacturer in the long term. The company sells passenger vehicles under the Nissan brand. It plans to sell 600,000 trucks, buses and passenger vehicles in 2007, an increase of 30% over the 460,000 units estimated for 2006. China: BP opens country 9s first hydrogen refuelling station BRITISH Petroleum (BP) and its partners have opened China 9s first hydrogen refuelling station, the China Daily reports. The US$3.5m Beijing refuelling station, a Sino-British joint venture, is a demonstration project and covers an area of 4,000 sq m. SinoHytec, BP 9s Chinese partner, provided the land for the station. Bill Fitzharris, general manager of Technology for Hydrogen for Transport at BP, says that mass production of fuel cell vehi- cles and development of commercial hydrogen refuelling stations is as far off as 2015 to 2020. BP expects to use steam reforming of natural gas to produce hydrogen at the refuelling station next year, which would help reduce logistics and storage costs. The company says the station can currently refuel four fuel cell buses daily and will be the base for the fleet of fuel cell buses that is being readied for the 2008 Summer Olympic Games. BP emphasised that although it is cooperating with other fuel cell vehicle manufacturers in research, it does not plan to form a partnership with a particular vehicle manufacturer. The Beijing Hydrogen Park, China 9s first demonstration project for renewable energy vehicles, comprises hydrogen supply infrastructure, such as a research and development centre, a hydrogen refuelling station, a fuel cell vehicle garage and a maintenance workshop. China: Dongfeng-Nissan Livina Geniss production starts NISSAN has announced the start of Chinese production of its Livina Geniss compact minivan. The model had its global debut at the Guangzhou show in July and China is its first market. All versions are powered by a 1.8 litre I4 gasoline engine. As well as being built at Dongfeng-Nissan 9s Huadu, Guangdong plant, the compact minivan will also be assembled in Indonesia from mid 2007. Nissan expects the Livina, as it will be called locally, to account for fully 70 percent of its Indonesian sales in 2008. Despite being a seven seater, the new model uses the Renault-Nissan P1 small car architecture. Nissan introduced this components set in 2002 for the current March (Micra). Renault also uses this platform for the Clio and Modus. The Nissan Cube and Note are other models that sit on P-1. As well as the Livina Geniss, Nissan builds the Sylphy, Teana and Tiida saloons, Tiida five-door hatchback and the Paladin SUV in China. China: Beijing Hyundai to open a research centre HYUNDAI 9S Chinese joint venture, Beijing Hyundai Automotive, is set to launch a Yuan 510m (US$64.8m) research centre in Beijing, according to a report carried by Reuters . The centre, which is expected to be completed by 2008, will design and develop a concept car for China by the same year, according to a company spokesperson. A production model should follow within five-ten years. China is an ever more important part of Hyundai 9s R&D and production plans. During the first nine months of 2006, the company 9s joint venture sold 210,964 vehicles, up by 22.96% year-on-year. The venture is also constructing its second plant in the region, adding capacity of 200,000 units by early 2008. This is expected to reach 300,000 units within the following 12 months, pushing the plants 9 combined total capacity to 600,000 units per year. China: Plans announced to tackle exhaust emissions FENG Fei, director of the industrial economics research depart- ment at the Development Research Centre of China 9s State Council, has said that half of China 9s cars would use fuels other than gasoline by 2025. Fei rejected diesel refined from coal as 11 December 2006 ASIA PACIFIC an alternative to gasoline, due to its low energy efficiency and high carbon dioxide emissions during production. Instead, he cited diesel, hydrogen and biofuels as alternatives. It is estimated that China will require 450 million tonnes of petroleum annually by 2020, of which more than half would be imported. In related news, the government of Hong Kong has announced plans to spend HK$3.2bn (US$411m) to encourage 70,000 