- Disappointing Start for Brazilian Auto Industry in January 2008
Brazilian auto industry experienced slump in new vehicles sale in January 2008 but expecting improvement in sales figures in coming months due to rising disposable income.
Anfavea, Automobile Manufacturers Association of Brazil, reported a decline in the sale of vehicles in the very first month of 2008 owing to seasonal trends, as reported by reuters.com.
There was a decline of 11.3% in sales of new cars in January 2008 as compared to December 2007 and sales reached 215,000 Units. However, it was up by 40.6% as compared to corresponding month in 2007. In January, Flex cars, that run on combination of gasoline and ethanol prepared from sugar cane, posted a drop in sale to 179, 731 Units from 200,686 Units sold in December last year. Nevertheless, the sale of flex cars went up significantly from last year January in which 120,199 Units were sold.
Industry experts attributed this decline in January 2008 to exodus of large number of Brazilians for vacations and this kept them away from buying automobiles. Although the sale of vehicles in January 2008 was less, Anfavea is anticipating the situation to get better in coming months and the sale is expected to grow by 17%, making up for 2.88 Million Units. On the back of rising domestic demand for vehicles, Anfavea also expected that output of automobile industry would grow up to 3.24 Million vehicles in current year.
Decline in interest rates and extension of repayment period of loans empowered Brazilians to expend on automobiles which, in turn, is boosting the automobile industry of the country. Both these factors will draw attention of Brazilians toward new automobiles in remaining months of the year.
Moreover, Brazil's economy is maintaining high growth pace and consequently, disposable income of middle and lower sections of its society is also rising. So people can now afford to buy new vehicles. Besides, industry experts recognize that increasing expenditure capability of Brazilians and introduction of fuel-efficient cars will continue to attract people in 2008.
According to a Research Analyst at RNCOS, "Brazilian automobile industry will keep breaking its past records in terms of selling new vehicles as people have easy access of credits at lower interest rates. January's sales of new vehicles in 2008 might have disappointed the automobile industry but in coming months, sales will increase as many factors are favoring growth in the industry."
Fri, 07 Mar 2008 11:55:00 +0000
- Tough Year for South African Automotive Industry
Slow growth in domestic market of South Africa is troubling the automotive industry and tough time will continue in coming months too. However, export can offset losses.
The South African automotive industry will face tough time this year as the sale of vehicles is slipping down, but export programs will help in minimizing the losses, as reported by allAfrica.
According to the data released by the National Association of Automobile Manufacturers of South Africa, the sale of new vehicles declined moderately to 47,296 Units in January 2008 against 52,212 Units in January 2007. It was a fall of 9.4%, however, the association is hopeful that export programs would help in recovering the losses.
Rising interest rates on financial credits seem to be the biggest cause for this decline as the demand for vehicle loan has slumped. In addition, housing debts reached 77.5% of the disposable income due to increase in domestic spending and ultimately, reining the growth in the automotive industry.
Export programs of many renowned motor-manufacturing companies, including Volkswagen and Ford, will prevent the automotive industry of South Africa from bleeding. These companies are all set to reap benefits from low production cost and trade agreement, which South Africa has signed with European Union. This will also give them access to new EU countries and opens 15 EU countries to goods from South Africa. This is expected to fuel the auto export.
These companies do not want to leave any loophole and will utilize the African Growth and Opportunity Act (AGOA) signed between the US and African continent in 2000. The Act provided access of the US market to 38 African countries. They can sell their products in the US without duty charges by complying with certain criteria such as market-based economy and obeying set rules. Now this Act has been extended for another 8 years (2008-2015). In fact, the automotive industry of South Africa has emerged as the largest exporter under this law. In 2001, when this Act was implemented, South African exports to the US were measured at $359 Million, up by 38.7%.
As per a Research Analyst at RNCOS, "Export program may help South African automotive industry to recover loss due to low domestic demand for vehicles, but to promote growth in this industry, the government has to come up with plans that increase demand and control inflation simultaneously."
