32
A s the first month of the year concludes, the automotive industry continues to perform poorly despite a number of meas- ures to create excitement in the market. Sales volumes remained weak in all segments. The indus- try keeps hope alive and expects new measures from the govern- ment to support it. The recent rate cuts announced by the Reserve Bank of India have raised hopes in the industry. “This cut is just the beginning and shows that the focus is on industrial growth and improving the economy. This will be reflect- ed in the coming months’ sales. However, for further strength- ening we need more such announcements,” said Vishnu Mathur, Director General, SIAM. The RBI reduced the repo rate – the rate at which banks borrow money from RBI – by 25 basis points in its third monetary policy. RBI also cut cash reserve ratio (CRR) – the share of deposits banks have to keep with the cen- tral bank – by 25 basis points. Commenting on the move, Pawan Goenka, President, Automotive & Farm Equipment Sectors, Mahindra & Mahindra, said, “Over the past few months, economic growth has clearly bot- tomed out, and the slowdown in manufacturing is a concern. Today’s combo of a repo as well as CRR cut is a welcome announce- ment and hopefully will help revive investments in the core sectors which the economy needs. Coupled with the recent policy announcement by the Government, I see this as a good beginning.” The rate cuts will certain- ly allow the cost of capital to go down and eventually help the industry, since most cars in India are financed. However, the macroeconomic situation remains under pressure, and that is not a good sign. At 5-5.5 percent, the country is expe- riencing the lowest economic growth in ten years. “However, the global scenario getting bet- ter, so we may expect a better economic environment which will help India also,” said Rakesh Batra, Partner, Automotive prac- tices, Ernst & Young. Taxes and Excise Duties Yet vehicle makers contin- ue to rely on government for help in kickstarting new initia- tives to support them, such as restructuring excise duty. The Society of Indian Automobile Manufacturers (SIAM) called for a new excise structure which should be in tune with the gap in the Automotive Mission Plan (AMP). SIAM has recommended that the AMP be extended by 10 years to 2026, as it has been fall- ing short in achieving its target by over $34 billon. “The recom- mendation has been accepted and work is on,” Vishnu Mathur said. However, he did not clearly state whether the revenue target will also be upgraded from $145 billion target till 2016. “We are working on it, it has to be seen if the revenue volume will also increase looking at the extension of it.” The industry has sought for Contd. on Pg 17 Auto Monitor www.amonline.in 11 February 2013 Vol. 13 No. 03 32 Pages `50 INDIA’S NO. 1 MAGAZINE FOR AUTOMOTIVE NEWS, VIEWS & ANALYSIS Top 5 2W Makers Company Dec-11 Dec-12 Change HML 521,922 527,375 1.04% HMSI 179,857 199,237 10.78% Bajaj Auto 169,485 198,394 17.06% TVS 146,747 144,561 -1.49% Suzuki 26,539 33,313 25.52% Top 5 2W Exporters Company Dec-11 Dec-12 Change Bajaj Auto 94,214 99,956 6.09% IYM 11,686 22,360 91.34% HMSI 11,465 18,275 59.40% TVS 21,158 17,169 -18.85% HML 18,354 14,240 -22.41% * Source: SIAM/ ** Excluding exports/ *** all sub segments considered/ ^ excluding MRPL DATA MONITOR Scan this code on your smart phone to visit www.amonline.in Growth Pangs B osch and Continental are burning the mid- night oil to be the first to introduce two-wheeler single-channel antilock braking system (ABS) units in the Indian market. ABS on two wheelers is a fairly new feature with only the Honda CBR250R and TVS Apache RTR180 having it as an optional feature. Both these bikes use combined ABS systems, which means it prevents both wheels from locking during emergency braking situations. It is an ideal system but shoots up the cost of the bike. Our market’s price sensitivity does not allow manufacturers the luxury of providing combined ABS systems on smaller capaci- ty motorcycles. That’s the reason why component majors Bosch and Continental are developing single-channel ABS units specif- ically for the Indian market. Single-channel ABS dumbs down the system in a way, rob- bing it of its complete function of preventing both wheels from locking. Instead, the ABS is applied to a single wheel, essen- tially halving the effect. That translates to a lighter unit with fewer parts, making it cheaper. All that’s needed is a motorcycle with a hydraulic brake system. Both component majors see potential for success with this technology. They are work- ing closely with OEMs to introduce variants that offer single-channel ABS as soon as possible. Balasubramanian, Deputy Managing Director, Bosch Chassis Systems India Limited said, “We are confident we will be the first to introduce single-chan- nel ABS in the Indian market. Expect it sometime this year.” Continental revealed in December 2012 to Auto Monitor that prototypes of their ABS units were undergoing testing in collaboration with OEMs. The company is also looking at India as an export hub for single-chan- nel ABS systems. Even if a small percentage of our 15 million plus two wheeler market adopts ABS systems, we have a major market waiting to be tapped. Single-channel ABS may not be as effective, but if it reduces braking distances and allows control over at least one of the two wheels during emergen- cy braking, a major accident can be averted. The UN has marked 2011-2020 as the decade of action for road safety with a target to reduce road deaths by 50 percent. Two-wheeler riders are the most susceptible. This ‘something is better than nothing’ approach is a good place to start to improve motorcycle safe- ty, but it should only be a start. ABS Race Heats Up Single-channel ABS will soon make its appearance on Indian motor bikes. The projections of the AMP remain unfulfilled, and the duty structure of the auto industry leave much to be desired. Nabeel A Khan reports. Anand Mohan Mumbai Pg 08 Pg 14 “ERP Can Save 15-20 pc In Costs” Booted Hatchbacks INTERVIEW Thiru Vengadam, MD & CEO, IFS Solutions India Pvt Ltd The Sail sedan will see competition hotting up. ABS prevents the wheels from locking, even when the road is wet. Photograph: Bosch

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AUTO MONITOR’, India’s leading weekly automotive news magazine, focusses on offering a broad platform to the automotive industry. It strives to facilitate effective interaction among several fraternities of the automotive, auto component and auto allied industries by enabling them in reaching out to their prospective buyers and sellers. It facilitates domestic business exchange and acts as a gateway to international business opportunities for Indian automotive manufacturers. It is recognised by leading associations like CII, SIAM, ACMA, and SIAT.

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As the first month of the year concludes, the automotive industry continues to perform

poorly despite a number of meas-ures to create excitement in the market. Sales volumes remained weak in all segments. The indus-try keeps hope alive and expects new measures from the govern-ment to support it. The recent rate cuts announced by the Reserve Bank of India have raised hopes in the industry.

“This cut is just the beginning and shows that the focus is on industrial growth and improving

the economy. This will be reflect-ed in the coming months’ sales. However, for further strength-ening we need more such announcements,” said Vishnu Mathur, Director General, SIAM.

The RBI reduced the repo rate – the rate at which banks borrow money from RBI – by 25 basis points in its third monetary policy. RBI also cut cash reserve ratio (CRR) – the share of deposits banks have to keep with the cen-tral bank – by 25 basis points.

Commenting on the move, Pawan Goenka, President, Automotive & Farm Equipment

Sectors, Mahindra & Mahindra, said, “Over the past few months, economic growth has clearly bot-tomed out, and the slowdown in manufacturing is a concern. Today’s combo of a repo as well as CRR cut is a welcome announce-ment and hopefully will help revive investments in the core sectors which the economy needs. Coupled with the recent policy announcement by the Government, I see this as a good beginning.”

The rate cuts will certain-ly allow the cost of capital to go down and eventually help the industry, since most cars in India are financed. However, the macroeconomic situation remains under pressure, and that is not a good sign. At 5-5.5 percent, the country is expe-riencing the lowest economic growth in ten years. “However, the global scenario getting bet-ter, so we may expect a better economic environment which will help India also,” said Rakesh Batra, Partner, Automotive prac-

tices, Ernst & Young.

Taxes and Excise DutiesYet vehicle makers contin-

ue to rely on government for help in kickstarting new initia-tives to support them, such as restructuring excise duty. The Society of Indian Automobile Manufacturers (SIAM) called for a new excise structure which should be in tune with the gap in the Automotive Mission Plan (AMP). SIAM has recommended that the AMP be extended by 10 years to 2026, as it has been fall-ing short in achieving its target by over $34 billon. “The recom-mendation has been accepted and work is on,” Vishnu Mathur said. However, he did not clearly state whether the revenue target will also be upgraded from $145 billion target till 2016. “We are working on it, it has to be seen if the revenue volume will also increase looking at the extension of it.” The industry has sought for

Contd. on Pg 17

Auto Monitorwww.amonline.in11 February 2013Vol. 13 No. 03 32 Pages `50

I N D I A ’ S N O . 1 M A G A Z I N E F O R A U T O M O T I V E N E W S , V I E W S & A N A LY S I S

Top 5 2W Makers

Company Dec-11 Dec-12 Change

HML 521,922 527,375 1.04%

HMSI 179,857 199,237 10.78%

Bajaj Auto 169,485 198,394 17.06%

TVS 146,747 144,561 -1.49%

Suzuki 26,539 33,313 25.52%

Top 5 2W Exporters

Company Dec-11 Dec-12 Change

Bajaj Auto 94,214 99,956 6.09%

IYM 11,686 22,360 91.34%

HMSI 11,465 18,275 59.40%

TVS 21,158 17,169 -18.85%

HML 18,354 14,240 -22.41%

* Source: SIAM/ ** Excluding exports/ *** all sub segments considered/ ^ excluding MRPL

DATA MONITOR

Scan this code onyour smart phoneto visit www.amonline.in

Growth Pangs

Bosch and Continental are burning the mid-night oil to be the first to introduce two-wheeler

single-channel antilock braking system (ABS) units in the Indian market.

ABS on two wheelers is a fairly new feature with only the Honda CBR250R and TVS Apache RTR180 having it as an optional feature. Both these bikes use combined ABS systems, which means it prevents both wheels from locking during emergency braking situations. It is an ideal system but shoots up the cost of the bike.

Our market’s price sensitivity does not allow manufacturers the luxury of providing combined ABS systems on smaller capaci-ty motorcycles. That’s the reason why component majors Bosch and Continental are developing single-channel ABS units specif-ically for the Indian market.

Single-channel ABS dumbs down the system in a way, rob-bing it of its complete function of preventing both wheels from locking. Instead, the ABS is applied to a single wheel, essen-tially halving the effect. That translates to a lighter unit with fewer parts, making it cheaper. All that’s needed is a motorcycle with a hydraulic brake system.