drivers of diesel commercial vehicles to trade them in for Euro IV-compliant cars. One incentive will be a 30% reduc- tion in first year registration fees. China: Cummins expects to double turnover by 2010 CUMMINS intends to more than double its sales in China by 2010, Reuters has reported, quoting a senior official. According to Wang Hongjie, vice chairman for China, the company 9s turnover was close to US$1bn in 2005. It expects to have annual sales of US$2.5bn by 2010. In order to achieve this target, Cummins plans to invest an additional US$100m to develop its research and manufacturing facilities, Hongjie added. The Columbus, Indiana-based engine manufacturer operates three joint ventures in China, with partners including Dongfeng Motor, China 9s third largest vehicle manufacturer, the news agency noted. Earlier this year, Cummins secured approval for a US$240m engine joint venture with pickups and truck manu- facturer, Beiqi Foton Motor. According to Hongjie, Cummins plans to raise its local procurement to US$300m by 2008-09 and US$500m by 2010, despite an appreciation of the Chinese currency. Cummins expects China to remain a low-cost sourcing base, given the economies of scale offered by the country 9s fast- growing automotive and component industries, Hongjie added. cWe believe China could still provide the cost advantage, at least in the next five to ten years, d he said. China: AFV Solutions-Baolong joint venture hybrid bus factory AFV Solutions has signed a joint venture agreement with Guangzhou Oriental Baolong Automotive Company to build a hybrid bus factory in China. Under the agreement, AFV Solutions and Baolong will jointly market, sell, manufacture and/or assemble light- to heavy-duty hybrid vehicles. AFV Solutions will acquire patents, licencing agreements, intellectual property, manufac- turing and assembly facilities, property, plant and equipment. According to AFV, it has begun regulatory compliance with the US Department of Transportation (DoT)/National Highway Traffic Safety Administration (NHTSA) to speed up the import of hybrid vehicles to that market. AFV Solutions is mostly looking to increase its production and assembly capacity and expand sales and distribution of its hybrid, compressed natural gas (CNG) and liquid petroleum gas (LPG) buses. The Guangzhou-based Baolong 9s manufacturing and assem- bly facilities have the capacity to produce up to 5,000 light- to heavy-duty vehicles annually. Baolong has developed commer- cial hybrid vehicles, including multi-passenger and single- passenger vehicles. China: Bosch to increase regional investment BOSCH intends to double its investment in China, injecting ¬ 620m (US$797.4m) by 2008, according to media outlet Xinhua . The company has already invested ¬ 160m (US$205.8) so far this year to build two plants in Changsha, in central China 9s Hunan province and Suzhou, in eastern Jiangsu province. In addition, the company plans to spend another ¬ 100m (US$128.6m) expanding the two plants. cBosch will increase its sales in the Asia Pacific region to 25% of its global sales within eight years, d Xinhua quoted Peng Deyuan, president of Bosch (China) Investment, as saying. According to the report, China and India are two of Bosch 9s fastest growing markets, with China currently accounting for 15% of its Asia Pacific sales and 2.5% of its global sales. Bosch 9s move is part of its strategy to increase its presence in China 9s automotive component industry, which is expected to be worth Yuan 800bn (US$101.6bn) in 2010, the report stated. China: TRW unveils new interior components plant TRW Automotive 9s Engineered Fasteners & Components busi- ness has opened a new plant in Langfang in Hebei province, China, to serve domestic and international vehicle manufacturers. TRW Automotive Components (Langfang), a subsidiary of TRW, will manufacture interior components such as air regis- ters and centre bezels. The new plant has 6,900 sq m of operating space and is expected to employ around 100 people by the end of 2007. Initially, the plant will have 20 injection moulding machines but this is expected to increase to 50 by mid-2008. Headquartered in Livonia, Michigan, TRW has plants in 26 countries and employs around 