Monthly Archives: March 2008

Auto stocks down despite upbeat mood

It has been a bad beginning for the Auto Industry in stock market this fiscal. First it was hike in interest rates, followed by stringent measures adopted by financial institutions and now increases in prices of raw materials. The downward performance this fiscal follows the impressive performance in 2006 – 2007. The higher interest rates, hard financial options have resulted in negative sales figures of automobile companies resulting in poor performance of the auto stocks.

But, financial observers see downward trend in car sales figures only as a time phrase which could recover by the second quarter. The Indian auto Industry has been in the global news this week with the Tata Motors clinching the Jaguar and Land Rover deal from Ford Motor. But the stock markets have not been favorable for the Tata Motors yet. Soon after the announcement of the deal on Thursday Tata Motors shares plunged by 6.39 per cent at Rs 636 dragging the BSE Auto Index down 1.79 per cent. Tata Motors share had been on the downtrend ever since Ford announced that Tata Motors was the preferred bidder for its luxury brands in January.

Tata Motors on Friday opened at Rs 654 and closed at 645.85 a loss of Rs 9.50. Similarly, Maruti Suzuki which is heavily affected by increase in raw materials opened at 834.75 and closed at 829.25 a loss of Rs 9.05.

    SocialTwist Tell-a-Friend     Add to Technorati Favorites                 Add New Post

Ford suffered loss after selling JLR brands

Is any one know that how much Ford spent initially to buy luxury car brands-Jaguar and Land Rover? Ford bought these two high end brands in 1989 at a whooping $10 billion. Ford has invested such a big amount in Jaguar and Land Rover but failed to reap profits.

Ford suffered a huge loss by selling its luxury brands to Tata for merely $2.3 billion. As far as global players are concerned, they are firmly committed to make their vehicle more appealing and luxurious than their rivals. It is still not known as to why Ford failed to make these brands profitable. Big wigs of world’s auto industry are now thinking of revamping their brands to avoid selling of their brands to any other company after Ford’s failure in Jaguar brands.

    SocialTwist Tell-a-Friend     Add to Technorati Favorites                 Add New Post

Fiat will compete with BMW

Fiat is re-launching Fiat 500 in India soon. It seems that Fiat is planning to give a tough competition to BMW’s Mini. When Fiat will launch its 500 it is expected to take on the costliest hatchback of India BMW Mini. Fiat priced at Rs 13 lakh onwards and BMW Mini priced at Rs 20 lakh. Both these cars carry the retro design, carrying with it the legacy of European history.

It will be interesting to see if these European cars carry their magic to India. These car manufacturers will most probably fight for a thin line of consumer segment, which have an option to buy luxury cars or SUV or 500 or Mini. Maybe the consumer will eventually decide on who is the boss of hatch back cars in India.

    SocialTwist Tell-a-Friend     Add to Technorati Favorites                 Add New Post

Tata Motors hopes better rating

After getting downgraded by rating agencies, Tata Motors is now hopping for a better rating after announcement of a new refinancing plan. But this may take a few months altogether. The refinance plan is expected as Tata Motors clinched a major acquisition deal with Ford to own the Jaguar and Land Rover. Tata Motors have paid 2.3 billion dollars for the deal. Eventually, the deal will be financed through a mixture of debt and equity.

Last week, Crisil, a rating agency, downgraded ratings on the auto major’s cash credit facilities from ‘AA+’ to ‘AA-/stable’. But the agency has removed Tata Motors from ‘Rating Watch with Negative Implications’ list. The auto major has taken a USD 3 billion bridge loan to take over the two iconic brands and meet the working capital requirements with a combination of debt, liquidation of existing investments. The company also plans to raise a fresh equity of USD 1 billion.

    SocialTwist Tell-a-Friend     Add to Technorati Favorites                 Add New Post

Maruti will not cut the price of Maruti 800 to beat Nano

Many who are expecting reduction in the price of Maruti-800 after Tata Nano’ appearance at Auto expo, will be disappoint to know the fact Maruti will not reduce any price of maruti-800 in future to compete with one lakh car Tata nano as Maruti does not want to compete with nano and is not even thinking to manufacture any new small car on the lines of ultra cheap car, Tata nano.