Both component majors see potential for success with this technology. They are work-ing closely with OEMs to introduce variants that offer single-channel ABS as soon as possible. Balasubramanian, Deputy Managing Director, Bosch Chassis Systems India Limited said, “We are confident we will be the first to introduce single-chan-nel ABS in the Indian market. Expect it sometime this year.”

Continental revealed in December 2012 to Auto Monitor that prototypes of their ABS units were undergoing testing in collaboration with OEMs. The company is also looking at India

as an export hub for single-chan-nel ABS systems.

Even if a small percentage of our 15 million plus two wheeler market adopts ABS systems, we have a major market waiting to be tapped. Single-channel ABS may not be as effective, but if it reduces braking distances and allows control over at least one of the two wheels during emergen-

cy braking, a major accident can be averted.

The UN has marked 2011-2020 as the decade of action for road safety with a target to reduce road deaths by 50 percent. Two-wheeler riders are the most susceptible. This ‘something is better than nothing’ approach is a good place to start to improve motorcycle safe-ty, but it should only be a start.

ABS Race Heats Up Single-channel ABS will soon make its appearance on Indian motor bikes.

The projections of the AMP remain unfulfilled, and the duty structure of the auto industry leave much to be desired. Nabeel A Khan reports.

Anand Mohan Mumbai

Pg 08 Pg 14

“ERP Can Save 15-20 pc In Costs” Booted HatchbacksINTERVIEW

Thiru Vengadam, MD & CEO, IFS Solutions India Pvt Ltd The Sail sedan will see competition hotting up.

ABS prevents the wheels from locking, even when the road is wet.

Ph

otog

rap

h: B

osch

Nothing can make a person or an industry feel low as the fact that everyone around seems to be feeling the blues. Facts and figures that keep emerging reveal less than the figures that were

announced the previous time. The numbers are touching nadir. And the only bleak hope to rely on is the RBI, who the industry is hoping, will reduce interest rates hence encour-aging buyers.

Amidst all this, another knight in shining armour has emerged out of nowhere. At the inauguration of the four-day event ACMA Automechanika, Praful Patel, Minister for Heavy Industries and Public Enterprises, had an announce-ment that would bring about a sigh of relief. He said that he had promised to meet the Finance Minister P Chidambaram and he would “press for providing a stimulus, mainly for the automobiles sector to spur growth in the wake of economic slowdown”.

Whether the stimulus will come or continue to lag is another issue. But one can imagine the hope in the eyes of the auto manufacturers who must have heard this then or later.

While the ACMA Automechnika event is expected to grow in the future, it is for the first time that India has something

exclusive for the aftermarket industry. One of the auto sec-tors that was hitherto largely ignored. And not because no one cared. OEMs did their job of providing spares for the vehicles they sold. But with the rise in disposable incomes, and the fact that the luxury segment too is expected to grow by a larger margin, the scope for aftermarket products are increasing. It is no small wonder that plenty of companies from outside the country have something unique to offer owners that will buoy them to make grandiose their vehicles.

And so while the industry is playing it cautious, they are aware that the best time to put their foot forward is now when the chips are down.

Comments can be sent to [email protected]

Knight In Shining?

QUOTESPraful Patel, Minister for Heavy Industries and Public Enterprises, at the opening of ACMA Automechanika

P Balendran, Vice-President, General Motors India.

I will be meeting Chidambaram in the coming week. I think it is important that the country’s entire economy gets a stimulus because auto sector will automatically be a beneficiary of that stimulus.

The market continues to remain sluggish. It is expected to improve only when the interest rates comes down. As far as my expectation is concerned, the market is expected to improve only after the budget.

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Now It’s Batteries On John Sculley’s Agenda 10John Sculley, the man famous for having “fired” Steve Jobs from Apple, has invested in an Indian online tyre store Changemytyre.com through his VC firm

CONTENTS

MIRA Aiding EV Development 12UK auto consultancy MIRA Ltd. has been providing its engineering services to Indian OEMs through its JV with Caepro. Clients of MIRA-Caepro also have access to MIRA’s testing grounds in the UK.

Hot New Trend: Booted Hatchbacks 14Chevy has launched the Sail sedan, and Honda plans to follow. The sedans, essentially enlarged versions of previous hatchbacks from the same manufacturers, will benefit all.

Hyundai Launches R210-7v 17The R210-7v is being touted as a real value for money proposition for Indian construction equipment buyers.

Playing Safe 18Bosch and WABCO team up to promote vehicle safety in India.

Patel Promises To Seek Solace For Auto Industry 19Promises to meet Finance Minister P Chidambaram and press for providing a stimulus, mainly for the automobiles sector to spur growth in the wake of economic slowdown.

A Treat For Enthusiasts 09Mercedes-Benz India has launched a series of initiatives to reach out to customers and motoring enthusiasts.

INTERVIEW“ERP Can Save 15-20 pc In Costs” 08says Thiru Vengadam, MD & CEO, IFS Solutions India Pvt Ltd, as he aims to target Tier I, Tier II, and Tier III suppliers.

CORPORATE

09

10

08

12

14

30THE OTHER SIDE

Anders Grundströmer, Scania CV India’s new MD Grundströmer comes from the passenger car industry where he worked with SAAB for 15 years. He holds an an MBA and it was in 1992 he joined Scania and took up the challenge to develop Scania distributorship concept in Europe as Managing Director Scania Czech Republic and Slovakia in 2000.Business Unit between 2004 and 2008.

Auto Monitor

I N T E R V I E W811 FEBRUARY 2013

How is your ERP system dif-ferent from your competitors?

Our system architecture is such that the applications are derived from a mother system. Suppose a supplier requires only 10-20 users on his ERP system, since he is a Tier2 or 3 supplier. He can use the same ERP sys-tem that an OEM with over 2000 users would use. So, we have the same system for all the differ-ent types of applications. The architecture is so scalable, it can efficiently operate irrespective of volume or number of connects or users. Nobody else has that. SAP has multiple software products, one for large companies, anoth-er for medium-sized ones, and yet another for small companies. These are not product variants, but different products altogether. They aren’t derived from mother product like ours.

So what advantage does your system have over others?

The advantage we have is that we have the same system for all, irrespective of what tier you are in, or what complexity you want to put in. Our software is one single application which has everything (about 80 modules). Its advantage is that any part of our application is same, unlike others’ where they have a core system with other purchased applications running alongside, hooked into them. So when you move from ERP to a CRM system,

in their case it’s different from the ERP. Project management system, document manage-ment system, workflow, HR, etc. are in-built in our system. So our target customers in the auto industry won’t need anything else apart from our system for all applications.

Does it have a cost advan-tage as well?

It will obviously give them a cost advantage. Our system is flexible and you need not buy all the 80 modules at one go. One can buy seven or eight modules from our range of 80 modules, and later buy more when required. Since it’ll fit in perfectly, like a build-ing block, you can keep adding more. This is the most flexible approach.

In others’ case, even if the software doesn’t get costly, the company will have to get hard-ware to put all the software into. It will further take a lot of time to configure as well. Software con-figuring and learning will take a whole longer time in that case. So time to install and benefit also gets more.

What is the acceptance that systems like ERP have, especial-ly in the supply chain?

Indian manufacturing indus-try is still in infancy in terms of adoption of integrated IT sys-tems. They all have distributed islands of information. There

is a long way to go before our companies can claim to be fully automated. We have implement-ed one for Toyota in Sri Lanka. Because OEMs are limited, our major focus is now on auto ancillaries.

From a business point of view, all of them need it. But if you look at whether they can afford it, dif-ferent companies are in different situations. Cash flow is also a common issue in the auto indus-try all over.

Based on our global survey we feel the adoption of ERP sys-tems will be more on the service management side than on man-ufacturing side. Manufacturing — they are somehow already doing it. Customers have got more to do with turnover time, servic-ing timings, etc., than a Kanban system in manufacturing.

What kind of cost savings can a manufacturer expect in the long run after adopting such a system?

G ener a l ly, c ompa n ie s achieve any where between 15-20 percent cost savings at the completion of implementation of ERP. The first project I took up was for M&M (back when I was with SAP), and they also had tractors and farm equipment, but at the end of three years, they initiated an internal study to see the return on investment. They had a significant benefit and decided to implement it in

all their units. On an average, 15-20 percent is the savings in the first iteration of an ERP sys-tem. ERP implementation is not a one-time activity, it is a contin-uous improvement.

What is the reason for your focus on the auto industry?

We have 800 out of 2000 cus-tomers in the manufacturing industry, out of which 120-140 are from the automotive sector. In India, we are focused on five industry verticals, automotive and discreet manufacturing is

one of our focus areas.We want to go for automo-

tive and discreet manufacturing only due to capacity constraints. There are other players for other industries. We don’t have the capacity to go after all of them.

How much does the automo-tive sector contribute towards your business?

Around 10 percent of global revenues of IFS come from auto-motive related industries. Our net global revenue in 2011 was 2.6 billion Swedish krona.

“ERP Can Save 15-20 pc In Costs”Says Thiru Vengadam, MD & CEO, IFS Solutions India Pvt Ltd, as he aims to target Tier I, Tier II, and Tier III suppliers for his software solutions. He elaborates on how his Enterprise Resource Planning (ERP) solution differs from the competition, and how the supply chain can improve their efficiencies using IFS’ ERP, and gain a cost advantage. Excerpts from an interview with Jagdev Kalsi.

Thiru Vengadam, MD & CEO, IFS Solutions India Pvt Ltd.

Auto Monitor

N E W S 911 FEBRUARY 2013

Mercedes-Benz India inaug u rated a specially created off-road test track

at its Chakan facility where par-ticipants can be taught the basics of off-road driving in Mercedes SUVs. The German car major wants to increase involvement in the brand by organizing vari-ous events under its performance drive umbrella.

Eberhard Kern, MD and CEO, Mercedes Benz India, com-mented, “Mercedes Benz is a performance brand, and has been committed to performance driving since the beginning of

motorsports. Being a perfor-mance brand, our engagements are not limited to race driv-ers alone but include motoring enthusiasts as well.”

Six different programs have been lined up:

Young Star Driver Program: It’s a platform to spot and nurture young Indian motorsport talent in the age group of 15-25 years. Applications can be sent through the MB performance drive web-site, from which 50 candidates will be selected. The group will then be trimmed down to 12 par-ticipants at the Buddh circuit.

The three top performers will get to train in Germany, finally step-ping up to the SLS AMG GT3 for the DTM championship and pos-sibly F1.

Star Off-Road Experience: Participants get to try out Mercedes SUVs at the purpose built off-road test track at their Chakan plant.

Track Day Experience : Includes driving AMG cars at the Buddh International circuit. The event runs over two days where trained professionals will teach participants performance driv-ing techniques.