63,000 people. The company manufactures integrated vehicle control and driver assist systems, braking systems, steering systems, suspension systems, seat belts and airbags, electronics, engine components and fastening systems. Sponsored by 12 A utomotive E merging M arkets ASIA PACIFIC December 2006 China: GKN announces new manufacturing facility and joint venture GKN Driveline Torque Technology says it is spending Yuan 34m (US$4.3m) to set up a new manufacturing plant in Shanghai 9s Kangqiao development zone. cWe are experiencing rapid growth in demand for our torque technology products in China. This is in part due to the dramatic growth of the vehicle market here& d said Graeme Walfor, managing director of GKN Driveline Torque technol- ogy. To begin with, GKN Driveline plans to produce a variety of geared components, including a range of drive units, power transfer units and advanced torque management devices at the new plant. Construction will start in 2007. The company is also establishing a new driveshaft manufac- turing joint venture in Chongqing, central China. To be known as GKN Driveshaft (Chongqing), the new firm will have a capi- tal investment of ¬ 9m (US$11.55m) and 155 employees. A majority 51% of the new venture, which will supply driveshafts to China South Industries Motor (CSIMC), will be owned by Shanghai GKN Drive Shaft Company (SDS), GKN 9s other joint venture. CSIMC will have 40% interest in the new operation, while GKN Driveline will hold the remaining 9%. China: Baosteel plans to double automotive sheet production CHINA-BASED steel manufacturer Baosteel Group plans to double automotive sheet production by 2010, according to the Shanghai Daily newspaper. President of Baoshan Iron & Steel, Ai Baojun, says the company is expected to produce 2.6 million tonnes of steel sheet this year and grow to a further five million tonnes by 2010. He was addressing reporters in Beijing at a ceremony marking the production of Baosteel 9s 15 millionth tonne of automotive sheet. Baosteel controls more than 50% of the market for cold- rolled automotive sheets in China, according to Baojun. It intends to maintain the pace by advancing its marketing and R&D programmes as well as seeking new strategic alliances and joint ventures. Baosteel also exports sheets to Fiat in Italy, Ford of Europe and General Motors in North America. India: Hyundai exports 300,000th car HYUNDAI 9S Indian subsidiary has built its 300,000th Santro car for export. The Santro, which is badged 8Atos Prime 9 in major overseas markets, is one of Hyundai 9s best-selling models in India. It is sold in Europe, Africa, Latin America and the Middle East. Hyundai first started exporting cars from its Chennai plant in December 1999, with the 200,000th export mark having been reached in October last year. Commenting on the occasion, Hyundai India 9s managing director HS Lheem noted that cHyundai is currently India 9s largest exporter in the automotive industry, and we are extremely keen to maintain our competitiveness. Our recent investment plans are in line with this and the need to make India the global hub for Hyundai 9s small car. d The vehicle manufacturer is in expansion mode in India with plans for a second manufacturing facility in Chennai to meet increasing demand. Total production capacity from its two assembly units should rise to 600,000upa in 2007. Apart from the expansion of its production capacity, Hyundai also plans to have added 38 dealers by the end of this year, giving it 200 in total. India: MAN Force Trucks to begin production ramp-up MAN Force Trucks, the joint venture operation between Force Motors and MAN Nutzfahrzeuge, will begin fully-fledged operations at its plant in India from December, according to the Financial Express, which cited Abhay Firodia, chairman and managing director of Force Motors. Firodia was reported to have said that the first 50 pre- production vehicles to have come out of the Pithampur plant include examples of a 49-tonne tractor trailer, 25-tonne tippers and 25-tonne rigid vehicles. The vehicles can be perfected to market requirements once customer feedback is obtained. Key export markets for the Indian joint venture are said to include Turkey, North