Fri, 07 Mar 2008 11:50:00 +0000
- UK Car Export Touched New Height Last Year
UK car exports has increased substantially in past few years due to decline in value of Pound and rising demand of Japanese cars that have increased the car export to European countries.
In the UK, record units of cars produced just for export purpose to other countries last year. In total, the car production amounted to 1.5 Million in 2007, as per the news published by IET.
Out of total cars manufactured, almost 80% were meant for export, which signifies the power of British car export business over other countries. Moreover, car exports grew by 7.2% in 2007 in comparison to 2006. In addition, the commercial automobile output in 2007 was highest since 1998 with 215,000 vehicles produced out of which 50% was meant for export.
Dave Osborne, National Secretary, Car Industry, Unite Trade Union, stated, "These figures show what we have always said - that the skills and productivity are there in UK car industry for it to be profitable and a world leader", as published by Ineedcontent.
The major reason for such huge increase in car export is that Japanese car producers in the UK have enhanced their production capacity to gain share in exports to European countries. The demand for Japanese vehicles in European countries is growing because of elevation in fuel prices and Japanese cars consume less fuel.
The appreciation in value of Euro against Pound additionally enhanced the UK vehicle exports as the majority of cars are exported to European countries. From European viewpoint, the currency exchange rate is predominantly positive for manufacturers based in the UK. Strong Euro is making car import from the UK cost effective for other European nations.
One more significant factor that augmented export of vehicles from the UK was the range of striking UK-manufactured models from several top car producers such as Ford and Nissan. Moreover, the new models like new Audi A4 and Chrysler Sebring have pushed the UK cars demand overseas.
s per a Senior Research Analyst at RNCOS, "Considering industrial sectors where an intense approach is required, automobile industry is one area where country is doing very well. Increase in number of exported cars demonstrates that car producers should make investments in this sector. Alternatively, increased demand for Japanese cars in Europe creating troubles for local automobile industry. Beyond all, the recent statistics support the UK' latent as international manufacturing base."
Mon, 03 Mar 2008 12:00:00 +0000
- Japan's Auto Sales on Downward Spiral
Sales of automobiles in Japan are taking a nosedive as population declines, incomes remain stagnant, young men prefer not to buy cars and oil prices continue to soar.
The Japan Automobile Dealers Association revealed that the country recorded lowest sales in the domestic auto market in last 35 years, as reported by detnews.com.
In 2007, a 7.6% fall brought down sales of new cars, trucks and buses to 3.434 Million units. New vehicle sales alone dropped by 7.1% against sale of new cars in 2006 to 236,142 units in December 2007, marking the first decline in three months since October 2007. Declining sales hit all the leading automobile manufacturers substantially in the domestic market.
The slump in car sales in the country is reflecting the downtrend. It has been shrinking in the domestic market for the last four years whereas the overseas markets have proved profitable for the car firms.
Among the leading factors for dismal car sales in Japan is the declining population in the country. As a result, the demand for automobiles is declining. In addition, the limited growth in incomes is also responsible for falling car sales, thus affecting the overall sales of cars. As wages come to a standstill, they are taking a toll on the purchasing power of the people, which in turn is having an adverse impact on sales.
Another factor that hugely contributed in decline of auto sales in Japan is the reducing percentage of young males who are opting to remain car-less has gone up from a quarter to a third and it is seriously damaging domestic sales of cars in the island country.
Moreover, as oil prices around the world continue to surge, the population of Japan finds itself increasingly unable to afford automobiles. High oil prices are proving a deterrent for consumers, forcing them to keep away from cars. Increased price of ownership to population gentrification is adding to the reasons for falling car sales in the country.
