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 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.
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.”
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 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.
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.
An alliance between Toyota Motor and Suzuki Motor could be a boon to both sides, helping the former gain ground in emerging markets such as India and giving the latter the engineering needed to compete in an increasingly high-tech industry.
Can’t go it alone
The two automakers said Wednesday they were discussing collaboration on environmental, safety and information technology.
Although Toyota President Akio Toyoda told a new conference that the idea of an alliance came together in just two business days after Suzuki Chairman Osamu Suzuki got the ball rolling, there is more to the story. Suzuki’s next partner had been the subject of speculation since August 2015, when the Japanese maker of economy cars ended a capital and business relationship with Germany’s Volkswagen over management conflicts.
Though Chairman Suzuki had said publicly that his company would look to remain independent going forward, another senior executive had acknowledged that collaboration was “necessary” in some fields. Even in India, a successful market for Suzuki, environmental regulations are growing tougher, making investment in technology like hybrid drive systems essential. Rising incomes have also stoked demand for higher-end vehicles in such countries.
Finding a big automaker ally was seen as essential for Suzuki to ensure a presence in self-driving cars. While a Toyota or a Volkswagen has the financial strength to counter the challenge posed by Google and other tech giants in this field — Toyota’s annual research and development budget comes to around 1 trillion yen ($9.59 billion) — Suzuki, which spent just 130 billion yen on R&D in the year ended March 31, hardly stands a chance alone.
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.
Leading car manufacturer Toyota has moved the National Green Tribunal arguing that the idea to ban diesel vehicles across the country was like a “corporate death penalty” as it impacts the existence of the company.
In its plea, the automobile company said ban on the registration of diesel vehicles manufactured by the applicant company is “unfair and unjust” as it was complying with all the laws and any restriction would severely impact its sales and the livelihood of thousands of people engaged in the automobile sector.
“The applicant company is being penalised for no fault or violation on its part thereby making the order banning registration of diesel cars as unjust and unfair on the company.
“The imposition of ban on registration of diesel vehicles is in the nature of a corporate death penalty as it impacts the very existence of the company. A ban order is an extremely harsh/excessive punishment and ought to be imposed in circumstances where a party commits a serious violation and not when there is no violation,” Toyota said.
General Motors (GM) has decided to put its earlier announced $1 bn investment plan on hold for an undefined period of time, reports ET NOW. The investment announced last year was aimed at turning India into a global export hub as domestic sales continued to be disappointing for the company. The decision had been announced at time when GM announced to shut down its plant in Halol, Gujarat,with leaving the company with just one plant in Talegaon, Maharashtra.
The reason for deferring the investment has been cited as a change in strategy to not limit the Indian market to the role of a an export hub but also have a profitable domestic business. The company earlier had planned to make vehicles underpinned on the Global Emerging Market (GEM) platform in India for exports. GEM platform has been specifically designed for entry-level compact cars that meet the requirements commonly found in emerging markets such as India, China and Brazil. With the renewed focus on stabilising the Indian sales and performance first GM has its task cut out.