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  • Guangzhou Auto raising up to $2.2 bln in green car, proprietary brand push

    Guangzhou Auto raising up to $2.2 bln in green car, proprietary brand push

    China’s sixth-largest car maker by sales, Guangzhou Automobile Group (GAC Group) , plans to sell up to 15 billion yuan ($2.2 billion) worth of shares to fund development of its green car business, proprietary brands and factories, the firm said late on Monday.

    Chinese automakers have invested billions in developing electric and petrol-electric hybrid vehicles at the direction of the government, which sees green cars as a way to leapfrog global competitors more experienced in traditional petrol engines while also cutting heavy pollution.

    Five investors involved in the private placement of GAC Group A-shares are mainly controlled by the government in the southern metropolis of Guangzhou, Thomson Reuters’ IFR reported on Tuesday.

    The automaker, like most domestic peers, is a state-owned enterprise.

    GAC Group said in an exchange filing that the proceeds would be used in 10 projects, with nearly a third of the funds to be spent on research and development of green energy cars and other technology.

    Other projects include factory expansion and improvement and developing a host of new models for its GAC Motor brand.

    The automaker’s Shanghai-listed shares jumped 9.6 percent after resuming trading on Tuesday, closing the session up 6 percent. Trading had been halted on Oct. 18 pending the announcement.

    The newly issued shares account for roughly 10 percent of the automaker’s outstanding stock.

    In addition to making cars under a wholly owned brand, GAC Group also makes vehicles through joint ventures with Toyota Motor Corp, Honda Motor Co Ltd and Fiat Chrysler Automobiles NV.

  • Honda raises profit forecast on strong China sales

    Honda raises profit forecast on strong China sales

    Honda Motor Co lifted its full-year net profit forecast by 6 percent, betting that Chinese customers will keep buying its XR-V and Vezel SUVs and the popular Civic sedan after robust demand there boosted Asian sales sharply in the latest quarter.

    Japan’s third-largest automaker by sales said on Monday it expects full-year net profit to hit 415 billion yen ($3.95 billion), compared to its previous forecast of 390 billion yen. Honda upgraded its global sales forecast to reflect strong demand in China, the world’s biggest auto market and the company’s second largest.

    It also expects cost cuts and lower quality-related costs to offset the impact of a stronger currency and lift its bottomline this year, after taking a hit last year due to hefty provisions for costs to recall Takata (7312.T) air bag inflators.

    Strong demand in growing cities has pushed Honda’s Chinese sales up 26 percent higher year-on-year to 872,000 in the first nine months of 2016, boosted by a near doubling in sales for the Civic, which underwent a model change this year.

    This prompted it to lift the forecast for group vehicle sales in Asia by 11 percent on the year to 1.915 million for the year ending in March 2017, after overall Asian sales rose 22 percent on the year in the second quarter.

    As a result, it sees global sales rising by 5 percent from last year to 4.98 million cars.

    “We’re seeing a positive impact from our new models. The Civic is doing very well in North America, China, and South America,” Honda Executive Vice President Seiji Kuraishi told reporters at a briefing, adding that strong demand for the XR-V compact SUV crossover was also lifting Chinese sales.

    To keep up with rapidly growing demand for its sedans and SUVs in China, Honda is planning to build a new factory in the country with partner Dongfeng Motor Group Co (0489.HK), two people familiar with the matter told Reuters earlier this month.

    Honda sells roughly 40 percent of its global production in North America, but as growing demand in China drives Asian sales higher, the automaker expects sales in the two regions to be roughly the same this year.

    Despite the rosier profit outlook, Honda’s new profit forecast remains lower than the average 482 billion yen profit expected by 21 analysts polled by Thomson Reuters, and Honda said that its conservative outlook was largely due to global uncertainties.

    “At the moment we see uncertainties related to the U.S. elections, Brexit and a weaker sterling, and in Asia, the outlook for Thailand after the death of the country’s monarch,” Kuraishi said.

    “We haven’t seen the impact of these factors yet, but we’re taking a cautious approach to our forecasts.”

    Honda operates a plant in Britain, producing around 140,000 vehicles per year, including the CR-V crossover SUV and Civic sedan at its plant in Swindon. Half of its production is exported to the EU.

    Kuraishi said that the automaker had no plans at the moment to shift its production away from Britain, adding that it would consider factors including the value of sterling and the likely introduction of tariffs when deciding its future in the country.

