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This week in Auto: Govt eases vehicle import norms, Tata Motors m-cap below two-wheeler companies

Here is the list of all the major developments in the automotive space this week

September 22, 2018 / 04:01 PM IST
 
 
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As India continues to mature in formulating buying trends, especially for automobiles, the government too seems to be in sync with the buyers and vehicle-making companies. From stricter emission guidance to pushing electric vehicles and other alternate fuel technologies, the government has indeed pulled out all stops to push for better vehicular standards. More on this later in the copy. Here is the list of all the major developments in the automotive space this week.

Mahindra’s e-mobility company record losses

Despite the government’s high decibel campaign for shifting to electric mobility, India’s biggest manufacturer of electric vehicle Mahindra & Mahindra (M&M) is fighting mounting losses amid declining sale. Mahindra Electric Mobility (formerly Mahindra Reva), a subsidiary of M&M, has seen its accumulated losses since 2010 balloon to Rs 686 crore as of March. Last fiscal, its losses increased 14 percent to Rs 129 crore as compared to Rs 113 crore in FY17.

Harley-Davidson enters used bike segment

One of world’s largest cruiser bike manufacturers — Harley-Davidson — has announced its foray into the pre-owned bike market in India. The official launch precedes the pilot testing Harley-Davidson has been undertaking since the start of the year through select sales outlets.

Tata Motors’ market cap falls below Bajaj Auto

Jaguar Land Rover is proving to be a drag on Tata Motors’ financials, so much that N Chandrasekaran-led carmaker's market capitalisation currently is even lesser than that of two-wheeler companies Bajaj Auto and Eicher Motors. At Rs 73,300 crore, Tata Motors' market capitalisation has now slid to the fifth spot in the auto segment, due to JLR's flagging sales in high-growth markets such as China and Europe. The market cap has fallen from the Rs 1.7 lakh crore-mark it hit in September 2016.

Suzuki wants to sell India-made cars to the world

Suzuki Motor Corporation is keen to sell those cars to the world that are developed and made in India as the country assumes a bigger place in the Japanese company’s strategy till 2030. The parent company of Maruti Suzuki, India’s largest car maker, has called for a change in its 'way of thinking’ to achieve these targets.

Jaguar Land Rover to cut production

Tata Motors-owned Jaguar Land Rover on September 17 confirmed a cut in its production schedule at the Castle Bromwich plant manufacturing Jaguar cars in the West Midlands region of England due to "continuing headwinds" impacting the British car industry. The change in schedule, described as "standard business practice" by the Tata Group company, will see nearly 1,000 workers at the plant shifting from a five-day work schedule to a three-day one until Christmas this year.

Mercedes-Benz launches new C-Class

The largest luxury car maker Mercedes-Benz, which controls over 40 per cent of the market, on September 20 launched a new C-Class, one of its most popular executive saloons, with BS VI diesel engine. The fifth generation C-Class, for the first time, is mounted on a BS-VI engine, and is priced at Rs 40 lakh (C 220 d Prime), at Rs 44.25 lakh for C 220 d Progressive and the topend C 300 d AMG line comes with a price tag of Rs 48.50 lakh, the Pune-based company said in a statement.

Eases in import norms to boost new launches

The government last week decided to ease import norms for automobiles, paving the way for a possible boost in new model launches. The rule of the minimum value of the car being $40,000 and two-wheelers with minimum engine size of 800cc, has been done away with. However, only 2500 units can be imported by a company in a year.

Also, there will be no need to certify roadworthiness of such imported vehicles using Indian testing standards. A certification from the country of origin of the vehicle will be enough to meet the requirements.

What this effectively means is that those companies such as Mercedes-Benz, BMW, Audi, Jaguar Land Rover, Volvo, Ducati, Harley-Davidson, Triumph and Kawasaki, who do not have a significantly large manufacturing operation in the country, can now import with less restrictions.

These vehicles will still have to pay the same rate of taxes before retailing them to the local buyers. India’s import tax structure is such that in many situations, the final cost of the vehicle is double than its cost in international markets. This is done to discourage imports and boost local manufacturing.

Companies can, however, now save on homologation (local testing and certification) expenses. In addition, they can now import even inexpensive models for test marketing purposes as the minimum requirement of $40,000 price tag is gone.

This would be beneficial to companies such as Volkswagen, Honda, Toyota, Skoda, Ford, Renault, Nissan and Mitsubishi who have international products that could be suited for the Indian buyer as well.

As the cost of such vehicles will still be prohibitively high coupled with a limited number of import volumes experts are not expecting any impact on local manufacturing.

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Swaraj Baggonkar
Swaraj Baggonkar
first published: Sep 22, 2018 04:01 pm

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