Indian Automotive Sector
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Ford likely to seal JV deal with Mahindra in India
Ford Motor Co and Mahindra & Mahindra are likely to sign a deal next week to form a joint venture in India, two sources told Reuters, in a move that will see the US carmaker end most of its independent operations in the country.
The two companies have for months been structuring the deal to create a new entity in which Ford will hold a 49 per cent stake, while Indian rival Mahindra will own 51 per cent, Reuters reported in April.
Under the deal, Ford will transfer most of its automotive assets and employees in India to the new company, but the carmaker will retain an engine plant in Sanand in the western state of Gujarat, according to the two sources, who asked not to be named as the talks are private.
A Ford spokeswoman did not comment directly on the deal, but said the company was engaged with Mahindra to develop avenues of strategic cooperation that help us achieve commercial, manufacturing and business efficiencies.
Mahindra did not respond to a request for comment.
By shifting to a joint venture, Ford is changing its decades-old India strategy focused on running an independent operation. Under pressure from shareholders to make profits, the U.S. carmaker has been globally restructuring its businesses with an aim to save $11 billion over the next few years.
Ford’s decision is a setback for the country at a time when Prime Minister Narendra Modi’s administration is trying to boost local manufacturing by cutting corporate tax rates and offering cheap loans to push car sales. Sale of cars by manufacturers to dealers have fallen at their steepest pace in two decades.
Ford’s two manufacturing plants - one in Chennai in southern India and the other in Sanand which was inaugurated in 2015 - will be moved to the new joint venture, but Ford will keep the engine plant at Sanand. Together, they have a maximum annual manufacturing capacity of 440,000 vehicles.
Ford-brand cars will continue to be built and sold in India and exported by the new company, one of the sources said.
Over two decades, Dearborn, Michigan-based Ford invested more than $2 billion in India but it has consistently struggled - it currently has a share of about 3 per cent in a market where Maruti Suzuki is the top player with a 50 per cent share.
The Mahindra deal is an opportunity for Ford to recover some of the money it has invested in India, said one of the sources.
In India, currently, Ford manufactures and sells its cars via its wholly-owned subsidiary. In 2017 it formed a strategic alliance with Mahindra under which, among other things, they will develop new cars together, including SUVs and electric variants.
Ford likely to seal JV deal with Mahindra in India: Report
Ford Motor Co and Mahindra & Mahindra are likely to sign a deal next week to form a joint venture in India, two sources told Reuters, in a move that will see the US carmaker end most of its independent operations in the country.
The two companies have for months been structuring the deal to create a new entity in which Ford will hold a 49 per cent stake, while Indian rival Mahindra will own 51 per cent, Reuters reported in April.
Under the deal, Ford will transfer most of its automotive assets and employees in India to the new company, but the carmaker will retain an engine plant in Sanand in the western state of Gujarat, according to the two sources, who asked not to be named as the talks are private.
A Ford spokeswoman did not comment directly on the deal, but said the company was engaged with Mahindra to develop avenues of strategic cooperation that help us achieve commercial, manufacturing and business efficiencies.
Mahindra did not respond to a request for comment.
By shifting to a joint venture, Ford is changing its decades-old India strategy focused on running an independent operation. Under pressure from shareholders to make profits, the U.S. carmaker has been globally restructuring its businesses with an aim to save $11 billion over the next few years.
Ford’s decision is a setback for the country at a time when Prime Minister Narendra Modi’s administration is trying to boost local manufacturing by cutting corporate tax rates and offering cheap loans to push car sales. Sale of cars by manufacturers to dealers have fallen at their steepest pace in two decades.
Ford’s two manufacturing plants - one in Chennai in southern India and the other in Sanand which was inaugurated in 2015 - will be moved to the new joint venture, but Ford will keep the engine plant at Sanand. Together, they have a maximum annual manufacturing capacity of 440,000 vehicles.
Ford-brand cars will continue to be built and sold in India and exported by the new company, one of the sources said.
Over two decades, Dearborn, Michigan-based Ford invested more than $2 billion in India but it has consistently struggled - it currently has a share of about 3 per cent in a market where Maruti Suzuki is the top player with a 50 per cent share.
The Mahindra deal is an opportunity for Ford to recover some of the money it has invested in India, said one of the sources.
In India, currently, Ford manufactures and sells its cars via its wholly-owned subsidiary. In 2017 it formed a strategic alliance with Mahindra under which, among other things, they will develop new cars together, including SUVs and electric variants.
Ford likely to seal JV deal with Mahindra in India: Report
Kia in talks over moving $1.1 billion plant out of Andhra Pradesh
South Korea’s Kia Motors is discussing with the Indian state of Tamil Nadu the possibility of moving a $1.1 billion plant out of neighbouring Andhra Pradesh only months after it fully opened, due to policy changes last year, sources close to the talks told Reuters.
The logo of Kia Motors is seen on a wheel of its Carnival car at the India Auto Expo 2020 in Greater Noida, India, February 5, 2020. REUTERS/Anushree Fadnavis
Kia inaugurated the Andhra plant, its first in the world’s fifth-largest car market, in December after two years of construction. It has an annual capacity of some 300,000 units and created 12,000 direct and indirect jobs.
However, Kia is now in talks with the nearby state of Tamil Nadu, home to many major autoparts suppliers, about potentially relocating the plant, a senior state government official and a second source familiar with the discussions said.