Inter nat iona l Dr iv i ng Experiences: Includes driving the entire range of MB cars on snow or embarking on a world tour that lasts 47 days and covers 17,000km

AMG Driving Academy: With training by motorsport veterans in the nuances of performance

driving in AMG cars from the Mercedes stable, it’s an ideal way to begin a career in motorsport.

Star Drive Experience: An engagement that enables expe-rience of MB cars and SUVs through specially created driv-ing situations.

At the off-road track at the plant, MB let the media sam-ple the capabilities of its SUVs. It involved climbing up and down a 40 degree incline, axle twisters, and driving on a 30 degree incline.

Descending a 40 degree road, you activate the DSR switch and the Merc SUVs will give you a speed range of 4-18 kph. When set to 4 kph, you can easily cruise down the incline without the overhangs scraping, or feeling any discom-fort. Climbing up is equally easy. The brakes hold on for about 3 sec-onds if you stop midway through the incline. You have to just dab the accelerator and the torquey SUVs slowly climb up the gradi-ent without a fuss.

Once you have negotiated the incline, you move on to the axle twisters. You can manually lock the differentials, making your way through a seemingly impos-sible path with ease.

These events are meant to understand the capabilities of MB vehicles so that customers don’t just think about them as luxury vehicles, or just a way to get from point A to B.

Being a performance brand, our engagements are not limited to race drivers alone

but include motoring enthusiasts

as well.

A Treat For EnthusiastsMercedes-Benz India has launched a series of initiatives to reach out to customers and motoring enthusiasts. Anand Mohan reports.

Auto Monitor

N E W S1011 FEBRUARY 2013

John Sculley, the man who has led two of the world’s best known companies – Pepsi Cola and Apple Inc,

was recently in India to explore a new investment opportunity. After leaving Apple, Sculley has been mentoring and investing in new businesses as co-found-er and Managing Partner of Inf lexionPoint Acquisit ion Corporation. Inf lexionPoint recently invested in setting up an online tyre store -- Changemytyre.com. The e-commerce site is now looking at entering the automo-bile battery market.

Changemytyre.com was start-ed in India six months ago and the company plans to expand its operations to 19 cities and tie up with new dealers. Currently it has warehouses in five big cities in the country. “We are not sure if the battery business will be under the same site, or if a new brand will be introduced,” said Sculley.

The company has already

made various successful ven-tures in e-commerce in the US. The most famous among them are Buy.com and Wirefly.com, which were later sold to acquirers. The company is also working on an IT supply chain in India, and hopes that the business will grow to $2 billion dollar in the next two years.

The company aims at becoming the country’s largest distribution for at least 90 per-cent of the tyre brands in India. “The size of the replacement tyres market is 13 million tyres for cars, and 36 million tyres for two-wheelers. We hope to tap at least five percent of this market.” Neeraj Chauhan, founder and CEO of Changemytyre.com said.

Arguing for the viability of an online tyre business in India, Chauhan said that it will be very tough for customers to find so many options in one place, apart from the competitive pricing and delivery facilities.

The main customer base for the company is expected to be the luxury segment, where margins are likely to be good, and cus-tomers easy to approach. “Most luxury car owners send their drivers for tyre changes, but with this online portal we can provide an insight about the price of the product,” Chauhan said. In the next two years they hope to clock a turnover of `500 crore.

ChangeMyTyre.com offers alloy wheels and two-wheeler

bike tyres along with the various other four-wheeler options the portal already offers. It delivers purchases to all major cities and towns across India. It is in the process of rolling out a network of Changemytyre.com author-ised fitment centres across India, where customers who have pur-chased tyres online can have their

tyres fitted. The brands available on ChangeMyTyre.com include Apollo, Continental, Goodyear, Bridgestone, Michelin, MRF, Nexen, Pirelli and Yokohama, among others.

The site offers convenient pay-ment options including credit cards, debit cards and netbanking, without any additional charges.

The size of the replacement tyres

market is 13 million tyres for cars, and 36 million tyres for two-wheelers. We

hope to tap at least five percent of this

market.

Now It’s Batteries On John Sculley’s AgendaJohn Sculley, the man famous for having “fired” Steve Jobs from Apple, has invested in an Indian online tyre store Changemytyre.com through his VC firm, finds out Nabeel A Khan.

What are the reasons for choos-ing Indian automobile industry as your investment destination?

I have been coming to India every year. Some time even more once in a year for the last 17 years. I have been involved with BPO industry and spent lot of time in Bangalore. The busi-ness I am in North America, into two categories- one is supply chain specific to IT distribution. We consolidated $1.6 billion turnover in North America. We are working on similar strategy in India and ASEAN countries. We hope to get about a billion dollar turnover this year that will include through acquisi-tion. We are going for massive acquisitions. We acquire com-panies transform them and sell them. I have been helping entre-preneur and financing them. We think the price model is going to be dramatically different here from the western middle class.

Smart phone today which is $500 will be $100, tab will be $100. We have a lot of experience in sup-ply chain and working at a very low margins.

What attracted you to enter the automobile tyre?

What attracted me in tires is that, I know the two most successful tyre and batteries developers in the US. For exam-ple with hawkwire we started same numbers a few years ago and then sold it, I became very interested in these two prod-ucts. If you look at the tirerack, this tiny numbers start in ecom-merce.. in two year we were over 180 mn and then we sold the company at $ 780 million , now building MDlive we had a 1.3 million last year 26 million this year—87 million next year… once the formula …

Since you sold your other

e-commerce business after they became mature –like www.buy.com , will you be selling this Changemytyre.com also?

No, I am not to decide on this. My work is to make it a success-ful. I am not an expert on India. My role is to bring the capital in, to help in mentor and do the branding. What we do with it will depend on different factors.

Automobile industry has great potential to grow here?

What we intrigue in India is about, in addition to the , I had a trip in Bangalore for about 25 km. what we saw was terrible roads. So new cars come with tyre and the life of the tires on the Indian roads is not more than three years. So the replacement market is going to be important. Right now the replacement mar-ket for tires is lower than the world average its about 70 pc of the tires sold..even now auto industry is slowing down…

We are not attracted by the growth in the automobile indus-try at this point of time because the numbers are still very small. We are focused on the things which are pretty much in our control . We are finding our business model which works. We have some stories which are compelling us. Once you get the right model it picks up this is ecommerce. We started e-com-merce business which is largest seller of mobile –Wirefly.com in the US. We grew from nothing to $500 million in turnover in four years. So once you get model right in e-commerce, because its virtual you can scale up very fast.

Things which were learn-ing is that the profit for many of dealers cannot only be selling of the tires but installation of the tires also. We can focus on

the premium market. The time has changed from Desktop, it has moved to laptop and pad. E-commerce is also growing very rapidly. The population is very young and enthusiast.

We see that major e-commerce site’s profitability in India is working well?

It’s always different from what we have in the west. We had 3G, and advance technology, but here in India it is at the nascent stage. Once these technology comes up the future of e-com-merce will further grow. The difference between 2G and 3G is incredible. So our point is that the experience of e-commerce with new technology is going to be dramatically different in India by 2014 compared with what is now. And this is not going to be only for automobiles or tires, there would be opportunity for the many kind of e-commerce products. Look at China in 2005, India is now where China was in 2005. I think, its highly likely that India is going to be as suc-cessful relatively as China may be a decade behind.

Any plans to explore other medium of business in automo-bile in India?

It would be a mistake to rule out anything at this point of time. What we do now is that we have the experience collec-tively of building and running business at very frugal cost expenditure than the physi-cal distribution system. We understand this business. We understand the financing of this business. We have experience in virtual business not so much in India but at other places. If it is necessary and we see the oppor-tunity to move in out of virtual

we will look at it. We have access to capital. At the moment we will start with virtual.

As an investor, do you see auto-mobiles as lucrative option?

Yes, I think so. But our inter-est is not only the automobile business. We don’t want to be in automobile business, if you look at –we see where the money is made. And according to me the money is not made in automo-biles anymore. The money is in accessories and service contract. I don’t know what the history is in India but our sense is that looking at the accessories, look-ing the service and replacement like tires, many be batteries. Looking at how the dealers can make money all those things is very attractive. What I am saying when the transformation is going on, there is big middle class and the opportunity is huge.

Do you feel that tapping the opportunity in the servicing of automobile will be a good idea for you?

We can see opportunity is there, then yes. But we don’t only see that there is a market but also we have to see that we can be successful in that.

Beyond automobiles which are the sectors where do you look for investment in India?

Anything, what is important to the emerging middle class. So it could be washers, dryers, air conditioners anything. It can be anything that has to deal with furniture, anything in the electronics specially dealing with the young people. We are pretty comfortable that in our IT –Supply-chain business mini-mum $2 billion turnover in the next two years.

John Sculley, MP Inflexion Point & Co-Founder, ChangeMyTyre

Auto Monitor

N E W S1211 FEBRUARY 2013

Out in the West Midlands, right in the heart of the United Kingdom, is a one-of-a-kind 760

acre facility. At this facility can be found 24 purpose-built circuits, containing some 95 km of roads. The premises house engineering facilities built with the objec-tive of developing vehicles for the future, subjecting them to all the foreseeable conditions a vehicle would have to endure. The facil-ity is called MIRA.

This independent testing ground is a platform for manu-

facturers around the world to develop vehicles with the help of services provided by MIRA Ltd. In India, MIRA Ltd. runs a joint venture (JV) with Computer Aided Engineering specialists Caepro, who together provide engineering and testing solu-tions to Indian OEMs locally with assistance from its parent in the UK. MIRA-Caepro’s Managing Director, John Roebuck, says, “Safety, durability, ride and han-dling, dynamics, electronics and control systems, and every devel-opment need a customer requires is available at MIRA-Caepro”.

The company has no plans as of now to build a test facility in India,

Anand Mohan Mumbai

MIRA Aiding EV DevelopmentUK automotive consultancy MIRA Ltd. has been providing its engineering services to Indian OEMs through its JV with Caepro. Clients of MIRA-Caepro also have access to MIRA’s testing grounds in the UK.

they will only be providing engineering services. However, Roebuck says that they are looking at the possibility of tying up with facility providers in India so that MIRA-Caepro can do the testing locally. By having an engineering services branch set up in Pune, the company makes its services available locally, reducing turnaround time, improving communications and saving cost.

The Indian JV is also working on electric and hybrid vehicle development with Indian OEMs. Roebuck declined to comment on the clients they are working with (although it’s not that hard to guess), but mentioned that interest has been high and that most major Indian OEMs have programmes they are working on.