    Honda is assuming an average rate of 103 yen to a dollar for the current year, against its earlier forecast of 105 yen.

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  • Chinese automaker BYD forecasts up to 84 percent profit rise for 2016

    Chinese automaker BYD forecasts up to 84 percent profit rise for 2016

    Chinese automaker BYD Co Ltd, backed by Warren Buffett’s Berkshire Hathaway, on Sunday said 2016 full-year profit was likely to rise as much as 84.17 percent, as rapid growth of the green car market eases.

    The Shenzhen-based manufacturer, which has invested heavily in making electric and hybrid petrol-electric vehicles, forecast a 77.09 percent to 84.17 percent increase in net profit for the year, at 5.0 billion yuan ($737.90 million) to 5.2 billion yuan.

    For the first nine months of 2016, BYD reported 3.66 billion yuan in profit, an 86.82 percent increase year-on-year. That compared with the automaker’s forecast in August of 83 percent to 91 percent for the period.

    BYD reported triple-digit profit growth for the previous four quarters. But its earnings expansion in the first nine months of 2016 slipped below 100 percent as the overall market for green-energy vehicles moderates after government support helped it quadruple last year.

    Overall sales of electric and plug-in hybrids in China totaled 289,000 vehicles in January-September, according to China’s automakers association, far from its target of 700,000 vehicles for 2016. An association official said Friday that sales were now likely to miss that target.

    Analysts said China may struggle to meet that target following the revelation that dozens of companies had been cheating the subsidy system.

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  • Tesla’s Musk unveils solar roof tiles, longer-lasting batteries

    Tesla’s Musk unveils solar roof tiles, longer-lasting batteries

    Tesla Motors Inc Chief Executive Elon Musk on Friday unveiled new energy products aimed at illustrating the benefits of combining his electric car and battery maker with solar installer SolarCity Corp.

    The products include solar-powered roof tiles that eliminate the need for traditional panels and longer-lasting batteries aimed at helping to realize Musk’s vision of selling a fossil fuel free lifestyle to consumers.

    “This is sort of the integrated future. An electric car, a Powerwall and a solar roof. The key is it needs to be beautiful, affordable and seamlessly integrated,” Musk said during an event to showcase the products at the Universal Studios theme park near Los Angeles. “If all those things are true why would you go any other direction?”

    Musk is the biggest shareholder in both Tesla and SolarCity, which is run by two of his first cousins. Analysts have been dubious of the deal’s proposed synergies, with some suggesting the merger is a way for Tesla to rescue money-losing SolarCity. A vote on the acquisition is scheduled for Nov. 17.

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  • Japan’s Nissan to sell parts maker Calsonic Kansei to KKR

    Japan’s Nissan to sell parts maker Calsonic Kansei to KKR

    Nissan Motor Co has decided to sell its entire stake in Japanese auto parts maker Calsonic Kansei Corp to U.S. private equity firm KKR &Co as part of a $3.8 billion takeover, the Nikkei daily reported, without citing its sources.

    KKR then will try to buy the remaining shares in Calsonic from other shareholders through a takeover bid, bringing the total deal to as large as 400 billion yen ($3.80 billion), the report said.

    Bain Capital and MBK Partners were also bidding to buy the auto parts maker, which has a market value of about 280 billion yen, Thomson Reuters LPC had reported earlier.

    Trading of Calsonic Kansei was suspended by the Tokyo Stock Exchange on Friday morning. A Calsonic Kansei spokesman said the company had not announced a sale to KKR.

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  • China’s Geely shows global ambitions, launching new compact SUV

    China’s Geely shows global ambitions, launching new compact SUV

    Chinese automaker Geely, the owner of Volvo cars, showed off the first model of its new Lynk & Co brand in Germany on Thursday, a compact SUV aimed at taking on the likes of BMW and Mercedes-Benz, as well as ride-hailing service Uber, across the world.

    The Lynk, made in China, will go on sale at home in 2017, followed by Europe and the United States in 2018, and marks one of the first attempts by a Chinese carmaker to create a global brand that makes use of European design and technology know-how.

    Chinese companies have been snapping up cutting-edge German technology to push upmarket and gain a global footprint. This year alone, Chinese home appliances maker Midea has agreed to buy German robotics firm Kuka and Fujian Grand Chip Investment Fund LP is taking over semiconductor equipment maker Aixtron.