A Senior Research Analyst at RNCOS says, "It is necessary for the automobile industry to take corrective steps like bringing down car prices to increase affordability for consumers. Even the automakers have to focus on R&D to come out with new and fuel-efficient models to boost demand of automobiles in the domestic market. It is advisable for Japan's automobile dealers to concentrate on youngsters to raise automobile sales."
Thu, 28 Feb 2008 10:37:00 +0000
- Executives Expecting Rising Profits for Global Automobile Market
Senior executives of the automobile industry are optimistic about the growth in the global automobile market over the next five years, according to a survey by KPMG LLP.
A survey showed that automobile executives around the world are hoping growth in their business, as reported by WLNS.com.
KPMG LLP, Audit and Tax Advisory Firm, conducted its annual survey in which 113 senior executives working in automobile industry were interviewed. They are expecting decent growth in the industry. The percentage of profit is expected to grow from 16% in 2007 to 26% in coming five years.
When it was asked to rate the technology, which would be at the focus in coming five years, 79% of the respondents gave priority to hybrid system while 78% gave importance to fuel cell technology.
Daron Gifford, Leader of company's auto industry of KPMG, said that executives are optimistic about growth because they know that the global automobile industry is heading towards transformation in propulsion technologies like hydrogen fuel cells and gas-electric hybrids, as reported by Business Week.
"Hybrid Cars Market Outlook", a comprehensive analysis by RNCOS on worldwide hybrid car market also says that hybrid fuel technology will have huge impact on the global automobile industry. Hybrid vehicles have an edge over the traditional technology vehicles as they are fuel-efficient, and give fast acceleration and low emission. The future of next generation vehicle depends on these features. Moreover, it is believed that economics of hybrid possession will also become more conducive for consumers in coming years.
Other reasons for optimism among executives include strong economic growth in developing countries like India and China (that has decreased their fears about global overcapacity) and improving cost framework as the North American makers won the negotiations last year between FM, Chrysler LLC and the United Auto Workers Union and Ford Motor.
24% out of total 113 executives said that the sale of vehicles would rise in China over the next five years. It may reach to 16 Million, equal to the US market or surpass the US market, if the economy of the country continues to grow at current pace. 72% executives said that the consumer demand would grow highest in India.
Betsy Meter, partner of KPMG, believes that the reason for huge optimism among executives is the fast evolving markets in the developing countries, which have surpassed the expectations of industry experts, owing to growth in population and affluence, as reported by Livemint.com.
Fri, 15 Feb 2008 11:16:00 +0000
- Indonesia's Car Industry on Acceleration Mode
The car industry in Indonesia is in throes of resurgence in car sales on the strength of various factors, mainly the liberalization of the region's car industry.
Car sales posted a revival in 2007 following a dismal 2006, as total sales were closed at 434,449 units, high by 36.2% the 2006 total of 318,904 units, reported The Jakarta Post.
Gaikindo (Indonesian Automotive Industry Association) declared 4x2 non-sedan to be Indonesia's best-seller with variations including 4x2 low Multi Purpose Vehicles (MPVs) that resemble van, 4x2 medium MPVs and 4x2 high Sports Utility Vehicles (SUVs).
Behind the acceleration of the Indonesian car industry are the forces like easily available credit, low interest rates and greater consumer lending by banks. The spurt in the availability of new affordable locally-assembled models has also triggered an explosion in Indonesia's car industry with no signs of slowdown in near term.
Also filliping car sales were better economic factors like lower inflation rate that facilitated more modest prices for cars. Admirers of imported cars also benefited from the availability of low priced imported cars due to the stability of Rupiah currency against the US dollar.
Total implementation of ASEAN Free Trade Area (AFTA) led to liberalization of the region's car sector as tariff barriers disintegrated, allowing Southeast Asian countries to combine their economies for a single production base. The result was the creation of a regional market of more than 500 Million consumers, sending car sales soaring.
The government did its part in facilitating growth for the car industry with measures like bringing down expenditure on subsidies and raising domestic fuel prices.