MIRA UK’s hybrid and EV division senior engi-neer Puneet Mathur says that MIRA can support pure EV and hybrid EV vehicle development. “It starts with gathering customer requirements, studying the market, and considering the usage, after which we begin simulations with the right powertrain configuration.” The next step is software development for electric vehicles that involves integration of the battery management system with the rest of the vehicle. Prototype development and testing follow at the facility in the UK.

MIRA-Caepro will be increasing its workforce in India to about 25 engineers by this year-end to cater to different verticals of development in the automotive space. Considering that most Indian OEMs are developing new products and inter-national OEMs are developing India-specific products, there seems to be plenty of scope for service providers like MIRA to thrive in the Indian market.

Safety, durability, ride and handling, dynamics, electronics and control

systems, and every development need a

customer requires is available at MIRA-Caepro.

Auto Monitor

N E W S1411 FEBRUARY 2013

Jagdev Kalsi New Delhi

units, which can switch from petrol to diesel and vice versa easily, taking into account the demand for the power plants.

However, three of Chevrolet’s best selling cars, the Beat diesel, the Tavera, and the Cruze, are all powered by diesel engines. Although the government has left the option of increasing the price of diesel to petroleum companies, it can only be in the range of 50 paisa per litre per month. The industry however believes the step is right, as it would create parity between petrol and diesel powered cars.

Chevrolet is also looking to capture a bigger piece of the market by offering a 3-5-3 scheme, in which the customers will get a 3 year or 1 lakh kilometre (whichever comes first) standard war-ranty, a 5 year or 1.5 lakh kilometre engine and transmission warranty, and a 3 year or 45 thou-sand kilometre Chevrolet Promise, which is a free maintenance package.

While the trend of booted hatchbacks began with the success of Maruti Suzuki Swift Dzire and Tata Indigo CS, Opel had tried to work on the same lines in the 90s with the Corsa and Corsa Sail, which didn’t do very well. Of late, though, the B+ booted cars have managed a better growth percentage than their hatchback counterparts, with a four percent YoY increase in sales in December 2012 (cumulative growth for Maruti Dzire, Toyota Etios and Tata Indigo), against the almost flat growth of their hatchback siblings.

The trend of premium booted hatchbacks has been advantageous to manufacturers and consumers alike. “People are able to take the advantage of a three-box car and the manoeu-vrability of a hatchback in the same package, which accounts for the consistent demand for these cars in the market,” said a Delhi based Honda dealer, who are themselves preparing to cater to a wider range of buyers when Honda brings out a booted version of the Brio hatch-back, called the Amaze.

Manufacturers benefit from rolling out more products, and more importantly, vehicles with varied body styles from the same platform with many common parts. These vehicles save on investment, and the cost burden can be reduced further by designing the car to avail excise ben-efits by reducing the length, etc. It also gives manufacturers a bigger portfolio, which allows them to cater to customers with different needs, and have a car available at every price point.

The three-box sedan has always been an Indian favourite. Apart from the large exterior dimen-

sions, the boot or ‘dicky’ remains the most wanted feature that can skyrocket a car’s desirability quo-tient. Of late, the Indian market has seen a boom in the sales of booted hatchbacks, with almost all manufacturers angling for this segment.

Chevrolet has now joined the race with a sedan sibling to their recently launched Sail U-VA hatchback. But unlike Maruti Suzuki, Tata, and Honda, Chevy has created a full-sized version of the hatchback instead of lim-iting the exterior length of the car to gain the excise benefits avail-able to vehicles under four meters in length.

Although the Chevrolet Sail sedan is 4.2 meters in length,

Chevrolet has still managed to price it attractively with the base variant priced at `4.99 lakhs ex-showroom in Delhi, which is very much in the same league as Maruti Suzuki Dzire, which how-ever has been kept under the four meter length limitation to save on excise duties.

Lowell Paddock, President and Managing Director, GM India, attributes the competitive pricing to Chevrolet’s motto of achieving heavy localisation. He also high-lighted the fact that the 1.3 litre SDE SMARTECH common rail diesel engine was developed by the GM Diesel Engine Technical Center in Turin, Italy, with the support of engineers in Pune and Bangalore to achieve a bal-ance between cost, performance, and fuel efficiency specifically for the Indian market. The engine has an aluminium alloy DOHC cylinder head, lightweight pis-tons with graphite coated skirts, and low tension piston rings, to

keep the weight in check.While manufacturers such as

Hyundai and Toyota are scepti-cal about starting diesel engine plants in India due to the unclear

diesel policies of the government, Chevrolet is already manufactur-ing diesel power plants in India. Putting to rest any speculation about the company’s game plan

changing with government poli-cies, Lowell Paddock endorses the company’s decision as he believes that GM’s diesel plant in India is one of their most flexible

Hot New Trend: Booted Hatchbacks Chevy has launched the Sail sedan, and Honda plans to follow. The sedans, essentially enlarged versions of previous hatchbacks from the same manufacturers, will benefit all.

Auto Monitor

N E W S 1711 FEBRUARY 2013

VE Commercial Vehicles Limited (Volvo Group and Eicher Motors JV) has inaugurated the modern and contemporary dealership of Eicher

branded trucks and buses, Pawan Automotives Pvt. Ltd. at Begusarai, in Bihar. The 3S dealer-ship (Sales, Service & Spares) facility is expected to strengthen the company’s resolve and com-mitment to provide sales and after-sales support to the rapidly growing customer base of Eicher in the Eastern part of India. Located at NH 3, Harpur Chowk, the facility is a well-equipped set spread across 17,000 sq ft. with contempo-rary tools and equipments. The service team at the new touch point has been trained at the Eicher training centre.

Eicher has 250 touch points nationally with 20 touch points in the Eastern region and plans to continuously expand its foot print to reach closer to customers.

Speaking on this occasion, G. Sekar (Senior Vice President – Sales & Marketing), said, “Our products are emphasized for customer orienta-tion. Our efforts to provide value to customers have borne fruit with increased customer accept-ance reflected in growing vehicle sales. Since Eicher products are fuel efficient, they are known for its overall low cost of ownership and the rea-son can be found in the ‘Eicher advantages’.”

Also present on the occasion Sree Ramarao (Senior Vice President – Aftermarket) said that the focus is on improving customer experience at the dealerships. “We want to get closer to our customers and ensure that they are able to get their products serviced much easier and faster. We are continuously enhancing the standards of our distribution centers so that we provide best-in-class service and uniform customer experience.”

Over the years, Eicher has ensured enhanced service coverage through:* Wide network of close to 250 dealer outlets

across the country* Higher availability of parts * Mobile service vans with all dealers* 24x7 helpline.

Eicher Forays Into Bihar

Hyundai Construction Equipment India Pvt. Ltd. (HCEIPL), a sub-sidiary of Hyundai

Heavy Industries, Korea, today launched its R210-7v excavator at the BAUMA CONEXPO SHOW 2013. The R210-7v is being touted as a real value for money propo-sition for Indian construction equipment buyers.

The R210-7v is equipped with “mechatronics” for opti-mized fuel consumption and productivity, apart from offer-ing lowest operating cost for 20-22 tonne class excavators. The seamless matching of work-loads with power requirement saves 7-10% fuel per hour, and ensures enhanced earnings per dig. The machine is attractively priced in the Indian construction equipment market and is expect-ed to generate an enthusiastic response from end users.

Hy u nda i Const r uct ion Equipment also showcased its technologically advanced R210-9 excavator at the BAUMA

CONEXPO in line with their plan of migrating to the 9 series prod-ucts. Both these excavators offer 7-10 percent fuel savings, with 8-14 percent improved productiv-ity, resulting in higher earnings per dig apart from the promise of Hyundai reliability and low oper-ating cost.

Commenting on the occa-sion, Ki Young Kong, Managing Director, said, “I am delighted to offer the widest range of excava-tors from the real value for money proposition to the technologi-cally advanced 9 series to our customers in India. We have been operating in Indian market since 2007 and it is a key market for us. The range caters to the growing needs of customers in various applications and markets in the Indian construction equipment space.”

Dheeraj Panda, Head - Marketing and Key Account Management added, “As per our study of the market, the 20-22 tonne class of excavators cap-tures about 50 percent of the total pie of the Indian market. Hence through the launch of the R210-7v and R210-9, we aim

to provide a wider range to our customers in this segment. Last year we touched the mark of 2400 machines across various seg-ments with a growth rate of 23-24 percent, which is not only a testi-mony of customer delight but is also a strong vote of confidence from our customers about our products and technology.”

The 9 series excavators pro-vide stability, greater digging and crowd force, along with advanced hydraulics for improved control-lability and smoother operation in arduous conditions like quar-ries and mines. One of the unique features of the 9 series excavator is the Data Download feature which enables customers to monitor progress of the excava-tor at site.

Hy undai Construct ion Equipment (HEC) also plans to add more touch points to ensure quicker response to customer que-ries by way of additional 3S (sales, service, and parts) offices through its dealers. The company is also adding a few workshops through its dealers to offer solutions in the area of reconditioned aggregates to its valued customers.

Anand Mohan Mumbai

Hyundai Launches R210-7vthe extension not only because it was falling short of revenue, but also wanted the support offered under the plan to continue.

Since the AMP was created in 2006, compounded annual growth rate (CAGR) for the vehi-cle industry till 2012 was over 14 percent, which has now fallen well below 10 percent. Even if the industry grows at 10 percent till 2016, the revenue of the automo-bile industry will be $111 billion by 2016 against the projected $145 billion. In FY12, the reve-nues of the automobile industry stood at $76 billion, which is $5 billion short of the AMP target.

Taxes on cars in various states vary between 57 percent and 82 percent, which is anoth-er major area of concern. The industry badly needs a uniform tax, and is pitching strongly for a goods and services tax (GST) to be introduced immediately. SIAM has demanded a reduc-tion in taxes (excluding small cars) to 22 percent from the current 75 to 82 percent, and a concessional excise duty struc-ture of 10 percent on small cars and two-wheelers. They also want excise duty on chassis to

be reduced to 10 percent from the current 14 percent.

CVs and DieselWith moderate agricultural

growth and sustained slow-down in Industrial activities, M&HCV sales declined by 20-22 percent. Future demand is weak on account of lower replace-ment volumes. With delays in resolution of the mining issue, mining bans in Goa and Odisha, and slow execution of National Highway projects, tipper demand is also very low. This is probably the worst hit segment. For a revival, vehicle manufac-turers suggest activating the JNNURM and similar schemes for intercity buses. The gov-ernment should also purchase vehicles for its institutions such as municipalities. SIAM also wants the government to offer incentives to banks financ-ing Indian vehicles outside the country.