    Long seen as a cheap, no-frills brand in China and unheard of in Europe, Zhejiang Geely Holding Group purchased struggling Swedish carmaker Volvo from Ford in 2010 to help it leapfrog a decade of research and development.

    While Volvo will continue to focus on premium vehicles, Lynk is an attempt to grab a slice of the mid market. It will initially take on foreign carmakers’ joint ventures in China, but – as shown by the global launch in Berlin – it also aims to challenge the world’s biggest automakers in their own markets.

    ‘SMARTPHONE ON WHEELS’

    At the launch of the ’01’ model at a former railway station in Berlin that now frequently hosts start-up conventions, Alain Visser, senior vice president at Lynk & Co, described the SUV as “our first smartphone on wheels.”

    It is targeting tech-savvy consumers that may have prioritized flexibility over car ownership in the past. “We are looking very much at millennial consumers all over the world who are very much concentrated around bigger cities,” he said.

    Each car will be permanently connected to the Internet and have a “share” button, enabling owners to rent out their car to other motorists via a smartphone app.

    “That becomes a source of income, which some of the consumers may use, a bit like an Airbnb vehicle,” said Visser, referring to the home rental company.

    Lynk has more models in its line-up, which the carmaker plans to launch over the next 3-5 years, but Visser declined to give details on body styles or launch dates apart from the name of the next car: ’02’.

    Once the full line-up is launched, Lynk aims to sell more than 500,000 vehicles a year by 2021, he said.

    EUROPEAN KNOW-HOW

    Geely’s design has been refined by British designer Peter Horbury, who headed up design at Volvo in the 1990s and oversaw it for Jaguar, Aston Martin and Ford’s other brands from 2002.

    In doing so, Geely is upping the competitive pressure on established global carmakers, which have long accused Chinese rivals of merely ripping off their designs.

    Jaguar Land Rover (JLR), for example, has sued China’s Jiangling Motor after it released the Landwind X7 SUV in 2014, a car that JLR says copies its Land Rover Evoque while costing around the third of a price.

    The car will be a hybrid powered by a 1.5-litre three cylinder petrol engine combined with a lithium-ion battery and electric motor, and will be the first based on the Complex Modular Architecture platform developed by Geely and Volvo.

    Mercedes-owner Daimler and BMW are also investing heavily in hybrid vehicles and will be watching closely to see how the ’01’ fares with European consumers.

    Geely said the car would be priced competitively and said it would be fixed across all markets, but declined to give details. It plans to keep down costs by selling the car online only and limiting the number of configurations available.

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  • Renault launches two new cars in Indonesia

    Renault launches two new cars in Indonesia

    Despite a bleak forecast for the automotive market in Indonesia, French carmaker Renault and its local partner PT Auto Euro Indonesia launched two new products in Jakarta on Wednesday: the KOLEOS and KWID.

    Serge Yoccoz, Renault ASEAN director of operations, said Indonesia was one of only a few countries to see the launch of the KOLEOS, a medium sport utility vehicle (SUV), ahead of Europe.

    “The new KOLEOS will be [Renault’s] flagship for the Indonesian market,” he said. “It has been redesigned to have unique features and has the ability of an SUV.”

    As for the KWID, Yoccoz added, the mini crossover would be offered for consumers eyeing high fuel efficiency and low maintenance costs. “The KWID will be able to address Indonesian customers’ [demand] for a stylish car,” he said.

    The KOLEOS is offered at Rp 460 million for its standard version and Rp 495 million for the panoramic sunroof version. Meanwhile, the KWID is tagged at Rp 117.7 million and is expected to be able to compete in the compact car segment, which accounts for 16.3 percent of the whole automotive market, according to 2015 data from the Association of Indonesian Automotive Manufacturers (Gaikindo).

    Bambang Subijanto, director of Indomobil Sukses International–an umbrella company of Auto Euro Indonesia, said the Renault-Nissan and Indomobil partnership would create good business synergy and respond to customers’ demands, especially in after-sales services.

    The sales target for both models is set at 1,000 units, until 2017.

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  • Honda planning new China car factory for 2019 start

    Honda planning new China car factory for 2019 start

    Honda Motor Co plans to build a new factory in China that will produce passenger cars from 2019, boosting its output capacity in the country by about a fifth, two people familiar with the matter said on Tuesday.