In the opinion of some industry experts, efforts are underway by car makers in the country to step up production capacity at pace with demand apart from making the most of the market potential given a fairly low ratio of car ownership in a country with the fourth biggest population in the world.
A senior research analyst at RNCOS said, "This year is set to witness an escalation of car sales in Indonesia due to availability of the affordable credit, improved economy and introduction of wider variety of new models. With the complete liberalization of the regional car sector in Indonesia, the country's car industry will result in greater competition which will compel manufacturers to resort to more aggressive promotion tactics to boost sales."
Fri, 15 Feb 2008 11:10:00 +0000
- New Car Sales Grew 6.7% YOY in the Czech Republic in 2007
The sale of passenger cars and LUVs is growing in the Czech Republic as the economy of the country is growing and car manufacturers are coming up with new models.
The Czech Car Importers Association released data showing that the number of new car registration in the country increased by 6.9% YOY in 2007. The figure rose from 123,987 vehicles in 2006 to 132,542 vehicles in 2007, as reported by HEMSCOTT.
The market growth of both passenger cars and Lifestyle Utility Vehicles (LUV) sales increased from 4.2% in 2006 to 12.6% in 2007. However, the rapid growth in the car market has raised concerns regarding inflation and tightening of monetary policies by the Czech Central Bank.
The economy of the Czech Republic is progressively growing, as a result, personal disposable income of families are also inflating to double in terms of local currency. Consequently, the sales of passenger cars have gone substantially up. Easier availability of credit and aggressive marketing by the car selling companies has also accelerated the car sales in the country.
During 2007, each car manufacturer launched its new models of cars, which contributed to increase in car sales because consumers had a variety of options to choose from. Additionally, many auto manufacturers have cut down prices of their cars, which prompted consumers to buy new cars.
Industry experts said that car manufacturers are quite satisfied with the current growth of the industry. They also said that carmakers should aim to increase the sale in the months to come so that the target projected by the Auto Association of the Czech Republic for coming years could be achieved.
A recent report, "Passenger Car Market - A Global Review (2006)", by RNCOS said that the automobile market in the Czech Republic is growing and it is expected that the trend will continue in years to come. New car models have boosted the passenger car sales and it will continue to attract people. Earlier, people were dependent on lease system and took personal loan from bank to buy vehicles. But now easier access to automotive financing has given people an alternative option of traditional systems. The flexibility in financing system is good because more than half of car sales in the country are financed by lease.
Fri, 15 Feb 2008 11:06:00 +0000
- No Relief for Domestic Auto Sales in Japan
Declining population and rising fuel prices are among the main reasons for the continuing decline in the sales of new vehicles in Japan's domestic market despite efforts by automakers to boost sales.
According to news reported by Xinhuanet, the Japan Automobile Dealers Association that domestic sales of new vehicles in Japan fell for the fourth consecutive year since 2003 to 3,433,829 units in 2007. The year on year decline was 7.6%, a new record since 1972.
For 2008, the Japan Automobile Manufacturers Association (JAMA) estimates domestic sales to fall to approximately 1.88 Million units. One of the reasons for this slump could be non-car owning males in their early 20s whose percentage has gone up from 24.9% to 32.1%.
Industry experts reveal that the government measures for reducing the population has resulted in a decline in population in the country. The modern youth is also displaying an aversion to automobiles and greater interest in mobile devices with innovative technologies.
New car sales in the country have also been hit by the never ending increase in gasoline prices. Apprehension over after-effects, especially soaring fuel prices, is leading to a preference for staying at home as opposed to purchasing new vehicles.
Also contributing significantly to the slump in Japan's auto industry is the slowdown in the housing market and low income which have casted an adverse effect on the demand for automobiles in Japan. The country is also suffering from declining employment that is increasing the difficulty for people to purchase new vehicles.
According to the findings, spontaneity is lacking in Japan's auto market to respond to attempts made by some carmakers of the country to reignite local demand through increased offerings in new models.