“Clarity on the diesel poli-cy is very important because investments have been kept pending. There have been signs of deregulation of diesel, but also speculation of levying tax on diesel. We need clarity on this,” Rakesh Batra said.

Contd. from Pg 1

Auto Monitor

N E W S1811 FEBRUARY 2013

It’s often said that when you drive in India, you’re put-ting all your luck on the line. Safety is secondary to

luxury, and in the price sensitive segments, the cost of the safe-ty feature. To be competitive in the largest selling segments in the automotive industry, manu-facturers do not offer even basic safety features like ABS (Anti-lock Braking System) and ESP (Electronic Stability Program), which are standard fitments in many countries the world over.

Bosch India and WABCO India

teamed up recently to increase awareness of the effectiveness of ABS and ESP, and the status of these features in India compared to the rest of the world. By January 2014, compulsory fitment of ABS will be part of regulations in all the major countries of South America including Brazil, while in the US and Europe it has been compulsory for a while now. ESP became mandatory from September 2011 in the US and Canada; the EU will adopt it by November 2014, Australia by the end of this year, and Japan and Russia will get it by next year.

By contrast, India reports a lowly 19 percent ABS installation

rate on new cars and an abysmal one percent ESP installation rate. If that sounds bad, according to WABCO, ABS in commercial vehi-cles stands at around 10 percent and that includes retrofitting.

At the WABCO proving grounds in Chennai, WABCO and Bosch organized a Safety Drive, a demonstration of the

effectiveness of ABS and ESP in passenger cars and commer-cial vehicles. Balasubramanian, Deputy Managing Director, Bosch Chassis Systems India Limited said, “The ‘Safety Drive’ symposium is an initiative to garner the collective effort of all stakeholders who support the cause of improved vehicle safety in India.” He added that it is imperative that Bosch con-tribute towards making vehicles safer, and critical safety features become a mandatory part of

any vehicle that plies on Indian roads.

WABCO too is pushing for increased used of ABS in commercial vehicles, cit-ing an increase in accidents. P. Kaniappan, W hole-Time Director, WABCO India said, “With the rapid growth in traf-fic volumes and transportation routes throughout India, we are facing an alarming growth in the number and severity of road accidents.”

Of the approximately three lakh M&HCVs sold last year, only ten percent had ABS installed. WABCO has developed an ABS system that can be retrofitted onto any bus or truck. Bosch says that unlike WABCO’s retrofitted ABS systems, Bosch doesn’t have a product for the aftermarket as things are more complicated in cars compared to CVs. Only if regulations are in place will there be a major increase in ABS and ESP applications. Until then, it is imperative that vehicle owners consciously opt for vehicles fitted with these life-saving features.

India reports a lowly 19 percent ABS installation rate on new cars and an abysmal one percent ESP installation rate.

Playing SafeBosch and WABCO team up to promote vehicle safety in India.

Bosch demonstrates ABS at work on the Swift Dzire.

WABCO demonstrates ABS at work on the Tata Prima.

Anand Mohan Chennai

Auto Monitor

N E W S 1911 FEBRUARY 2013

After inaugurating the four-day long ACMA Automechanika show joi nt ly orga n ised

by Automotive Component Manufacturers Association of India and Messe Frankfurt from Germany, Minister for Heavy Industries and Public Enterprises Praful Patel had something to tell reporters gathered there. He has promised to meet the Finance Minister P Chidambaram soon and press for providing a stimu-lus, mainly for the automobiles sector to spur growth in the wake of economic slowdown.

“ I think it is important that the country’s entire economy gets a stimulus because auto sector will automatically be a beneficiary of that stimulus,” he said.

Patel said, “I understand the Finance Minister’s dilemma. On one side, he has to raise the reve-nues and on the other side he has

to maintain (growth) momen-tum. It is a delicate issue, I don’t want to speak on his behalf...”

“But, certainly, the automo-bile sector needs some kind of stimulus package. How will it be done and which way is the best one that could be told after meeting the Finance Minister,” he added.

In the wake of poor per-formance by the automobiles industry in the current fiscal, Patel said, there is a need to revive various other projects like infrastructure and power in the country, which are related to auto industry and can build the momentum for growth.

Also, interest rates need to be brought down as it has also impacted the sector’s perfor-mance, he added.

Passenger car sales in the country declined by 12.5 percent to 1,41,083 units in December last

year, the steepest fall in the last four months, due to high interest rates, rising fuel prices and overall slowdown in economic growth.

During April-December 2012, the overall year-on-year growth in domestic sales was 4.57 percent.

As regard to overall automo-bile exports, they declined by 2.92 percent to 21,86,834 units in during April-December 2012 compared to the same period last year.

The Society of Indian Automobile Manufacturers (SIAM) has revised its sales fore-cast for passenger cars this fiscal to zero to one percent, as against an earlier forecast of 1-3 percent.

To revive the sector, SIAM has suggested that the government reduce excise duty on cars other than small cars to 20 percent and said the duty on 10-13 seater vehi-cles should be at par with buses, that is 10 percent.

Exide Industries Ltd has entered into an additional technical collaborative arrange-

ment with Shin-Kobe Electric Machinery Company Ltd, Japan.

The initiative is expect-ed to reap dividends through enhancement of quality of auto-motive batteries and cut back on warranty costs.

The `5,000-crore lead acid battery maker is witnessing pressure on its margins largely due to slowdown in automobile sector.

Exide had an existing tech-nical collaboration with Shin-Kobe.

However, Exide Managing Director and CEO T.V. Ramanathan, said that the cur-rent arrangement will pave way for introduction of “different” newer technologies against payment of royalty.

It will lead to “implementing new manufacturing process” for automotive batteries, there-by ensuring higher productivity and quality, Ramanathan said. In both ways, the company should gain in terms of better cost economics.

Asked if the new arrange-ment would lead to roll out of fresh products, he said that such opportunities will be looked into by the research and devel-opment wing of the company.

Quality gapIndustry analysts feel that

though Exide grew substan-tially in size over the last one-and-a-half decade, the company suffered from a

technology gap.For long, it banked on the

technology collaboration with Furukawa that was inherited through acquisition of Standard Batteries.

The concern was expressed by former CEO S.B. Ganguly – who steered the company on growth path – while relinquish-ing office in April 2007.

“I always looked up to the Japanese manufacturers on quality issues and I aspired for Exide to cross that bench-mark. However, I regret we are yet to achieve that,” he said, when asked whether he had any regrets while hanging up his boots.

Latest initiativeThe first major push to mit-

igate the technology gap was witnessed in early 2012, when Exide roped in Pennsylvania-based East Penn Manufacturing Co Inc, makers of ‘Deka’ branded lead acid batteries as technical collaborator.

The company’s share price on Tuesday moved by less than one per cent, to close at ̀ 122.40, on the NSE.

Patel Promises To Seek Solace For Auto Industry

Exide In Technical Pact With Jap Firm Shin-Kobe

Industry analysts feel that though Exide grew substantially

in size over the last one-and-a-half

decade, the company suffered from a technology gap.

SIAM has revised its sales forecast for passenger cars this fiscal to zero to one percent, as against an earlier forecast of 1-3 percent.

Auto Monitor

G L O B A L2011 FEBRUARY 2013

Citroën has started 2013 with an exceptional fleet sales performance for both its car and LCV

ranges.In January, Citroën’s fleet cars

took 3.32 percent of the total fleet sector with 2,740 registrations. This represents a year on year increase for January of no less than 19.39 percent, a significant increase compared to the mar-ket, which was up by just 8.41 percent.

Citroën also delivered a strong showing from its LCV models. Citroën LCV fleet sales were up by 10.16 percent to 1,627 registrations to take 9.89 percent of the LCV

market during the month. Market growth was also encouraging, with an increase of 10.12 percent compared with January 2012.

Martin Hamill, Citroën’s Fleet Director, commented: “This strong fleet sales performance going into 2013 is great news for Citroën and builds on the brand’s success in 2012, when it

again outsold the fleet market in both cars and LCVs. Today’s Citroën car range offers fleet

drivers, at virtually every level, an economical, well equipped and environmentally responsible choice of vehicle. Spearheading Citroën’s fleet car success is the DS range, which is going from strength to strength. At the same time we are also seeing tremendous sales performance from Citroën’s award-winning LCV range, which continues to appeal to all classes of business user from the sole trader to the largest fleet.”

Scott Michael, Citroën’s Head of Commercial Vehicles & Business Centre Programme, explains: “An important part of Citroën Fleet’s strong start to the year is the growing success of the Citroën Business Centre net-work. In January alone, the 77 strong Business Centre network managed to grow its business with SMEs by an incredible 12 percent.”

Citroën’s Car & LCV Fleet Fast Start To 2013

Spearheading Citroën’s fleet car success is the DS

range, which is going from strength to

strength.

With the Xsara Picasso, C4 Picasso, Grand C4 Picasso and C3 Picasso, Citroën has built a real success story by asserting itself as one of the leaders in the compact MPV segment.

Since 1999, the brand has sold almost 3 million Picassos. Now Citroën is entering a new phase in the sector by revealing the CITROËN TECHNOSPACE concept, which points to the brand’s future compact MPV that will be released from the second half of 2013.

A demonstration of Citroën’s ‘Créative Technologie’, the new concept ushers in a new era with:

new Efficient Modular Platform 2 (EMP2), which features effi-cient architecture and minimises weight.

touch driving interface with a high-definition 12’’ panoramic screen.

-ting interior space and class-leading boot capacity (537 Litres VDA).

headlamps complemented by 3D-effect tail lights inspired by the latest Citroën concept cars.

The concept will be revealed at the Geneva Motor Show.

As the SMMT records a year on year rise of 5.6 percent in new commercial vehi-

cle registrations for January 2013, leading vehicle auction company, British Car Auctions (BCA) is also reporting strong demand and rising values for used commercial vehicle sales.

The latest data from BCA shows that the average values of a light commercial vehicle was £4,669 in January - the second highest monthly figure on record since the BCA Pulse Report was launched in 2005. Shortage of stock continues to be a key factor and reflect-ing the fact that businesses are keeping hold of their vans for longer, average age at 56 months and mileage at 80,000 have risen by three months and five thousand miles respec-tively in the past year.

There was strong demand across the widest range of com-mercial vehicles in January which Duncan Ward, BCA’s General Manager - Commercial Vehicles believes can be partly attributed to people starting up new businesses looking for vans. “The rise in average prices at the ‘value-for-money’ end of the market continues unabated and values for older, higher-mileage vans have stepped up significantly over the past two months. This is likely to be a side-effect of the tough economic climate. With continuing redundancies from retail to manufacturing, many people will be tempted strike out on their own and one of the first things they will buy with their redundancy money is a van.”