    Honda and partner Dongfeng Motor Group Co (0489.HK) are experiencing explosive growth in China with sales for their joint venture soaring 48 percent for the year to date thanks to the popularity of the XR-V sport-utility vehicle as well as the recently launched Civic sedan.

    At the same time, the venture, Dongfeng Honda, is coming close to its capacity limits at its two factories, targeting sales of 450,000 vehicles for 2016 – not far off current annual capacity of 480,000.

    The new factory will be located in Wuhan, central China, a major auto hub. It will initially produce 120,000 cars a year, with capacity likely to double eventually, the sources said, declining to be identified as there had not been a formal announcement by the companies.

    Honda confirmed that it was discussing the additional plant in Wuhan with Dongfeng, but that it had nothing official to announce now. A Beijing-based spokesman for Honda said the project had yet to be formally approved by the company or the government.

    The plan was initially reported by the Nikkei business daily, which said the venture planned to spend “hundreds of millions of dollars” on the factory.

    The new factory would be Honda’s seventh in China. Honda also has a joint venture with GAC Group (601238.SS)(2238.HK) called Guangqi Honda which has three plants. The Japanese automaker also has a separate plant for exports.

    Honda said in April it was looking to boost car sales in China to 1.07 million cars this year. It sold 1.01 million vehicles in 2015, a 33 percent jump over the previous year.

    Auto sales in China strengthened in September for a consecutive fifth month, rising to a three-and-a-half year high.

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  • Mazda to leave Indonesia, hands distribution to Eurokars

    Mazda to leave Indonesia, hands distribution to Eurokars

    Mazda Motor Corporation has appointed Eurokars Motor Indonesia, a member of Eurokars Group, as the distributor of Mazda vehicles in Indonesia following its decision to leave the country.

    Eurokars Group spokesperson Angeline Tan said Mazda’s distribution network of 45 dealers would be officially transferred from Mazda Motor Indonesia to Eurokars Indonesia in February.

    “This appointment represents a significant milestone for Eurokars Group. It also reflects the synergistic partnership between Mazda Motor Corporation and Eurokars Group, which is well-positioned to run the distributorship,” she said in a press statement in Jakarta on Friday.

    Following the official transfer, she added, Eurokars would take over existing staff members and dealers currently under Mazda Indonesia. It will also be responsible for after-sales including the warranties of all Mazda vehicles sold by Mazda Indonesia prior to the transfer.

    Founded in 1985, Eurokars was a dealer for Mazda cars in Indonesia in 2007 and took over the distribution of Mazda vehicles in Singapore in 2011.

    From November, Mazda Indonesia’s business entity will be changed from a sole distributor to an importer of the Japan-based Mazda Motor Corporation’s products in related to the business decision.

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  • Astra named best Indonesian company of past decades

    Astra named best Indonesian company of past decades

    PT Astra International has added one more award to its collection after Hong Kong-based magazine FinanceAsia named the widely diversified business group the best non-financial company in Indonesia for the past two decades.

    The magazine’s publisher, Jonathan Hirst, presented the award to Astra International president director Prijono Sugiarto at a ceremony in Hong Kong on Thursday evening.

    The award was based on polls conducted annually on the company’s performance over the past 20 years. As many as 115 financial and non-financial companies in Asia received such awards this year.

    Other large corporations named as best non-financial companies in their respective countries include Samsung Electronics of South Korea, China Telecom of China, PTT of Thailand and SingTel of Singapore.

    Meanwhile, in the Indonesian financial sector, five companies won similar awards. They include Bank Mandiri, which was named the best domestic bank, Mandiri Sekuritas as the best domestic investment bank and as the best domestic bond house, Danareksa Sekuritas as the best domestic equity house, HSBC as the best foreign bank and Credit Suisse as the best foreign investment bank.

    “On behalf of the Astra management, we thank all the stakeholders who have participated in the survey for their support for Astra during its 59 years of operations,” Prijono said after receiving the award.

    “Obviously, we hope that this achievement also brings pride to the Indonesian people, “ he added.

    According Prijono, as a national asset, Astra wants to continue to contribute to economic and social development for the Indonesian people through its 202 subsidiaries and affiliated companies, which employed more than 200,000 people. The business group was working with at least 2,500 vendors employing more than one million employees, he said.