The slump in Japanese auto market has hurt Japan's largest automaker, Toyota Motor Corp. also that despite the introduction of nine models since May 2007 estimated a fall of 65% in domestic sales in 2007.
A RNCOS Research Analyst said, "Japan's automobile industry is reaching maturity. A large chunk of the population is looking away from the auto sector. The need, therefore, is for Japanese automakers to come up with technology-intensive new vehicles, given the Japanese penchant for technology. A shift of focus is also recommended for automakers to foreign countries, particularly the developing countries like India, Pakistan and Sri Lanka where automobile demand continues to rise seamlessly."
Thu, 14 Feb 2008 06:43:00 +0000
- Australian Car Industry Booming
Boom in Australian economy and appreciating Australian dollar against the US dollar are backing the Australian car industry. Also, imports have made cars less costly in the country.
The sale of vehicles in Australia crossed 1 Million and reached to 1.04 Million. The sale rose in spite of uncertainty regarding interest rates and soaring fuel prices, reported Hearldson.
In January 2007, when the new auto market opened in January 2007, the Federal Chamber of Automotive Industries forecasted to sell 940,000 units in 2007 but its prediction proved wrong.
Industry experts have given many reasons for rise in car sales. Wide range of brands (with around 40 brands) and a large number of individual models (at around 550 models ranging from 3 cylinder cars to 12 cylinder performance sport cars) have given consumers a wide option to choose from. The entire segment experienced high growth last year but the family-oriented segment experienced exceptional rise in sales volume. This segment includes medium cars, large cars and compact Sports Utility Vehicles (SUV).
Dealer incentives and cut down in prices drove importers and local carmakers. Companies like Ford, Toyota and Honda made use of free trade agreement with Thailand and imported new models from there. Apart from this, price fell down due to intense competition and import from lower cost countries like South Korea helped in cutting down the prices of new cars and keep them down.
Other factors that contributed in raising the sale of cars include high purchasing power of consumers. Booming Australian economy and strengthening Australian dollar against the US dollar too helped in keeping the car prices stable. The strengthening Australian dollar is escalating the competition among car models, as a result, consumers are demanding better value of their money.
Import of cars from lower cost countries is mainly responsible for this boom but the local car manufacturers are under intense pressure of how to deal with this problem. They cannot compete with importers operating from low cost nations in cutting price that resulted in weak sales.
As per a Research Analyst at RNCOS, "If the consumer confidence sustains and the Australian economy keeps growing with current pace despite soaring crude oil prices and uncertainty about interest rate, 2008 will be good for the auto industry. However, the biggest problem is for the local car manufacturers, as they are facing intense competition from importers. But cheaper funding can solve their problem."
Wed, 30 Jan 2008 12:39:00 +0000
- Automobiles Sales Fell in 2007 in South Africa
South Africa automobile industry is facing a tough time. The sale of automobile vehicles went down significantly in the last year due to rise in fuel prices and increase in interest rates.
South Africa experienced steep decline in sale of automobiles in the year ended. The overall figure of automobile vehicles sold in 2007 was 612,707 units, which was 5.2% less than the vehicles sold in 2006, according to NAAMSA (National Association of Automobile Manufacturers of South Africa), as reported by iAfrica.
According to the NAAMSA, the sale of LCVs (Light Commercial Vehicles) and new cars in 2007 was quite low but the sale of Heavy Commercial Vehicles (HCVs) was comparatively well.
During 2007, the decline in affordability of vehicles was due to several reasons, such as price increase of vehicles and the significant rise in prime lending rates. Besides, the home debts as percentage of disposable income touched a record value of 77.4% in 2007, which made it difficult to take credit from financial institutions. The disposable income of people was strongly influenced by increase in fuel prices and increasing costs of food and electricity.
