Sept. 7 (Bloomberg) -- India, whose auto market is 19 percent of China’s, has the edge in exports.
Suzuki Motor Corp.,Hyundai Motor Co., and Nissan Motor Co. are making India a hub for overseas sales of minicars as incentives lift demand for smaller, fuel-efficient autos. Helped by cheaper labor and a surging local market, India this year overtook China in auto exports and is challenging Thailand and South Korea as an alternative production center in Asia.
“There is a worldwide shift toward fuel-efficient, compact cars,” said Jayesh Shroff, who helps manage about $7 billion of assets including carmaker shares at SBI Asset Management Co. in Mumbai. “This offers a huge potential for India and it can emerge as a leader in the small car segment.”
Maruti Suzuki India Ltd.’s exports more than doubled to 79,860 this year. It aims to ship 130,000 vehicles in the year to March, 86 percent more than last year, said Chairman R.C. Bhargava.
Maruti Suzuki sold a monthly record 14,847 vehicles overseas in August. India’s exports of minicars and hatchbacks gained 44 percent between January and July to 201,138, according to the Society of Indian Automobile Manufacturers. Total exports, including vans, sport-utility vehicles and trucks, rose 18 percent to 229,809. Cars are exported to over 100 countries, and don’t include the U.S. or Japan.
In contrast, China’s exports slumped 60 percent to 164,800 between January and July, according to government data. Vehicles produced in Thailand for export declined 43 percent to 263,768, according to the Thai Automotive Club.
Full Control
South Korean exports dropped 31 percent to 1.12 million units, according to the Korea Automobile Manufacturers Association. Japan, the world’s largest automobile producer and exporter, shipped 1.77 million cars, trucks and buses. Of those, 135 were minicars and 439,849 were compacts.
Besides the attraction of serving a market where three of four cars bought are compacts, automakers will favor India to set up an export base as China requires companies to form local joint ventures and India doesn’t, said Ashvin Chotai, London- based managing director of Intelligence Automotive Asia Ltd.
“It makes companies more comfortable to have an export strategy when they have full control,” he said. “They don’t have to give up some parts of the profits to their partner.”
Small cars will account for 95 percent of the 690,000 passenger vehicles India will export in 2015, according to Tim Armstrong, Paris-based director of IHS Global Insight Inc. In 2016, India may share the top slot with Japan as the world’s biggest small car producer, building as many as 3 million units.
“Natural Place”
“All of India’s expertise has been the small car,” Armstrong said. “So obviously it’s a natural place to turn to” to set up export units.
Toyota Motor Corp. and General Motors Co. are also expanding Indian factories and plan to export compact vehicles.
Hyundai, South Korea’s biggest carmaker, plans to export 300,000 cars from India this year, more than its sales in the local market, a first since setting up a plant a decade back.
Nissan Motor Co., Japan’s third-biggest carmaker, will set up its first factory in India by May and use it to export entry- level cars to Europe. Spending on the plant is the most out of its global investments this year, said Colin Dodge, executive vice president.
Production in India will help Nissan save at least five percent of costs, he said. “We needed a car that can make money in Europe,” Dodge said in a June interview. “Five percent saving is very significant. It’s enormous money for us.”
Indian labor costs are about 10 percent of that in the U.S. and Europe and raw material costs in the nation are lower by 11 percent, according to Puneet Gupta, an analyst at CSM Worldwide Inc., an industry consultant. Developing a car from the design stage in India may take $225 million to $250 million, while in Europe it may be $400 million.
“The single-biggest opportunity in the auto industry for India is the small car,” said Vikas Sehgal, a Chicago-based partner at Booz & Co., an industry consultant. “If India loses in the small car market, it has nothing.”
Monday, September 07, 2009
Asian Stocks Rise Amid Merger Speculation; Toshiba Advances
Sept. 7 (Bloomberg) -- Asian stocks rose for a third day, led by technology companies and automakers, as a $1.8 billion bid for Chartered Semiconductor Ltd. fueled merger speculation.
Chartered was halted from trading in Singapore. Toshiba Corp. climbed 3.9 percent in Tokyo after the Nikkei newspaper said the company will contract out production to cut costs. Canon Inc., which gets 28 percent of its sales from the Americas, gained 2.3 percent, while Toyota Motor Corp., the world’s No.1 automaker, rose 1 percent after the U.S. government said companies had cut fewer jobs than estimated in August.
The MSCI Asia Pacific Index gained 0.6 percent to 113.43 as of 10:24 a.m. in Tokyo, taking a three-day advance to 0.9 percent. Stocks on the gauge are priced at 1.5 times book, lower than 2.1 times for the Standard & Poor’s 500 Index in the U.S. and 1.6 times for Europe’s Dow Jones Stoxx 600 Index.