Citroën Enters A New Era With TECHNOSPACE Demand For ‘Value For Money’ Used

Citroën LCV fleet sales were up by 10.16 pc to take 9.89 percent of the LCV market during the month.

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M A C H I N I N G2211 FEBRUARY 2013

One word, two figures and a punctuation mark are sparking plenty of animated

debate, as did once upon a time the vision of Computer Integrated Manufacturing (CIM): we are talking about Industry 4.0, the new manufacturing concept with web-based networking. But what role are the tools playing in this context? A situation report from the 2012 Tool Conference in Schmalkalden, the meeting point for insiders from the metalcut-ting sector.

The controversial issue of Industry 4.0 – some people are already dubbing it derisively CIMera 2.0 – was not on the agen-da at the 10th Tool Conference in Schmalkalden. Nevertheless, the manufacturers and users of metal-cutting tools are not indif-ferent to the issue: when you take a closer look, you can already dis-cover some tools with the right

stuff for Industry 4.0. As indeed the 200 conferees saw for them-selves, both in the presentations and during a tour of the test bay and the laboratories of the GFE – Gesellschaft für Fertigung-stechnik und Entwicklung Schmalkalden e.V. (Society of Production Technology and Development), who organized this symposium themed around high-precision tools.

When the Tool Transmits... The experts in Thuringia

unveiled a mechatronic tool, for example, designed for retrograde machining of large boreholes, which uses telemetry to acquire the ongoing status of the tool during the metal-cutting opera-tion. This tool, which acquires and transmits measured data, fits in neatly with the new con-cept known as the “Internet of Things,” in which basically all participants communicate with

each other just like on the con-ventional web.

To quote GFE scientist Bernd Aschenbach: “The use of mechatronic tools with integrat-ed sensor-monitored actuators can help to downsize the amount of work required for produc-ing retrograde counterbores on large-size machining centres while retaining high levels of pro-cess dependability.”

In order to reduce the costs involved, GFE has developed a prototype featuring standard electronic modules. What are called Hall sensors monitor the end positions of the hydraulic cutting drive, which are commu-nicated to a base station.

The BMBF’s (German Federal Ministry of Education and Research) joint project called Sensomikrosys goes one step fur-ther. What’s been created here is extremely small sensors that monitor in real-time machines

and tool compo-nents exposed to highly dynamic loads. These microsystems serve, for example,

to measure the forces acting in tools and clamping systems. For this purpose, the GFE had at the

EMO Hannover Showcases What role are the tools playing? A situation report from the 2012 Tool Conference in Schmalkalden, the meeting point for insiders from the metal-cutting sector.

Tool Conference in Schmalkalden showcased a test rig for dynamic load testing of tool clamp-ing systems in machine spindles. Sensors of this kind can even be integrated into hand-held tools. Here, too, the term “Tools 4.0” is definitely apposite.

“At the EMO Hannover 2013, we shall be seeing plenty of interesting tool and tech-nology solutions incorporating concepts of this kind with sensors and actuators,” com-ments GFE’s Executive Director Prof. Dr.-Ing. Frank Barthelmä. “The basic idea of integrat-ing machine functionalities into the tool is not entirely new, of course. But for machin-ing jobs like systems for energy technology or components for large-size machinery, we have meanwhile arrived at quite different dimen-sions. The EMO is also going to show that besides the innovative content of technical solutions, users are more than ever going to be asking about their cost-efficiency.”

Assistance systems is one of the watchwords at Komet Group GmbH from Besigheim. Its Managing Director Dr.-Ing. Christof W. Bönsch has deliberately adopted the term from the automotive industry. “Parking backwards is for many people a complex task. But there are assistance systems for it that solve the problem,” he explains. “The idea is to arrive at assistance systems in metal-cutting applications as well, designed to make life easier for us.”

This is the functional thrust exhibited by the familiar systems for process monitoring, which detect tool wear and tear, for example, or improve the efficiency of the metal-cutting pro-cess with the aid of adaptive control systems.

Fingerprinting the ProcessIn his view, there are even more possibilities:

it would be conceivable, for instance, to create a process fingerprint, holistically covering machine dynamics, spindle behaviours, metalcutting forc-es and the clamping situation, and defined as a standard process. These “fingerprints” could be used in process acceptance-testing, after a production operation has been relocated, for example, or when starting up series production in the automotive industry (SOP).

“When a gigantic plant is built in China, for instance, then the machines used there are ones that are running in Germany with estab-lished processes,” comments Dr. Bönsch in Schmalkalden. “Monitoring the system enables the fingerprint of a process to be created, and then used to implement a self-learning produc-tion process.”

Here, though, he adds, the tool industry is still in the early stages of development work.

Another issue relates to tool management. The expert from Komet is not talking here, how-ever, about the administering and procurement of tools, e.g. by an outside service provider. “What I mean by tool management is complete-cover-

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M A C H I N I N G 2311 FEBRUARY 2013

age acquisition of all relevant data over a tool’s entire useful lifetime,” Bönsch says. “For this purpose, we have laser-printed

our tools with data matrix codes, which can be read using a simple scanner.”

The code serves merely to identify the tool concerned, while the detailed informa-tion on important key figures

comes from sensors, for exam-ple. Thanks to these features, an electronic system now acquires

the entire tool lifetime, which is stored in a data cloud. This can even go so far as to enable a tool’s acquired process data to be

linked to each other.To quote Christof W. Bönsch:

“In the cloud, I can file a complete tool history.”

Learning from GoogleKomet has already come up

with a method for transferring a tool’s presetting data into the tool management system by sim-ple scanning. But the company (best regards from Industry 4.0) aims to achieve a whole lot more. The goal is a cloud with a large quantity of process and tool data, serving as a foundation for a huge knowledge database, resting on assured statistical under-pinnings. It will then be able to provide dependable answers to questions, e.g. on tools’ behavior during operation, or the nature of any machine malfunctions.

But, says Komet, there are even more possibilities, since as larger and larger quantities of data are acquired the error rate will also fall.

As evidence, Bönsch points to Google, whose huge performa-tive capabilities are attributable to global networking and multi-ple usage.

“Statistics play an important role in systems like Google,” says the expert. “When several billion search inquiries are received every day, then the few inquiries

that do not fit in precisely with the subject do not play any sig-nificant role.”

This means the errors occur-ring are “statistically irrelevant.” Analogously, a corresponding knowledge database could also be created for tools.

This still sounds a bit like science fiction. Some initial con-tours, however, will already be on show at the EMO Hannover 2013.

Komet is not disclosing very much yet, but for Bönsch one thing is already certain as the new year begins: “The EMO is an ideal opportunity for us to showcase for the public the first industrial implementations of these ideas. We shall be exhib-iting some initial mock-ups for the issues concerned, address-ing specific job profiles of our customers. The major issues being covered in this con-text are assistance systems for communalising metal-cutting processes, and cloud-based tool management as an on-demand application”.

The controversial issue of Industry

4.0 – some people are already dubbing it derisively CIMera 2.0 – was not on the agenda at the 10th Tool Conference in Schmalkalden. Nevertheless, the

manufacturers and users of metal-cutting

tools are not indifferent to the issue.

Tool Industry Concepts

In the Fabrication Panel, Alexandr Danovich, OSCAR Tube Production Group, plans to present the Ukrainian manufac-turer’s history of seamless cold-drawn

titanium tube production.Regarding future growth, he will analyze

the impact of adding a VAR melting facility to control quality and assure traceability, in adherence with ISO 9100. Operating its own melt plant will also allow the firm to use read-ily available Ukrainian sponge.

Richard Freeman, TWI Limited, UK, will describe recent developments in welding tita-nium alloys that improve productivity without quality loss; linear friction welding to construct preforms that reduce the necessary machining of forgings; high brightness laser welding and its impact on porosity and weld profile; and novel high frequency pulsed TIG and reduced splatter MIG welding.

Understanding Ti-6Al-4V microstructural mechanisms during forging will be Christina Schmidt ‘s focus, Outokumpu VDM. When the metal is destined for rotating jet engine com-ponents the requirements for homogeneity and lack of inclusions, which depend on microstruc-ture, are increasingly stringent.

In their project, compression tests are used to develop microstructural models that enable transformations during single forging steps to be described and simulated.

For the Emerging Markets Session, MariaPia Pedeferri, Politecnico di Milano, will discuss titanium’s metallurgical attributes, but related to tribologic behavior. Titanium alloy surfaces exhibit a high wear coefficient in dry sliding, poor wear resistance and limited load bear-ing capacity. Tests of a simple electrochemical anodizing process that changes the metal’s sur-face oxide film show it could reduce friction and increase wear and corrosion resistance.

Jaka Klemenc, Akrapovic d.d., will examine progress in using titanium alloys for high per-formance automotive exhaust systems, where weight reduction and corrosion resistance are the prime benefits. He will report on differenc-es between stainless steel and titanium alloy exhausts of the same design in vibration, sound quality and frequency, and heat dissipation.

Military applications for investment cast titanium components will be explored by Sarah Mott and Bret Clayton, Precision Castparts. Titanium is a proven solution and investment casting yields complex, monolithic parts that lower material costs, increase strength and reduce finishing needs.

Experts to Talk Critical Subjects at TITANIUM EUROPE 2013

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G L O B A L2411 FEBRUARY 2013

Ceat Ltd, the tyre man-ufacturer controlled by the RPG group has entered into 70:30 joint

venture with Bangladesh’s lead-ing business house A K Khan & Company to set up a tyre manu-facturing facility in Bangladesh.

To go on stream at the end of 2014, the new facility at an investment of Rs 360 crore by the joint venture to produce tyres for truck, light commercial vehicles and two and three wheeler tyres. The plant will have a capaci-ty of 110 metric tonnes per day. As per the joint venture agree-ment, CEAT Ltd. will provide technical and business exper-tise & manage the JV company operations while A K Khan & Company Ltd. will bring in their vast knowledge of Bangladesh market besides providing the strength of their goodwill and local presence.

Anant Goenka, MD, Ceat Ltd said,””This strategic partner-ship will enable us to establish a leadership presence in the Bangladesh market.””

This will be one of the largest manufacturing investment in

Bangladesh by an Indian com-pany and it is the first large scale tyre manufacturing plant in Bangladesh.

Salahuddin Kasem Khan, Managing Director, A K Khan & Co, said, “Besides catering to the growing local market, the plant will earn valuable foreign exchange for the country by exporting approximately 20 per-cent of its output to the region and rest of the world”

CEAT Ltd is the f lagship company of RPG Enterprises and is one of India’s leading

tyre manufacturers and has a strong presence in both domes-tic & international markets. The company manufactures over 10 million tyres every year and enjoys a major market share in the light truck & truck tyre market.