In addition, the automobile industry was strongly influenced by a series of events during 2007, which includes implementation of the national credit legislation and the introduction of National Traffic Information System (e-NaTIS). The national credit legislation increased the interest rates and introduced tough guidelines for lending while the e-NaTIS increased the problems of vehicle registration. Apart from this, the loans for automobiles are not consumer-friendly. Financial institutions are making tight polices for lending and as a result, people are not showing interest in taking loans.
Poor commercial conditions have made it difficult for automobiles companies to earn good profits. Skyrocketing fuel prices have adversely affected the purchasing capacity of consumers and the car manufacturers are going to suffer a lot this year because of prolonged strike by the car parts manufacturing industry during September last year.
NAAMSA has predicted that the country's automobile industry will face difficult time in 2008 because the similar conditions are likely to prevail this year as well.
According to a Research Analyst at RNCOS, "The South African automobile industry is facing a tough time due to several reasons. To make consumers feel comfortable, the automobile manufacturers have to come forward and make their policies more flexible. Companies should come up with vehicles that are based on advanced technology and consumes less fuel to attract consumers."
Mon, 28 Jan 2008 12:20:00 +0000
- Demand for Cars Increasing In Vietnam
The demand for cars is increasing in Vietnam with every passing year because sales prices have reduced significantly and people are shifting from two-wheelers to cars.
Car sales in Vietnam went up by nearly two-time during January-November 2007. Car manufacturers said that that this was pushed by an increasing demand for new passenger cars, reported Forbs.
According to the monthly report by VAMA (Vietnamese Automobile Manufacturers), a 97% rise in car sales was seen during the period, with passenger car sales up by 148%. In November 2007 alone, sales of passenger cars went up to 10,110 vehicles, still marginally small by regional standards. However, this was up by 167% year on year.
The growth for that month came primarily from commercial vehicles with a 235% rise in November 2006, says VAMA. Also, Vietnam, which is a fast-growing economy of 84 Million people, has witnessed emergence of increasing middle-income earners who are shifting from two-wheelers to cars. It has been seen that day by day, more cars, trucks and buses are hooting their way through two-wheel traffic as wages are increasing and road conditions are improving. However, the most remarkable growth is seen in the luxury car segment.
Vietnamese automobile industry was provoked by the government decision to bring down tariffs on imported cars from January 1, 2006. Also, import of used cars and their taxes have decreased, thus fuelling heated competition among car manufacturers. Decreased automobile taxes are primarily attributed to larger imports of vehicles. Vietnam cut down import duty on cars from 70% in August 2007 to 60% in October 2007 as compared to 80% earlier.
As per VAMA, auto manufacturers in the local market have the potential to manufacture 10,000 cars, which they have vowed to deliver by the end of the first quarter of 2008. Many sales agents have denied security money from clients as manufacturers find it difficult to deliver on time.
According to a Research Analyst at RNCOS, "Many customers are now purchasing imported cars in Vietnam. Earlier, it was difficult for people to buy imported cars, as they were quite expensive. However, this is not the case now - all thanks to reduction in tax. The Vietnamese automobile market will continue to be a growing segment in near future because importers are incapable to meet drastically increasing demand. Imports will exaggerate the strain on local automobile manufacturers, thus pushing them to decrease prices further."
Fri, 25 Jan 2008 10:45:00 +0000
- Passenger Car Sales in China Climbed up by 21.2% in Oct '07
The increase in demand of passenger car has enhanced car sales figure in China. This has affected the economy significantly and a further demand is still predicted in the time yet to come.
Passenger car sales in China had shown a phenomenal growth of 21.2% in October than the same period last year and domestic cars touched a never before record of 496,900 units for the month, reported China Knowledge.
As per China Association of Automobile Manufacturers (CAAM), as many as 364,600 sedans were sold, a 20% growth while there was a snap up of 30,900 SUVs. MPVs also grew in popularity, selling 17,800 units. Overall car sales in China grew by 24% for the initial ten months, reaching 7.15 Million units. To keep pace with the strong demand, manufacturing during January to October had risen by 21.7% to 5.14 Million units, with 713,100 passenger vehicles manufactured in October 2007.
