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Thu, 29th June 2017

Anirudh Sethi Report

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Archives of “automotive industry” Tag

Toyota-Tesla tie-up goes kaput

Toyota Motor has terminated its business and capital partnership with U.S. electric car maker Tesla, The Nikkei learned on Saturday.

Going forward, the leading Japanese automaker will try to speed up its development of electric cars by consolidating the technologies of affiliated parts makers at a unit launched late last year.

 Toyota is said to lag its rivals in electric vehicle development.

Toyota in 2010 paid $50 million for about a 3% stake in Tesla. Around the same time, it paid $42 million for part of the site of a joint venture it once had with General Motors, thinking the old plant could be updated and used for producing electric cars.

In 2012, Toyota released the RAV4 EV, an SUV, with Tesla-made batteries.

But the partnership was short-lived. Toyota stopped sourcing lithium-ion secondary batteries from Tesla in 2014. There has been virtually no collaboration between Toyota and Tesla since 2015, according to a Toyota representative.

As of March 2016, Toyota held about 2.34 million Tesla shares, which meant it owned more than 1% of the California company. By the end of last year, Toyota had sold all of its Tesla shares.

Ban on BS III vehicles: As Supreme Court emission order hangs fire, automakers set to take big hit

With the Supreme Court (SC) set to deliver a verdict on a ban on vehicles that are compliant only with BS III emission norms on Wednesday, automakers fear they will lose several thousands of crores on their inventories unless they are allowed to sell existing stock even after April 1. On Tuesday, the apex court reserved its order. An estimated 96,000 trucks that are BS III-compliant are lying with dealers and at an average price of R25 lakh are valued at around R25,000 crore. Moreover, close to 7 lakh two-wheelers — valued at around R2,500 crore — are also in showrooms and in factories. Hero MotoCorp estimated it would incur losses of close to R1,600 crore if the existing stock was left unsold.

On Tuesday, automobile industry body SIAM urged the apex court to give automakers 12 months time to dispose of vehicles with BS III-compliant engines. Lawyers for SIAM argued dealers would need least six to eight months to sell the inventories. The Environment Pollution Control Authority had moved the apex court on Friday to stop the sale of BS III-compliant vehicles from April. The government, however, has sought time for inventories to be disposed of. According to a notification of the ministry of road transport, automakers must adhere to BS IV emission norms from April 2017, but dealers will be allowed to sell the inventory of BS III vehicles.

Commercial vehicle manufacturer Tata Motors has said it is geared up to produce BS IV-compliant vehicles but would like dealers to be allowed to sell the inventory even after April 1. Solicitor general Ranjit Kumar argued that manufacturers be permitted to sell BS III vehicles till stocks last since it was not possible to make BS III-compliant vehicles into BS IV-compliant ones. In the passenger vehicle segment, most players like Maruti Suzuki, Hyundai, Honda and Toyota have virtually no inventory of BS III vehicles.

Toyota near tie-up with Suzuki on development, procurement

Toyota Motor President Akio Toyoda, left, stands with Suzuki Motor Chairman Osamu Suzuki.

Japan — Toyota Motor and Suzuki Motor are near an agreement on a comprehensive partnership covering areas such as development and procurement, it was learned Friday.

The two Japanese automakers could announce a deal as soon as Monday, setting specific points of cooperation later. On the development side, these are expected to include self-driving technology and applications for information technology, as well as advancements needed to keep up with increasingly strong global environmental standards. Partnering on procurement could involve sharing sources for parts in Japan and abroad.

 Toyota has deemed it necessary to bolster cooperation with other automakers in order to maintain its influence as nontraditional players such as tech companies stoke competition in the auto sector. Suzuki has sought a powerful partner since dissolving a capital and business tie-up with Germany’s Volkswagen in 2015. Suzuki Chairman Osamu Suzuki last year approached Shoichiro Toyoda, Toyota’s honorary chairman, regarding collaboration.

Suzuki and Toyota unit Daihatsu Motor, which together control more than 60% of Japan’s market for minivehicles known as kei cars, will continue to sell automobiles under their separate brands to avoid falling foul of antitrust laws. But the two will collaborate in ways that steer clear of that risk, starting with a loose partnership on matters such as technological development.