    Astra is engaged in six business lines, namely automotive, financial services, heavy equipment and mining, agribusiness, infrastructure, logistics and IT.

    Astra was listed on the Indonesian Stock Exchange in April 1990 and has become a blue chip stock with a market capitalization of about Rp 337 trillion (US$25.8 billion) as of Oct. 12.

    FinanceAsia has presented awards to leading Asian companies every year since its establishment 20 years ago. Winners are determined by surveys among investors and analysts in Asia on a range of criteria, such as corporate performance, corporate governance, investor relations, corporate social responsibility (CSR) and leadership.

    Astra has received at least 13 awards from the magazine, in addition to numerous awards from other organizations. Unlike in previous years, this year’s award was given for the achievement over a 20-year period.

    In 2010, Astra management under the leadership of Prijono adopted a comprehensive business strategy it calls the Triple P Roadmap, according to which the company’s portfolio, people and public contribution should all ensure sustainable growth.

    Prijono attributed the success of the business group in maintaining sustainable growth to the company’s long-term business concept.

    Based on that concept, Astra had implemented concrete programs that clearly highlight the position of Astra in the long-term, including by creating new opportunities to diversify sources of revenue, to improve the competency of human resources and to expand the reach of the company’s corporate social responsibility (CSR) activities.

    Prijono explained that Astra carried out CSR activities through all of its subsidiaries and nine foundations, which include the foundation of Toyota and Astra, the foundation of Dharma Bhakti Astra, the foundation of Astra Bina Science, the foundation of Astra Honda Motor, the foundation of Amaliah Astra, the educational foundation of Michael D. Ruslim, the foundation of Karya Bhakti UT, the foundation of Astra Agro Lestari and the foundation of Insan Mulia Pama.

  • Hyundai Motor reaches tentative wage deal with South Korean union

    Hyundai Motor reaches tentative wage deal with South Korean union

    Hyundai Motor reached a tentative wage pact with its South Korean labor union on Wednesday after the worst strikes in the automaker’s history disrupted output at its domestic production base.

    The agreement is subject to a vote by almost 50,000 union members on Thursday, who rejected an earlier deal in August because of it was less generous than the previous year’s package.

    The union has held 24 rounds of full-scale or partial strikes since July 19, preventing the automaker from making 131,851 vehicles worth more than 2.9 trillion won ($2.60 billion), the government said last week.

    “The company and the union have formed a common ground that we should prevent further catastrophe as a prolonged strike has had a substantial impact on not only the company but the regional and national economy,” Hyundai Motor said in a statement.

    Under the latest agreement, Hyundai will increase basic monthly pay by 72,000 won; give each worker a one-off payment of 3.3 million won as well as bonus and incentives payments worth 3.5 times their basic monthly wage; and each worker will also receive 10 Hyundai shares, the company said.

    The deal came after the government threatened to intervene to suspend strike action, criticizing the union for walkouts despite relatively high wages at the automaker.

    The prolonged labor disputes coupled with sluggish domestic demand have prompted some analysts to cut earnings forecasts for the July to September quarter which the company is scheduled to report late this month.

    Twelve out of 25 net profit estimates have been revised down in the past 30 days, pushing the average estimate 12 percent lower, according to Thomson Reuters StarMine.

    Hyundai Motor, which is the world’s fifth-biggest carmaker including affiliate Kia Motors (000270.KS), has been hit by strikes in all but four of the union’s 29-year history though it usually made up for lost production by the end of each year.

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  • Daimler Trucks to increase its sales activities in core market Indonesia

    Daimler Trucks to increase its sales activities in core market Indonesia

    Daimler Trucks, the world’s leading truck manufacturer with a strong foothold in Asia, is enhancing its position in commercial vehicles in its core market Indonesia. The Daimler Trucks subsidiary FUSO (Mitsubishi Fuso Truck and Bus Corporation, MFTBC), Mitsubishi Corporation (MC), Mitsubishi Motors Corporation (MMC), and the Indonesian company PT Krama Yudha (KY) have signed a respective framework agreement. As part of this agreement, the Indonesian trade and sales partner PT Krama Yudha Tiga Berlian Motors (KTB) will focus exclusively on selling FUSO brand commercial vehicles. KTB’s passenger car business will be transferred to an independent legal entity. At the same time, FUSO will increase its stake in the newly structured company KTB from 18 to 30 percent.