Healthy economy of China and migration of people from smaller places to larger cities where a car is needed allows car manufacturers to predict an increase in demand for their product. Sustained depression in the price along with continuous increase in the availability of new, cheaper and smaller cars is also allowing the number of consumers to increase.
Strong economic position since 1990s led to the expectation of growth in passenger car segment. However, the rate at which the car industry has grown would not be so if it were not for the potential that the Chinese market has. Moreover, China’s access to the WTO in 2001 proved a crucial turning point for its automobile industry.
The government of China has also encouraged banks to provide easy car loans and reduce taxes by permitting private car duties to be determined by public tenders.
Industry experts are of the view that passenger car companies have been at the zenith of industrial development during January-October 2007 and they had attained performance at a rather high level. Currently, the passenger car industry mainly depends on private utilization and new vehicle procure, opening the gates of a fast growing era.
As per the report "China Automobile Industry Forecast (2006-2010)" published by RNCOS automobile industry of China is evolving as a key player in the global automobile landscape from the viewpoint of demand as well as supply. In future, fuel efficiency standards' introduction is going to promote the sales of small cars. Also, the Beijing Olympics in 2008 would require investments in the logistics area that would improve the sales of commercial vehicles in the country.
Sat, 19 Jan 2008 10:30:00 +0000
- India All Set to Become Global Player in Auto Component Industry
The Indian auto component industry has the potential to earn 50% of its total revenue from exports only by 2015 as the industry has been drawing the attention of global auto players.
According to Vishnu Mathur, Executive Director, Automotive Component Manufacturers Association (ACMA), the export of auto components in India would grow phenomenally in coming years. It is likely to grow more than eight times by 2015 from the current level of 20% ($2.9 Billion) and the total turnover would reach somewhere around $15 Billion, as reported by Financialexpress.
According to ACMA, the growth in domestic auto component market is not as good as in exporting the products. The industry has the potential to earn 50% of its total earnings from exports by 2015 while domestic market is expected to touch $40 Billion.
The research report "Indian Automobile Sector - A Booming Market" by RNCOS said that the export by the Indian auto component industry was US$ 1800 Million during 2005-06 with a growth of 28.57% as compared to 2004-05. In fact, 75% of the total auto component export was generated by car companies in 2005-06. Indian auto component market has the potential to provide Original Equipment Manufacturers (OEMs) a good market and can reduce their manufacturing cost significantly.
The industry experts believe that stringent laws in Europe and the US regarding safety and emission norms are pressurizing global car manufacturers to cut down costs. Consequently, all the big global auto players are looking towards India. India has emerged as a hub of component manufacturing where right mix of quality standards and technology are easily available.
Other reasons for high growth in the export of auto components include payback differentials, decline in the profit margins of companies, and slowdown in the domestic vehicle market due to rising interest rates for auto loans. Moreover, the declining value of dollar against rupee by almost 13% is also responsible for the boom in the industry. But at the same time, it is causing heavy loses to auto component exporters.
Foreign companies are willingly investing in the industry as they feel it is a better place to invest than anywhere else in the world. This is possible due to high quality of infrastructure, easy tax system and favorable government policies.
Furthermore, political stability, and high industrial and economic growth have captured the attention of global players and investors. Low cost and increasing focus on specialization in the segment is forcing overseas companies to come in India.
Sat, 19 Jan 2008 10:26:00 +0000
- Auto Exports in China Going High
The automobile industry in China has grown at a phenomenal rate and the number of vehicles the country is exporting to emerging countries has grabbed the attention of global automakers.
Auto exports in China went up in the initial ten months of 2007, as per data released by the Commerce Ministry. The Ministry says that 413,500 completely assembled vehicle units, high by 64% against same period in 2006, were exported by China, including buses, cars, and trucks during the period. Total sales of vehicle exported reached $4.80 Billion, a YOY growth of 117%, reported Associated Press.