A. K. Khan & Co Ltd is one of the oldest business conglomer-ates in Bangladesh, operating since 1945. The Group engag-es in business through joint venture in the area of textile, telecom, logistics, hospitality sector amongst others.

Ceat Inks JV With Bangladesh Co For Plant

Tyre maker Ceat Ltd has reported nearly three-fold jump in consolidated net profit for the third quarter ended December 31, 2012 at `22.44 crore, pro-pelled by higher sales volumes and lower raw material cost.

The company had posted net profit of `8.12 crore in the year-ago period.

Net sales during the period under review stood at `1,238.5 crore as compared to `1,092.86 crore in the same period last fis-cal, Ceat Ltd said in a statement.

Commenting on the results, Anant Goenka, Managing Director, Ceat Ltd said: “We have been able to post a good profit during the quarter pri-marily due a decline in rubber price and good growth in sales volumes”.

During the quarter, rubber prices came down by 78 per cent

to around `180 per kg, while the company’s sales volume grew by 13 per cent, he added.

“Moreover, we also had a better product mix during the period with an increase in the passenger car tyre component,” he said, adding that the com-mercial vehicle to passenger car tyre ratio stood at 55:45 dur-ing the quarter as compared to 60:40 in the year-ago period last fiscal.

Moreover, the company also crossed sales of five lakh motor-cycle tyres per month in the months of October, November and December.

During the quarter, the com-pany said it had incurred an expense of `13.66 crore towards voluntary retirement scheme of its Bhandup unit (near Mumbai) where 188 employees opted for the offer.

It had also made an invest-ment of Rs 10.96 crore in its Bangladesh subsidiary. Subsequent to the quarter end, it had entered into a 70:30 joint venture with A K Khan Company.

“The plant is expected to be operational by the third quarter of FY’15. In the initial phase, it will have a capacity of 65 tonnes per day, which would soon be ramped up to 110 tonnes per day,” Goenka said.

It will produce tyres for small commercial vehicles, light commercial vehicles and motorcycles.

“We are looking to have a market share of 35-40 per cent in the next three to four year when the market (in Bangladesh) is estimated to attain a size of ` 1,500 crore,” he said.

Ceat Net Jumps Nearly 3-Fold In Q3

Demand for com-mercial vehicles is very weak, while passenger vehi-

cles are just about holding up, observes Nomura Equity Research in its Quick Note on the automobile industry based on sales volume data for January 2013. The bro-kerage estimates that overall industry volumes for two-wheelers would be up about 5 percent, car volumes could have declined by about 1 percent, and commercial vehicles would have been down by around 40 percent in January 2013.

W hile HMCL’s (Hero MotoCorp) volumes were also slightly better than esti-mates, Nomura points out that there is a need to check if there has been any increase in inventory. Tata Motors reported volumes which were significantly below Nomura’s estimates in all categories, and there may be a need to reduce estimates further. However, JLR retails in the US were up 25 percent year-on-year, which in Nomura’s view are strong numbers.

JLR was helped by strong uptick in new Range Rover and Evoque sales. The weighted average promo-tional spend also decreased by 14 percent MoM (month-on-month) as the new Range Rover got retailed.

Industry Sees Slowdown Across

Segments

Volumes for two-wheelers would be up about 5 pc, car volumes

could have declined by 1 percent, and CVs by 40 percent.

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R E P O R T2611 FEBRUARY 2013

India’s population is expect-ed to surpass that of China’s in 2030, making it the most populous county in the

world. High economic growth rates and the impacts of glo-balization have concentrated prosperity in urban centers resulting in sprawl and auto-mobilization. Within 15 years the population residing in urban areas is expected to double to over 700 million due to dis-tressed rural to urban migration and other factors. This will place additional pressures on urban infrastructure, which is already overburdened. Projections indi-cate that by 2021 India will have the largest concentration of megacities in the world with a population exceeding 10 million. Out of a total of 88 cities, with a population of more than half a million in 2011, only 28 have any formal public transportation system. In most cases, the exist-ing public transport systems are ageing and stretched beyond capacity, as the demand for pub-lic transport services outstrips supply, both qualitatively and quantitatively.

As disposable income increas-es, a result of economic growth, those entering the middle-class are able to afford and prefer per-sonal vehicles, as it is a symbol of upward social mobility, and also provides greater comfort, flex-ibility and convenience.

In the absence of proper plan-ning measures, the dynamics between increasing numbers of vehicles as well as a growing pop-ulation wanting to use private vehicles for transport are likely to pressurize transport infrastruc-ture, leading to inefficiencies as a result of infrastructural bottle-necks such as traffic congestion, gridlocks and slower train speeds. This would result in higher traffic management costs and greater energy consumption, therefore significantly increasing carbon emissions from transportation.

The growth in motor vehicles is much faster than the popu-lation and faster than the GDP with 5 percent annual growth in motorcycles/scooter and 14 per-cent annual growth in cars. If current ICE uptake trends con-tinue, developing countries like India are faced with unsustain-able futures that are likely to

have negative triple bottom line impacts. Considering the stage of economic development in India, the country has a unique oppor-tunity to develop sustainably by managing emissions growth, enhancing energy security and by supporting the creation of a world class clean-technolo-gy industry. The time is ripe to explore a range of potentially promising solutions to redirect the economy towards a path which is sustainable and secure.

Energy SecurityBeginning with economic

liberalization in 1991, the con-sistent growth and globalization of the Indian economy thereafter, energy consumption in India has grown exponentially. Increasing urbanization, infrastructural development and concentration of economic activities in cer-tain load centers have resulted in higher mobility fuelled by a rapid increase in number of vehi-cles and distances travelled. The growing demand for energy is being addressed largely though oil imports, where India is cur-rently the 5 largest oil importer in the world. India simply does not possess adequate oil reserves to meet current and future demand. 72 percent of the oil consumed in India in 2007 was imported and this is projected to rise sharply to over 90 percent by 2030. High oil prices result in negative feedback loops that weaken stock prices and tighten fiscal conditions, thereby depressing economic growth in the long term.

The growth of the Indian economy is impacted by the price of oil imports, which tends to be extremely volatile and sensitive to economic and political shifts. As a result of the global recession, oil prices rose to a record peak of INR 7,830 per barrel (USD 145) in July 2008 and the Brent Crude oil price hit INR 5,400 per barrel (USD 100) on 31s t January, 2011 due to the political upheaval in Egypt. The growth in demand for oil from BRICS (Brazil, Russia, India, China & South Africa) nations and other emerg-ing economies coupled with a decrease in the discovery of new exploitable oil fields will push up oil prices up over the next few decades. This would further exacerbate the budget deficit,

dampening economic growth.The transport sector is a key

consumer of oil and oil prod-ucts. More than 50 percent of the oil consumption in India occurs on account of transport-relat-ed activities . The World Energy Outlook has estimated that most of the increase in oil con-sumption by 2030 in India will be driven by light-duty vehicles, mainly passenger cars – growing at an annual rate of approximate-ly 10 percent.

A significant question to ask at this juncture is whether the world can continue generating a sufficient supply of oil in the coming decades to accommodate the rise in demand from emerg-ing economies like India and China, without hampering envi-ronmental quality?

Until recently Governments and businesses have ignored the phenomenon of ‘peak oil’. Peak oil refers to the ‘point at which the maximum rate of global oil extraction is reached’. However, there has been grow-ing acceptance of peak oil in the public domain, where both Governments and businesses have been exploring alternative sources of energy supply, primar-ily renewable sources like solar,

wind, hydro, geo-thermal and nuclear energy. The oil industry is beginning to realize that we have crossed “the era of easy oil, (and) in the future oil will be dirtier, deeper and far more challenging (to extract)”. Technologies that have the potential to phase-out oil dependent forms of transpor-tation should be actively pursued to gauge their feasibility.

Climate ChangeClimate Change has emerged

as one of the most pressing issues for Governments and policymakers. This issue has drawn unprecedented global collaboration between scientists and policy makers through the United Nations Framework Convention on Climate Change (UNFCCC) treaty that has been signed by 194 nations (as of May, 2011). According to the Fourth Assessment Report of the United Nations Intergovernmental Panel on Climate Change, ‘warming of the planet is unequivocal’ and it is very likely that the rise in glob-al average temperatures is ‘due to the observed increase in anthro-pogenic greenhouse gas (GhG) concentrations’.

The World Meteorological Organization (WMO) reported that 2010 was the hottest year on records since 1880, tied with 2005, and the difference was less than a margin of uncertainty. This is evidence of a warming trend that continues to be strengthened. Consensus among the scientific community tells us that we must reduce greenhouse gases by 50 percent by 2050 to prevent the worst impacts of climate change.

Since the transportation sector is one of the largest and fastest growing sources of GhG emissions, decoupling growth in transport from increasing GhG emissions presents a clear chal-lenge for policy makers in India. EVs, in particular, can have a sig-nificant impact towards cutting down demand for oil imports and reducing carbon emissions aris-ing from road transportation, only if electricity is derived from hydro and renewable.

Road Transport Emissions

In IndiaIndia is the fourth largest GhG

emitter in the world. The trans-port sector is the fourth largest contributor of greenhouse gases in India with a share of 7.5 percent of the emissions in the country preceded by electricity genera-tion (37.8 percent), agriculture (17.6 percent) and industry (8.7 percent).

India has witnessed a 200-fold increase in vehicle numbers between 1951 and 2011. Road transport is the largest con-tributor of GhG emissions and was responsible for 87 percent (123.5 Mt CO e) of the total emis-sions arising from the transport sector in 2007. Currently passen-ger 2 vehicles that include two wheelers and four wheelers are responsible for about 30 percent to 35 percent of the total road transport emissions (Exhibit 1).

Over the next decade, the number of passenger vehicles on the road is expected to rise sharply, approximately 14 per-cent y-o-y. According to the IEA/SMP transportation model refer-ence case (using 2003-04 as the base year), emissions from pas-senger cars are likely to grow at 5 percent per annum in India. Even if engine efficiencies improve, the sheer growth in the number of vehicles on the road would lead to an absolute increase in GhG emissions from road transport.