    Dr. Wolfgang Bernhard, Member of the Board of Management of Daimler AG for Daimler Trucks & Buses: “By increasing our stake in our partner KTB, we are underlining the importance of the Indonesian market and can be even more active locally. Concentrating our sales activities completely on the commercial vehicle market fits perfectly into our Daimler Trucks strategy of consistently focusing on the needs of our customers. With this shift, we as market leader are positioning ourselves in order to continue to tap market potential in Indonesia in the best way possible.”

    Marc Llistosella, President and CEO of Mitsubishi Fuso Truck and Bus Corporation and Head of Daimler Trucks Asia: “With our FUSO brand we have been the clear market leader in Indonesia for over 40 years. By increasing our stake in KTB, we can expand on our position even further.”

    With a current market share of about 47 percent, FUSO has been leading the Indonesian market for 46 years in a row since 1970. The country is the largest export market for the FUSO brand. The light duty truck Fuso Canter, which is sold under the name FUSO Colt Diesel, is the absolute top-seller in Indonesia.

    The current restructuring of KTB results in the following shareholder composition: FUSO (MFTBC) holds 30 percent, Krama Yudha (KY) 40 percent and Mitsubishi Corporation (MC) 30 percent. The overall transaction is subject to customary conditions precedent including merger control clearances.

    KTB will serve as dedicated wholesaler and distributor of FUSO vehicles in the Indonesian market and will continue to hold its stake in the related production business, which is responsible for vehicle assembly in Indonesia.

    For Daimler Trucks, this transaction is another important step forward in implementing its strategy of global and consistent orientation towards the requirements of commercial vehicle customers. To this end, Daimler Trucks is partially repositioning its sales and service organizations around the world with a clear focus on the commercial vehicle business. Daimler Trucks is thereby putting regional and national customer orientation at the center of its operations.

    Indonesia has a population of about 250 million people, of which 70 percent are under the age of 40. In 2016, the annual GDP growth rate is at 5.1 percent. The middle class is forecasted to expand to more than 140 million people by the year 2020. Indonesia is the world’s fourth most populous country with growth prospects, which are expected to be supported by a large number of infrastructure projects in the near future. It can be assumed that the infrastructure sector will expand further and result in an increasing demand for commercial vehicles.

  • New Mitsubishi Distributor to Boost Sales Operations in Indonesia

    New Mitsubishi Distributor to Boost Sales Operations in Indonesia

    Mitsubishi Motors Corporation (MMC) and business partners Mitsubishi Corporation (MC), PT Krama Yudha (KY) and Mitsubishi FUSO Truck and Bus Corporation (MFTBC) reached a basic agreement on restructuring MMC-brand vehicle sales operations in Indonesia in order to strengthen their Indonesian operating base.

    Under the basic agreement, the current distributor PT Krama Yudha Tiga Berlian Motors (KTB) will be split into MMC and MFTBC brands and a new distributor dedicated to the MMC brand will be set up. The new distributor will enhance MMC’s passenger car sales organization in Indonesia through promoting areas such as branding, sales personnel training, improving the quality of after-sales services and building up the dealer network. The new company is due to start sales operations in April 2017.

    MMC, in partnership with MC and KY began automobile production and sales in 1970 and since then business has grown focusing mainly on commercial vehicle sales.

    To meet further expected growth in the Indonesian passenger car market, MMC is preparing to commence production in April 2017 in a new factory at Mitsubishi Motors Krama Yudha Indonesia (MMKI). In October 2017, MMC also plans to start production of a new compact MPV segment model for which there is a large demand in Indonesia.

    MMC will work to further expand profits in Indonesia through expanding its model lineup, moving its focus from small commercial vehicles to passenger vehicles, strengthening the sales aspect with the new MMC brand-focused distributor in addition to production through the new factory at MMKI and new product.

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  • Toyota with Daihatsu gets ready to enter small-car market

    Toyota with Daihatsu gets ready to enter small-car market

    The world’s largest carmaker, Toyota Motor, is finally getting ready to enter the Indian small-car market and challenge the dominance of Maruti Suzuki and Hyundai Motor in their bread-and-butter segment. The Japanese automaker and its unit specialising in small cars, Daihatsu Motor, are expected to drive in a new range of vehicles to India starting 2020-2021.