Africa, the Middle East, south east Asia and South Africa, where MAN already has a manufacturing presence. India: Eicher reports profit in second quarter EICHER Motors earned Rs141.8m (US$3.13m) in net profits during the second quarter ended 30 September, compared to a net loss of Rs76.1m (US$1.67m) in the corresponding period a year ago. Total income during the quarter leaped 29% to Rs4.64bn (US$102.3m) compared with Rs3.59bn (US$79.12m) reported a year ago, according to a Press Trust of India (PTI) report. For the first half of the fiscal year 2006-07, the company 9s profit after tax amounted to Rs226m (US$4.98m), up from a 13 December 2006 ASIA PACIFIC loss in the corresponding period of the previous fiscal. Total revenues during the April-September period stood at Rs8.54bn (US$188.2m), up from Rs7.52bn (US$165.7m) posted a year earlier. Commenting on the results, Eicher 9s managing director and chief executive officer Siddhatha Lal said, cOur ability to effec- tively reduce material costs and contain inflation has increased our revenue to expenditure ratio significantly. d During the fiscal year 2005-06, the company posted after- tax profits of Rs2.16bn (US$47.38m) and gross sales of Rs18.89bn (US$414.49m), including other income. In other news, Eicher is set to enter the 40-tonne trailer segment. This will be part of a three year strategy to expand its product offerings to cover the entire range of 5-50 tonne capac- ities, Reuters has reported, citing a top official. The India-based company will become a full-range commer- cial vehicle player, the company 9s CEO, Siddhartha Lal, was reported as saying. India: Maruti net profit shows strong growth in second quarter MARUTI Udyog 9s second-quarter net profit rose 39.9% year- on-year to Rs3.67bn (US$81.14m), up from Rs2.62bn (US$57.93m). Total income (net of excise) was reported at Rs35.4bn (US$782.37m), up 12.5% from Rs31.47bn (US$695.66m). Basic and diluted earnings per share (not annualised) for the quarter ended September 2006 stood at Rs12.72 (US$0.28), up from Rs9.09 (US$0.20) per share a year ago. cIndustry margins are taking a hit due to an increase in raw material prices, yet we are working towards negotiating the impact of prices on our margins, d commented Jagdish Khattar, managing director of Maruti. The company registered a 16.2% increase in domestic sales to 149,518 units, while export sales declined 31% to 8,165 units during the quarter. Sales revenue for the quarter rose to Rs34bn (US$751.6m) from Rs30.25bn (US$668m) For the first half of the year, the manufacturer posted Rs7.37bn (US$162.9m) in net profits, up 50% year-on-year, while total income reached Rs68.09bn (US$1.5bn), up from Rs58.7bn (US$1.29bn). Net sales of 65.14bn (US$1.44bn) during the period reflected an increase of 15.6% from Rs56.4bn (US$1.25bn). Unit sales for the period from April-September totalled 302,631 units, up from 262,409 units a year earlier. Of this, 286,622 vehicles (up 17%) were sold locally and about 16,009 units were exported (down 14.7%). For the fiscal year 2005-06, the company reported sales revenue of Rs120bn (US$2.65bn) and net profits of Rs11.8bn (US$260.88m). India: Government establishes export certification centres INDIA 9S National Automotive Testing and R&D Infrastructure Project (NATRIP) and the UK 9s Vehicle Certification Agency (VCA), have entered into an agreement to test and certify vehi- cles and components to be exported from India, reports The Hindu Business Line . This will enable manufacturers to obtain certification for exports in the country itself. Under the tie-up, vehicles will be tested at NATRIP centres in India and be certified by the VCA. The agency tests and certifies vehicles for export to Europe, the US, Japan and Australia. Currently, vehicle and component exporters must test and certify their products in the destination country. This procedure costs the industry approximately Rs4.5bn (US$99.7m) annu- ally. The tie-up is expected to increase savings for the Indian automotive industry by around 40% and in the future, by way of capacity expansion, savings could increase by up to 85%. NATRIP is also planning to set up two new homologation centres near New Delhi and Chennai. In addition, NATRIP