Trends In Personal Road Transport

The Indian road network is the second largest in the world, covering 3.34 million kilometers where as much as 80 percent of passenger traffic is carried by the roads. The high growth rates of the Indian economy have result-ed in an unprecedented rise in disposable incomes and this has contributed towards a burgeon-ing automotive industry. With the Indian economy projected to grow at an average of 8-9 per-cent per annum over the middle term, the percentage of Indian consumers that are able to afford vehicles is likely to increase. Yet, India’s car per capita ratio (i.e. number of cars per 1000 persons) is the lowest among the world’s

Challenges & OpportunitiesElectric Vehicles in India:

Road Transport: CO2e emissions by Fuel type – 2007 [12]

Expected growth in CO2 emissions in India from different transport 2 modes [13]

Source: Transport Sector: Greenhouse Gas Emissions 2007, Central Road Research Institute, New Delhi, INCCA

Source: Transport Sector: Greenhouse Gas Emissions 2007, Central Road Research Institute, New Delhi, INCCA

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R E P O R T2811 FEBRUARY 2013

five largest automobile markets, pegged at 18 cars per 1000 people. The share of public transport has been declining slowly as a result of the growth in private vehicle ownership, fuelled by expanding urbanization and affluence.

Existing transport infrastruc-ture has however, proven to be grossly inadequate to meet these demands. The reason for the same is reflected in a study con-ducted by the Ministry of Urban Development, Government of India and Wilbur Smith Associates. The study esti-mated that total intra-city passenger transport activities (passenger kilometers) across 87 cities, including state capi-tals and cities with populations greater than 0.5 million (2008), was growing at a rate of about 5.5 percent per annum between 2007-11 as compared to a popu-lation growth rate of about 2.6 percent per annum in the same period of time. It is estimated that the increase in passenger activi-ties would continue to grow at an even higher rate of about 7.6 percent per annum between 2011 and 2031.

The dynamic interactions between personal vehicle pene-tration, rising incomes, increasing affordability of cars and expand-

ing export opportunities is expected to position the Indian automobile industry for growth. The Indian automobile industry has recovered from the recession registering record sales in 2009-10 and it contributed almost 4 percent of India’s Gross Domestic Product and recent estimates sug-gest that the output of the industry is expected to reach 4 million units by 2013 supported by infra struc-tural developments and favorable Government policies.

The automotive market remains cost-conscious in India. The primary decision point for car buyers in India continues to be the upfront purchase price of vehicles, whereas fuel efficiency has historically been a second-ary concern, though the implied effect is evident due to a prefer-ence for small and cheap cars. Having stated that, the luxury car market in India has shown compounded annual growth rate of 30-40 percent over the last 4 years. This statistic chal-lenges the notion that the Indian consumer will remain predom-inantly price conscious in the long term. However, as fuel costs rise, we can expect increas-ing consumer importance and emphasis on fuel efficiency in purchase decisions.

Modal ShiftsThe rapid growth of demand

for passenger mobility in Indian cities has not been matched by an equal increase in supply of trans-port infrastructure and services. This has resulted in the increased use of private vehicles across most urban centres accompa-nied by declining share of public transport systems. In addition, with expanding cities, the share of pedestrians, cyclists and non-motorized transport users has also fallen.

In India, the transportation sector is responsible for near-ly 20 percent of the total energy consumption and is the second largest consumer of energy in the country after industry. A sig-nificant amount of road based passenger transport activities in the country are concentrated in cities. The on-road passen-ger transport activities in urban India are responsible for near-ly 40 percent of the total energy consumption in road passenger transport sector.

The current trends in urban transport, which are primarily a result of the inability of Indian cities to meet the increasing transport demand in a planned manner, have resulted in local problems related to conges-

tion, deterioration of air quality, increase in number of road fatal-ities and accidents and loss in economic productivity. The con-gestion levels in many Indian cities have reached unmanage-able proportions, the average vehicle speeds dropping down to as low as 10 km/hour in many cities. This leads to higher fuel consumption due to low speeds and vehicle idling.

Considering an oil con-strained future and the high

emission levels associated with the transport sector, it is there-fore important to reduce the use of petroleum dependent private vehicles in the country.

In the 1950’s and early 1960’s, private vehicles were less in num-ber and road transport served as a mode complimentary to public transportation. By the late 1990’s the share of road transport in cities was as much as 80 percent in passenger traffic. The modal split has shifted in favor of road

transport, away from energy efficient modes like railways and buses that have a lower carbon footprint. For example, in Delhi the modal share of public transport has dropped from 60 percent in 2000 to 43 percent in 2008 [22]. This is a likely trend not only in most megacities but also Tier II and Tier III cities that are characterized by poor transport services and infrastructure. Only 20 cities in the country have an organized public bus service [23], which in most cases are inad-equate leading to an increased dependence on personal modes of transport.

The growth in personal vehicle ownership will continue to accelerate with increasing incomes, greater availability, as well as access to credit and decreasing vehicle cost, case in point being the Tata Nano which has enjoyed an increase in sales, 5.8 percent, over 2011-2012.

There is a growing reliance on personal modes of transport (cars and two-wheelers) and intermediate modes of transport (taxis and auto-rickshaws) driven by the doubling of per capita incomes from 2001 to 2009. Over the same period the number of public buses has remained relatively constant considering a rise in popu-lation of approximately 125 million. This data suggests a growing trend towards a reliance on personal modes of transport due to the bur-geoning middle class, a lack of urban planning and minimal investments by the Government towards improving public transportation.

Bus services in particular have deteriorat-ed because public transport service providers are unable to expand services, both in terms of number of buses and number of routes plying. The share of buses is negligible when compared to private/personalized vehicles in most Indian cities. Overcrowding of the public transporta-tion system is particularly evident in large cities, where buses and trains carry more than twice their optimal capacity. As a result we have seen a massive shift towards personalized transport, particularly two-wheelers, and the growing use of intermediate modes such as taxis and three-wheeler auto-rickshaws.

At this juncture, it should be noted that the Government has drawn plans to improve local rail networks in urban cities by improving access and expanding existing capacity. Other urban transport planning initiatives include bus-rapid-transport-systems (BRTS), pedes-trian zones, skywalks and cycling paths. Delhi, Mumbai, Kolkata, Chennai and Hyderabad are in different phases of planning or implement-ing light-duty metro rail services to complement existing modes of public transport. It is envis-aged that these plans will have some impact on increasing the share of public transport.

Growth in passenger vehicles in India (mn) from 1981 to 2009

Source: MoRTH Yearbooks

This research report has been brought together by Yes Bank and Teri. Auto Monitor will publish the concluding part in the February 18, 2013 issue.

2911 FEBRUARY 2013

A D V E R T I S E R S ’ L I S T

ACE Micromatic Group 1, BC

T: +91-80-40200555

E: [email protected]

W: www.acemicromatic.net

Actia India Pvt Ltd 18

T: +91-120-4222229

E: [email protected]

Alfa Flexitubes Pvt Ltd 17

T: +91-9811209178

E: [email protected]

W: www.alfa-flexitubes.com

Automotive Dealership Excellance Awards 16

T: +91-22-30034650

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W: www.adea.in

Baker Gauges India Ltd 23

T: +91-20-66093800

E: [email protected]

W: www.bakergauges.com

Carl Zeiss India (Bangalore) Pvt Lt 7

T: +91-80-43438102

E: [email protected]

W: www.zeiss.co.in

Dhoot Transmission Pvt Ltd 13

E: [email protected]

W: www.dhoottransmission.com

Ecocat India Pvt Ltd 25

T: +91-129-4266500

E: [email protected]

W: www.ecocat.com

Elofic Industries 21

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E: [email protected]

W: www.elofic.com

Ferromatik Milacron India Pvt Ltd 9

T: +91-79-25890081

E: [email protected]

W: www.milacronindia.com

Fox Solutions 5

T: +91-253-6618100

E: [email protected]

W: www.foxindia.net

G W Precision Tools India Pvt Ltd 12

T: +91-80-40431252

E: [email protected]

W: www.gwindia.in

Godson Bending Systems Pvt. Ltd 22

T: +91-281-2361467

E: [email protected]

W: www.godson-india.com

Greaves Cotton Limited 27

T: +91-22-24397575

E: [email protected]

W: www.greavescotton.com

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T: +91-11-24647810

W: www.siamindia.com

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T: +91-2827-287081

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W: www.jyoti.co.in

Jytra Engineering Services 29

T: +91-92461 63747

E: [email protected]

W: www.progecadindia.com

Kalpa Industries 14

T: +91-8791333300

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W: www.larexcables.com

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W: www.larsentoubro.com

Makino Auto Industries Pvt Ltd 11

T: +91-120-6519685

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W: www.makino.in

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T: +91-80-26860600

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W: www.meibanengg.com

National Engineering Industries Ltd 15

W: www.nbcbearings.com

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T: +91-22-66923131

E: [email protected]

W: www.oppindia.org

Safexpress Private Limited 6

T: +1800-113-113

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W: www.safexpress.com

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T: +91-20-27104725

E: [email protected]

W: www.sandvik.coromant.com/in

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E: [email protected]

W: vww.oilandlubncant.com

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T: +91 -124-4081711

E: [email protected]

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T: +91-80-43438607

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T H E O T H E R S I D E3011 FEBRUARY 2013

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Getting Personalwith Anders Grundströmer, Scania CV India’s new MD.

In Real Life If not in the auto industry, where would you be?

I come from the passenger car industry, I worked for Saab. I started my career with Saab. Prior to that, I worked for a software company and was Managing Director between 1992 and 1995. There I developed software systems for Volkswagen and Scania in Sweden.

What car do you drive and what do you dream of driving?In Stockholm, my family and I drive the Volkswagen Touareg and an Audi A3. In India, I drive the Toyota Innova.

What’s your most recent indulgence?It’s mostly work. But in terms of indulgence, I am most interested in spending time with my family. I already have a vacation house in Archipelago in Stockholm. I also go skiing. If you look at me, I do need the exercise and I cannot do enough because I work too much and travel around plenty. I am basically a sports person and I have been playing soccer. And then business took over.

What are you currently reading?I am reading What is lean? It’s mainly to understand flows and how to rectify waste in flows and how to take away waste in flows. It’s a management book by a Swedish author.

When you are not talking auto, what are your leisure activities?Sports, going to my vacation home in the Archipelago, boating if the weather allows. It’s now -21 degrees in Stockholm and so it’s not possible to go on the sea now.

Where was your last holiday?It was with the family in India, in Goa.

Anders Grundstromer is an MBA who started his career at SAAB Car Division and worked there for 15 years. In 1992, he joined Scania. He took the challenge to develop Scania distributorship concept in Europe as Managing Director Scania Czech Republic and Slovakia in 2000, and later as Managing Director of Scania in Netherlands and the BeNeLux Business Unit between 2004 and 2008.

What is the best thing to have happened to you in the last one year?I have been appointed as head of India operations. But personally, I have my health, and enjoy life. I find my job interesting. And I am glad that everyone at home is safe and sound.

Any word of advice for budding car aficionados?One advice is to work more and have fun.

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