Before Tata nano’s appearance, Maruti-800 was considered as one of the cheapest small car available in the country for many middle class families. When Tata motors have confirmed its production of one lakh car, many had thought that maruti would cut the price of maruti-800 on par with one lakh car to compete with nano. But now that suspense is over as Maruti openly clarified its intention that it will not reduce or cut down the price of Maruti-800 to compete with nano. Such honesty statement by maruti will really create conducive atmosphere in auto market leaving no place for unhealthy competition.

    SocialTwist Tell-a-Friend     Add to Technorati Favorites                 Add New Post

DZire prices may go up

All those small car owners who thought that they could now get a DZire sedan by paying just Rs 75,000 more than Swift hatch back’s cost, take note of this. Maruti Suzuki has decided to increase the introductory price for DZire. Rise in input costs of aluminum and copper are forcing Maruti to increase the price of Dzire. The prices are likely to be revised in the next few weeks.

So all those who want the new DZire will have to rush to Maruti outlets soon and book your cars, otherwise you will end up paying more than you thought. What with the cost of interest, rising cost of accessory and rising fuel costs. Anything more will certainly burn your pockets.

    SocialTwist Tell-a-Friend     Add to Technorati Favorites                 Add New Post

Lack of incentive will affect exporting of passenger cars

India’s dream of becoming a global small car hub may not become reality. Car manufacturers, who are till recently beaming over the reduction of excise duty on small cars, are now considering limiting their exports to maintain profitability as the government has not given incentive to encourage the exporting of passenger cars. Lack of incentive from the government is expected to affect the growth of export business of many car manufacturers.

Sale of small cars, sedan and luxury cars is increasing in domestic market but lack of incentive for export and continues depreciation of the dollar, is bound to affect the sale of many cars in overseas market. Discouraged by the government’s disinterest in encouraging export business, largest exporter of passenger cars from India like Hyundai motor, Maruti Suzuki are seriously considering to downscale their original target of exporting 50 productions from India. Government should join hands with car companies to make India a global hub for small cars by giving some impetus to small cars export business.

    SocialTwist Tell-a-Friend     Add to Technorati Favorites                 Add New Post

Mitsubishi plans new models every six months

There was a time when introduction of a new model took years in India. Going down the memory lane, we could find that Ambassador actually rolled out only one model till late 90’s and Fiat had only two models for India for over twenty years. When Maruti came in the early 80’s it revolutionized car industry, but new models were not forthcoming. But now the time seems to be changing so fast that if you blink you could miss a model.

Going a step ahead and breaking all records, one of the most successful sedan manufacturers, Mitsubishi has now decided to launch one new model in India every six months. They are even planning to introduce the sophisticated SUV Outlander in few months, which will be manufactured in India. It seems launching of new small cars, luxury cars, SUVs and sedans within span of short period may soon become a trend among car soon become car manufacturers.

    SocialTwist Tell-a-Friend     Add to Technorati Favorites                 Add New Post

Another jewel in Tata’s crown

Tata Motors has taken the entire world by storm when it unveiled world’s cheapest car Nano at auto expo and earned the reputation of being mass car producer. By acquiring Ford’s luxury and premium brand Jaguar and Land Rover, Tata Motors has also proved its commitment towards producing high end class cars. It added one more jewel in the Tata’s crown.

Tata has taken very decisive and bold step by acquiring JLR brand from global player Ford. Tata has become a world-class car maker by clinching this deal for $2.3 billion. With this deal, Tata Motors has set the entire auto world on fire and also proved global players wrong who thought Tata can only make cheapest car than high end model as it will now produce cars ranging from Rs 1 lakh to 1 crore.

    SocialTwist Tell-a-Friend     Add to Technorati Favorites                 Add New Post

Car sales gear up in small cities

It seems that B and C cities are emerging as profitable markets for car companies in the last year. The rising income and easy accessibility to loans have been largely responsible for driving car sales upwards in these cities. As metros have been are soon going to become a stagnant market, it makes sense that car manufacturers look for cities other than metros. Most of these car buyers in these cities are first time car owners and obviously go for entry level cars.

It is believed that Hyundai accounts 40 per cent of its sales including small cars and luxury cars are in cities other than the metros and six big cities in India. And the most popular models have been Santro and i10.

    SocialTwist Tell-a-Friend     Add to Technorati Favorites                 Add New Post