Majority of auto exports in China were sent to emerging countries like Iran, Russia, and Kazakhstan. As per state media reports, 70% of auto exports in China in the initial six months of 2006 were meant for Europe and Asia with the highest share going to Russia, followed by Kazakhstan and Iran.
Russia has evolved as a major overseas market of China's auto export and for three successive years, it has been seen that China's auto export in Russia has increased so swiftly.
Despite the fact that automakers in China are trying to broaden their business in North America and Europe, so far, these makers have exported economy and compact passenger models to emerging countries only. In December first week, Geely Group Co., the Chinese automaker, declared plans to make an assembly plant in Subic Bay industrial zone in the Philippines. Similarly, FAW Group Corp. signed a joint undertaking with Grupo Salinas (Mexican conglomerate) for an assembly plant in central Mexico.
"Developing overseas markets is a realistic strategy for Chinese own-brand automakers, facing intensifying competitive pressures at home", Zhang Ji, official at Commerce Ministry said in a statement published by Associated Press.
A few industry experts are of the view that while China's vehicle exports account for a comparatively small part of Asia's overall export pie, the growth rate of China's export expansion and the potential for any future growth have drawn the attention of both its competitors and its export cooperation partners.
According to a Research Analyst at RNCOS "The rapid growth rate of China's passenger car market has grabbed the attention of global automakers and suppliers and has pushed them to set up or expand their activities in the Middle Kingdom. And the anticipated surge of economical Chinese passenger car exports in coming years has left dealers and distributors from across the world lining up for there to sell Chinese cars in their native countries."
Fri, 18 Jan 2008 11:33:00 +0000
- Russia - Foreign Car Import to Rise to 2 Million by 2010
Increasing demand for foreign branded cars in Russia is creating troubles for her own domestic car manufacturers as these makers are not able to keep up with demand.
The rapid stride in the economic growth of Russia has made its people capable to import cars from some of the most developed countries in the world. But this is not a good indication for domestic auto manufacturers, according to the report, "Booming Russian Automobile Sector", by RNCOS. The report says that the Russian automobile producers are already facing the problems of inferior quality, poor distribution system and lack of investment.
As reported by Interfax, Economic Development and Trade Ministry of Russia has estimated that import of foreign brands of automobiles would escalate to two million by 2010, higher from a projected 1.4 Million in 2007.
Speaking at an Auto Industry Conference in Moscow, Andrei Klepach, Head, Macroeconomic Forecasting Department of the Ministry, said, "Automobile production (in Russia) is a weak spot", as reported by Interfax.
According to Klepach 'Only a small niche of about 600,000-700,000 cars per year, which is less than now, will remain for domestic automobiles due to the expected growth in imports to two million cars and the assembly of foreign cars (within the country) at a level of 1.2-1.3 Million cars with the size of the market expected to stand at 3.5 Million automobiles.'
Economic experts have accredited several reasons, including rise in personal disposable income, accessibility of consumer credit and tax reforms, for rise in import of foreign branded cars in Russia. In addition, selling foreign cars in the country is much more profitable than selling domestically-manufactured cars. Hence, businesses sell foreign cars are flourishing exceptionally and the domestic automobile industry is facing shortage of investment.
Globalization has enhanced the awareness of people and its impact reflects in their demand for advanced technology in automobiles. Russian people are demanding for international quality and better performance in locally developed automobiles. Consequently, domestic automobile players are molding themselves in accordance with the situation to maintain their existence. However, dearth of adequate technological platforms and lack of investment is making the local manufacturers unable to meet the demand of desired cars.
The upward movement in demand for foreign branded cars has opened gates for foreign players who are very keen to collaborate with domestic players to exploit the Russian automobile market.
Wed, 16 Jan 2008 10:34:00 +0000