will upgrade the Automotive Research Association of India in Pune and the Vehicle Research and Development Establishment in Ahmednagar, in western India. NATRIP is in the process of establishing the largest of such centres at Indore in the central west of the country. India: Ashok Leyland and Bosch to set up Centre of Excellence ASHOK Leyland, Bosch and the Indian Institute of Technology Madras (IITM) intend to jointly set up the Ashok Leyland and Bosch Centre of Excellence in Engineering Design at the IITM campus in Chennai, India. R Seshasayee, managing director of Ashok Leyland, Dr Albert Hieronimus, managing director of Motor Industries Company (MICO), flagship of the Bosch Group in India, and M S Ananth, director of IITM, have signed a Memorandum of Understanding to this effect. The Ashok Leyland and Bosch Centre of Excellence in Engineering Design will house the department of engineering design, formed recently by IITM. The department offers a dual degree programme in engineering design. The two companies will contribute Rs40m (US$881,483) each towards the programme. cThe key to the long-term success of this industry will be the availability of excellent local competencies and the introduc- tion of this programme would be a valuable step to meet this growing need, d commented Dr Hieronimus. Sponsored by 14 A utomotive E merging M arkets ASIA PACIFIC December 2006 India: Tata 9s Q2 profit rises by 29% TATA Motors 9 revenue (net of excise) reached Rs65.72bn (US$1.46bn) in the second quarter of the fiscal year 2006-07, up 37% year-on-year, while profit before tax increased by 29% to Rs5.86bn (US$129.95m). Unit sales on a stand-alone basis jumped by 30% to 139,704 units during the quarter. Net profit for the quarter amounted to Rs4.42bn (US$98.02m), rising by 31% over the corresponding quarter a year ago. Consolidated revenues (net of excise) for the quarter totalled Rs77.03bn (US$1.71bn), up 42% year-on-year, while consoli- dated profits after tax rose by 36% during the period to Rs5.36bn (US$118.86m). For the first half of the fiscal year 2006-07, Tata reported an increase of 42% in revenue on a stand-alone basis (net of excise), totalling Rs123.55bn (US$2.74bn). Profit before tax rose by 33% during the period to Rs.10.84bn (US$240.39m), while sales rose by 37% year-on- year to 266,098 units. Exports for the first six months of the year were 18% ahead at 27,224 vehicles. First-half net profit totalled Rs8.23bn (US$182.5m), a year- on-year gain of 35%. Consolidated revenue (net of excise) for the first half amounted to Rs144.73bn (US$3.21bn), reflecting an increase of 46% year-on-year, while profit after tax at Rs.9.18bn (US$203.56m) represented an increase of 40%, the company stated. Tata also improved its market position in India in the first half of the fiscal year, with a 65.2% share of the commercial vehicle segment (58% a year ago) and a 16.3% share of the passenger vehicle segment, up from 15.8% in the previous year. India: First-half net profit up 18% at Ashok Leyland ASHOK Leyland has reported an increase of 18% in net prof- its to Rs1.64bn (US$36.62m) for the first half of the April 2006-March 2007 fiscal year, helped by net profits of Rs953.63m (US$21.23m) in the second quarter alone. For the July-September period, the company 9s unit sales totalled 19,863, a gain of 33% year-on-year. Its sales turnover, meanwhile, reached Rs19.29bn (US$429.27m) against Rs14.4bn (US$320.6m) in the same quarter a year ago. Income from operations totalled Rs16.75bn (US$372.9m), up by 30.5%, while gross profit rose 27% to Rs1.68bn (US$37.4m). Profit before tax stood at Rs1.29bn (US$28.5m) for the quarter, after a charge of Rs364.5m (US$8.1m) towards depreciation and Rs30.84m (US$685,238) in extraordinary items, such as the amortisation of Voluntary Retirement Scheme (VRS) compensation. At the end of the first half of the fiscal year, cumulative sales had risen by 34% to Rs35.699bn (US$793.15m), while income from operations climbed to Rs30.99bn (US$690.08m) compared to Rs23.12bn (US$514.66m) in the first half of fiscal 2005-2006. In spite of the increase in input cost, gross profit for the April-September period improv

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