“Investors are focusing on the relative cheapness of equities,” said Hiroichi Nishi, an equities manager at Tokyo- based Nikko Cordial Securities Inc.
Japan’s Nikkei 225 Stock Average gained 0.9 percent. Australia’s S&P/ASX 200 Index rose 0.3 percent. New Zealand’s NZX 50 Index added 0.6 percent.
Futures on the S&P 500 were little changed. The stock gauge climbed 1.3 percent on Sept.4 after a Labor Department report showed U.S. companies cut fewer jobs last month than economists had estimated. The unemployment rate rose to 9.7 percent, the highest level in 26 years.
U.S. Jobs Report
Finance ministers and central bankers from the Group of 20 nations concluded talks in London on Sept. 5, agreeing to rein in bank bonuses and force lenders to hold more capital to avoid a repeat of the global financial crisis.
Technology companies accounted for 15 percent of the MSCI Asia Pacific Index’s gain today as Advanced Technology Investment Co., owned by the government of Abu Dhabi, said it plans to acquire Chartered Semiconductor for S$2.5 billion ($1.8 billion) in cash.
BHP Billiton Ltd. and Rio Tinto Group, the world’s biggest and third-biggest mining companies, are considering a A$1 billion ($853 million) merger of their Canadian diamond operations, the Australian reported, without saying where it got the information.
Rio Tinto gained 1.2 percent to A$55.89 in Sydney, while BHP was little changed at A$36.59.
Toshiba, Japan’s largest chipmaker, climbed 3.9 percent to 484 yen. The company will contract out production of large-scale integrated circuits to overseas chipmakers as part of efforts to cut production costs, the Nikkei newspaper said. Keisuke Ohmori, a spokesman for Toshiba, said that no decision had been made.
Canon rose 2.3 percent to 3,550 yen. Toyota, which gets 31 percent of its revenue in North America, added 1 percent to 3,890 yen.
Chartered was halted from trading in Singapore. Toshiba Corp. climbed 3.9 percent in Tokyo after the Nikkei newspaper said the company will contract out production to cut costs. Canon Inc., which gets 28 percent of its sales from the Americas, gained 2.3 percent, while Toyota Motor Corp., the world’s No.1 automaker, rose 1 percent after the U.S. government said companies had cut fewer jobs than estimated in August.
The MSCI Asia Pacific Index gained 0.6 percent to 113.43 as of 10:24 a.m. in Tokyo, taking a three-day advance to 0.9 percent. Stocks on the gauge are priced at 1.5 times book, lower than 2.1 times for the Standard & Poor’s 500 Index in the U.S. and 1.6 times for Europe’s Dow Jones Stoxx 600 Index.
“Investors are focusing on the relative cheapness of equities,” said Hiroichi Nishi, an equities manager at Tokyo- based Nikko Cordial Securities Inc.
Japan’s Nikkei 225 Stock Average gained 0.9 percent. Australia’s S&P/ASX 200 Index rose 0.3 percent. New Zealand’s NZX 50 Index added 0.6 percent.
Futures on the S&P 500 were little changed. The stock gauge climbed 1.3 percent on Sept.4 after a Labor Department report showed U.S. companies cut fewer jobs last month than economists had estimated. The unemployment rate rose to 9.7 percent, the highest level in 26 years.
U.S. Jobs Report
Finance ministers and central bankers from the Group of 20 nations concluded talks in London on Sept. 5, agreeing to rein in bank bonuses and force lenders to hold more capital to avoid a repeat of the global financial crisis.
Technology companies accounted for 15 percent of the MSCI Asia Pacific Index’s gain today as Advanced Technology Investment Co., owned by the government of Abu Dhabi, said it plans to acquire Chartered Semiconductor for S$2.5 billion ($1.8 billion) in cash.
BHP Billiton Ltd. and Rio Tinto Group, the world’s biggest and third-biggest mining companies, are considering a A$1 billion ($853 million) merger of their Canadian diamond operations, the Australian reported, without saying where it got the information.
Rio Tinto gained 1.2 percent to A$55.89 in Sydney, while BHP was little changed at A$36.59.
Toshiba, Japan’s largest chipmaker, climbed 3.9 percent to 484 yen. The company will contract out production of large-scale integrated circuits to overseas chipmakers as part of efforts to cut production costs, the Nikkei newspaper said. Keisuke Ohmori, a spokesman for Toshiba, said that no decision had been made.
Canon rose 2.3 percent to 3,550 yen. Toyota, which gets 31 percent of its revenue in North America, added 1 percent to 3,890 yen.
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