A capital tie-up, including cross-shareholdings, will be discussed in the future to deepen ties between the groups.

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Angry Germany Slams Trump Criticism: Urges US To “Build Better Cars”, Accuses Washington Of Causing Refugee Crisis

An angry Berlin has responded with a staunch defense of its policies after President-elect Donald Trump criticized German Chancellor Angela Merkel in two separate Sunday interviews, one with Germany’s Bild and one with the Sunday Times, for her stance during the refugee crisis while threatening a 35% tariff on BMW cars imported into the US.

Germany’s deputy chancellor and minister for the economy, Sigmar Gabriel, said on Monday morning that a tax on German imports would lead to a “bad awakening” among US carmakers since they were reliant on transatlantic supply chains. “I believe BMW’s biggest factory is already in the US, in Spartanburg [South Carolina],” Gabriel, leader of the centre-left Social Democratic party, told the Bild newspaper in a video interview.

“The US car industry would have a bad awakening if all the supply parts that aren’t being built in the US were to suddenly come with a 35% tariff. I believe it would make the US car industry weaker, worse and above all more expensive.” Playing Trump’s threat off Congress, Gabriel added that he “would wait and see what the Congress has to say about that, which is mostly full of people who want the opposite of Trump” as quoted by The Guardian.

In his interviews with Bild and the Times, the US president-elect had indicated that he would aim to realign the “out of balance” car trade between Germany and the US. “If you go down Fifth Avenue everyone has a Mercedes Benz in front of his house, isn’t that the case?” he said. “How many Chevrolets do you see in Germany? Not very many, maybe none at all … it’s a one-way street.”

 So, when asked what Trump could do to make sure German customers bought more American cars, Gabriel had a simple suggestion: “Build better cars.”

Volkswagen confirms $4.3bn US settlement over diesel emissions

Volkswagen AG confirmed on Tuesday it has negotiated a $4.3 billion draft settlement with U.S. regulators to resolve its diesel emissions troubles and plans to plead guilty to criminal misconduct.

The guilty plea is part of the civil and criminal deal as the automaker looks to restore its tarnished global brand. Volkswagen said with the addition of the fine, its diesel costs will exceed the nearly 18.2 billion euros ($19.2 billion) it has set aside to handle the problem. VW also said it will face oversight by an independent monitor over the next three years.

 Reuters reported earlier the company’s supervisory board is set to meet on Wednesday to approve a civil and criminal settlement with the U.S. Justice Department over the automaker’s diesel emissions. VW said the supervisory board and the management board would meet Tuesday or possibly Wednesday to approve the deal.

VW is expected to plead guilty as part of the settlement as early as Wednesday, a source familiar with matter said. The plea deal will need the approval of a U.S. judge.

Evercore ISI said in a research note it believes the “settlement is intended to draw a line under all remaining U.S. related legal risk. This is good news.”

VW had raced to get a deal done before President Barack Obama leaves office on Jan. 20. A change in administration could have delayed a final settlement for months if not longer.

Overnight US Market :Dow closed + 60 points.Now 58 points away to kiss 20k

Stocks climbed Wednesday as Wall Street posted a second straight day of gains in the new year and the Dow once again approached the 20,000 milestone.

The Dow Jones industrial average ended up 60 points, or 0.3%, to 19,942.16. The blue-chip index rose has come close to topping 20,000 several times in recent weeks but each time it gets near has pulled back. The Standard & Poor’s 500 index rose 0.6% and the Nasdaq composite index gained 0.9%. Both the S&P 500 and Nasdaq are near their record closing highs.

Stocks maintained their gains following the release of the minutes from the latest Federal Reserve meeting that provided clues to why policymakers raised interest rates in December for only the second time since 2006 and forecast three rate hikes in 2017 instead of the two moves previously anticipated.

Fed officials said they might have to raise interest rates faster than anticipated to prevent rapidly falling unemployment and President-elect Donald Trump’s proposed fiscal stimulus from fueling excessive inflation, according to minutes of the Fed’s December 13-14 meeting.

Benchmark U.S. crude was up 1.8% to $53.24 a barrel in New York. It lost $1.39 on Tuesday.

China to penalise U.S. automaker for monopolistic behaviour – China Daily

China will soon slap a penalty on an un-named U.S. automaker for monopolistic behaviour, the official China Daily newspaper reported on Wednesday, quoting a senior state planning official.