    A few days ago, Toyota and its fully owned Daihatsu unit announced plans to establish an internal company that will be responsible for compact vehicles for emerging markets, from product planning to production preparation. India is an integral part of this move. The structure of this new internal company is likely to be formed by January, 2017.

    The groundwork has already been done through various studies commissioned over the years, said people in the know of the plans. The Toyota-Daihatsu combine will target the A and B segments, where vehicles are typically priced below Rs 10 lakh. This segment, where Toyota currently has only a limited presence here with the Etios range, is the mainstay for Maruti and Hyundai Motor India.

    The branding for the products is yet to be defined. The new cars under the venture may be branded Toyota or Daihatsu, or it could be an all-new brand in line with how Toyota introduced a ‘Scion’ brand in North America in 2003 — the brand was discontinued this year.

    Through the proposed internal organisation, the objective is to develop and launch competitive compact vehicles in emerging markets based on Daihatsu’s approach to manufacturing affordable, high-quality products. While the small car champion will take the lead responsibility in this new initiative, in India, it will seek to gain from the parent’s understanding of the market.

    Vikram Kirloskar, vice chairman of Toyota Kirloskar, the Indian unit of Toyota, told ET that the initial target of the new company would be Asian countries and that joint decisions would be made to enable the effective use of both companies’ existing bases of operation.

    “We are happy to note that India is among the countries being considered as the responsibility of Daihatsu as the Indian market has strong need for compact vehicles in the B Segment and A Segment which is Daihatsu’s strong point. The priority would be to strengthen operations in each country by first enhancing the collective capabilities of the Toyota Group,” he said.

    More details on the initiative will be known by January of 2017, when the formal structure will be defined, Kirloskar said, while declining to comment on products or timelines.

    A person in the know of the plans said the vehicles would come around 2020 and conform to the BS-VI emission guidelines that would come into effect that year.

    It makes sense for Toyota to launch compact cars in India around 2020, by when the market would grow more than 70% from now and the buying power of the middle class would be much higher, said Gaurav Vangaal, senior analyst for forecasting at IHS Markit Automotive. “But then, countering the already strengthening Maruti and Hyundai won’t be an easy task, though the cars will be from Toyota,” he added.

    Daihatsu will be responsible for the development, procurement and production preparation for compact vehicles for emerging markets based on “DNGA”, a Daihatsu vehicle architecture now being defined, and Toyota will support these efforts by providing knowledge and resources. The business plans will be formulated jointly and, in India, the Toyota-Daihatsu combine is likely to use Toyota’s existing facility on the outskirts of Bengaluru. It factory has an annual capacity to produce 3.1 lakh vehicles and is being underutilised.

    Kirloskar said Toyota is learning about Daihatsu’s strengths, such as its work processes and approach to manufacturing at both its production and development workplaces. Daihatsu, on the other hand, is receiving various kinds of support related to the evolution of automobile manufacturing, such as information related to advanced technologies, starting with hybrids.

    “We are hopeful that by sharing and unifying strategies for the future, mutual synergies will be steadily achieved and result would be seen in India as well,” he added.

    Daihatsu has twice in the past attempted to enter the Indian market — first in late 2000 and then a few years later.

    According a person in the know of Toyota’s plans, the sourcing executives of Daihatsu have already met vendors to discuss a few projects.

    Another said future growth for the company would likely come from Asia. “The needs of these markets are different from the developed world; they can be catered only through Daihatsu’s small car,” he added.

    Daihatsu will launch a new generation Agya or Ayla — a small car sold in Indonesia — by 2019 and it is the same car which is being explored for the Indian market, said year another person. “The company has also studied the possibility of launching the B segment SUV for India.”

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  • Fuji Heavy recalls 100,000 Subaru cars to fix air pump switch

    Fuji Heavy recalls 100,000 Subaru cars to fix air pump switch

    Japan’s Fuji Heavy Industries said on Thursday it was recalling about 100,000 of its Subaru-branded vehicles in Japan to fix a problem with an air pump switch located in the main fuse box.

    The recall covers models including the Legacy and Imprezza, along with Exiga and Forrester crossover SUVs produced in 2006-2013.

    The Japanese automaker said it was also planning to recall models overseas, but declined to give further details.

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