Investigators found the U.S. company had instructed distributors to fix prices starting in 2014, Zhang Handong, director of the National Development and Reform Commission’s price supervision bureau, was quoted as saying.

 News of the penalty comes at a sensitive time for China-U.S. relations after U.S. president-elect Donald Trump called into question a long-standing U.S. policy of acknowledging that Taiwan is part of “one China”.

Beijing maintains that self-ruled Taiwan is a wayward province of China and has never renounced the use of force to take it back.

Zhang was quoted in an exclusive interview with the newspaper as saying that no one should “read anything improper” into the timing or target of the penalty.

The article did not give further details.

Jaguar Land Rover November U.S. sales jump 19% on new luxury cars

Jaguar Land Rover, the luxury carmaker owned by India’s Tata Motors, reported a 19% jump in November sales in the U.S., aided by demand for new Jaguar models and higher incentives.

Jaguar Land Rover sold 9,040 cars and sport utility vehicles in the U.S. last month, compared with 7,604 vehicles a year earlier, making it the best-ever November sales, the company said in a statement on Friday.

 JLR’s performance continued to outpace the broader U.S. auto industry, which reported a 3.7% growth last month on the back of hefty discounts. Still, the annualized U.S. auto sales in November stood at 17.87 million vehicles, compared with 18.25 million a year earlier, Reuters reported, citing Autodata.
 Analysts say industrywide sales remained strong, helped by higher incentives as well as increased consumer confidence following the U.S. election.

“We continue to see the U.S. market plateauing at a high level and believe the market should remain above 17 million over the next few years,” Macquarie Research said in a note.

New GST tax structure to make luxury cars more expensive

Image result for luxury carsThe GST Council has announced the final tax structure ranging from 5 percent to 28 percent and in general that isn’t good news for all of the automotive industry. As per the GST Council’s announcement, the tax rates decided under the GST structure are 5 %, 12 %, 18 % and 28 %. All cars except the luxury segment will fall under in the segments below 28 percent. Clarity on which segments will be subjected to what rates is yet to be made clear but small cars could benefit from incentives and fall in the smaller brackets.

Luxury car, a segment that hasn’t been defined yet, will be subjected to 28 % tax plus cess. This could result in the cost of CBUs (Completely Built Units) being pushed north further from an already high rate. Every other car though will be taxed under the 28 percent slab but the segment classification is awaited.

The end result of the GST tax structure on various classifications of cars is yet to be seen. However, if the classification of luxury includes carmakers, who are assembling vehicles in India and also localising components, it could force them to redraw their Indian strategy. Mass market cars are not expected to be affected much by the new tax structure.

Stay tuned for more details on how the new GST tax structure will affect car prices across segments.

Is US Auto Sales Data Fabricated: FBI Investigating Chrysler For Falsifying Monthly Sales Reports

Ever wonder how car sales have been so remarkably strong over the past 7 years as the economy has seemingly stagnated?  Sure, a massive subprime auto lending bubble has helped fuel auto sales as $0 cash down, 0% interest and 70 month terms have become the norm for people looking to “manage” monthly payments…though we’re sure that buyers making $30k a year really can afford that new $80,000 vehicle.  And, of course, government programs like “cash for clunkers” has also helped to fuel the recovery. 

But, as Bloomberg points out today, there might be a little more to the story, at least at Fiat Chrysler.  It seems that the FBI has become interested in whether or not Fiat Chrysler forced dealers to falsify vehicles purchases in order to manage monthly sales figures.  Apparently, all fraudulent activities were handled through Fiat Chrysler’s “Department of ‘unnatural acts.'”  Per Bloomberg:  

Investigators are examining whether Fiat Chrysler improperly adjusted monthly numbers to show growth over the prior year, a person familiar with the matter said. They are looking into allegations the company ordered dealers to create false vehicle purchases, some of which were made in the names of friends and relatives of salespeople, including underage family members, the person said.

The allegations get even stranger. Investigators are probing calls from Fiat Chrysler officials to dealers saying its department of “unnatural acts” was open for business, the person familiar said. The question is whether those calls had any relationship to allegations that company officials were urging dealers to falsify sales to meet reporting targets, the person said.