“(Kia) are facing problems (in Andhra Pradesh), they have been in preliminary negotiations with us ... There is a secretary-level meeting next week, we might have more clarity then,” the official told Reuters on Wednesday.
Kia said in a statement it has a long-term commitment to the Indian market and it aims to utilize the full capacity of its Andhra plant “before considering further expansion”.
“We do not have any plans to shift the manufacturing facility from the current location,” it said, without commenting on any policy concerns or talks with Tamil Nadu, which are at an early stage.
The Andhra Pradesh government said on Thursday in response to the Reuters story that it was continuing its “strong partnership” with Kia.
It said in a statement that Andhra Pradesh enjoys a cordial relationship with Tamil Nadu, adding that the government had received assurances from a senior official in the neighbouring state that it was not in talks with Kia.
The Tamil Nadu chief minister’s office did not respond to a request for comment.
Kia is being represented in the talks by executives at its sister company Hyundai Motor Co, which is India’s second-largest automaker and has all its car production facilities in Tamil Nadu, the state official added.
Hyundai did not respond to a request for comment.
Kia has been troubled by a new Andhra state law on local hiring and by the new state government wanting to review the incentives given out by the previous administration to encourage the company to set up the plant, the second source and a third person with knowledge of the discussions said.
Moving the plant to Tamil Nadu could also help Kia in reducing logistics costs as it would bring it closer to some of its parts suppliers, the second source added.
It was not immediately clear how swiftly Kia could move production lines from a plant in one state to another, or what sort of disruption that would entail.
The sources declined to be named as the talks are private.
Visitors walk past the logo of Kia Motors at its pavilion at the India Auto Expo 2020 in Greater Noida, India, February 5, 2020. REUTERS/Anushree Fadnavis
STATE POLICY CHANGES
Kia started building the new plant in 2017 and formally inaugurated it in December, when it said the 23 million square foot facility would manufacture vehicles like its Seltos SUV for both the Indian and overseas markets.
It said the facility would “become a vital part” of its global production network in the long term.
But considering relocation within months of the inauguration highlights the challenges foreign investors face while dealing with policy changes at federal or state level in India.
Kia was caught off guard in July after the new state government in Andhra mandated companies to reserve 75% of all jobs for locals from the state, making it much harder for the company to find suitable employees, two of the sources said.
Kia has also been unnerved by the new state government’s bid to review certain financial incentives - such as breaks on electricity tax and deferred land payments - given to the company by the previous administration, one of the sources said.
After taking control of Andhra in 2019, a new government has decided to review agreements signed with several companies, including from the renewable energy sector, sparking concerns among foreign investors around sanctity of contracts in India.
The Japanese ambassador to India, given Japanese companies interest in the region, told Andhra Pradesh not to renegotiate renewables contracts as it would hit business sentiment in the region, an Aug. 7 letter seen by Reuters showed.
Prime Minister Narendra Modi’s federal government is separately working on a foreign investor protection law to safeguard against policy changes, Reuters has reported.
“This is a problem for all companies including Kia ... the cost of moving the plant would be too high and would set the company back by about two years and they have made huge investments,” said one of the sources aware of Kia’s concerns.
Exclusive: Kia in talks over moving $1.1 billion plant out of Andhra Pradesh - sources
South Korea’s Kia Motors is discussing with the Indian state of Tamil Nadu the possibility of moving a $1.1 billion plant out of neighbouring Andhra Pradesh only months after it fully opened, due to policy changes last year, sources close to the talks told Reuters.
The logo of Kia Motors is seen on a wheel of its Carnival car at the India Auto Expo 2020 in Greater Noida, India, February 5, 2020. REUTERS/Anushree Fadnavis
Kia inaugurated the Andhra plant, its first in the world’s fifth-largest car market, in December after two years of construction. It has an annual capacity of some 300,000 units and created 12,000 direct and indirect jobs.
However, Kia is now in talks with the nearby state of Tamil Nadu, home to many major autoparts suppliers, about potentially relocating the plant, a senior state government official and a second source familiar with the discussions said.
“(Kia) are facing problems (in Andhra Pradesh), they have been in preliminary negotiations with us ... There is a secretary-level meeting next week, we might have more clarity then,” the official told Reuters on Wednesday.
Kia said in a statement it has a long-term commitment to the Indian market and it aims to utilize the full capacity of its Andhra plant “before considering further expansion”.
“We do not have any plans to shift the manufacturing facility from the current location,” it said, without commenting on any policy concerns or talks with Tamil Nadu, which are at an early stage.
The Andhra Pradesh government said on Thursday in response to the Reuters story that it was continuing its “strong partnership” with Kia.
It said in a statement that Andhra Pradesh enjoys a cordial relationship with Tamil Nadu, adding that the government had received assurances from a senior official in the neighbouring state that it was not in talks with Kia.
The Tamil Nadu chief minister’s office did not respond to a request for comment.
Kia is being represented in the talks by executives at its sister company Hyundai Motor Co, which is India’s second-largest automaker and has all its car production facilities in Tamil Nadu, the state official added.
Hyundai did not respond to a request for comment.
Kia has been troubled by a new Andhra state law on local hiring and by the new state government wanting to review the incentives given out by the previous administration to encourage the company to set up the plant, the second source and a third person with knowledge of the discussions said.
Moving the plant to Tamil Nadu could also help Kia in reducing logistics costs as it would bring it closer to some of its parts suppliers, the second source added.
It was not immediately clear how swiftly Kia could move production lines from a plant in one state to another, or what sort of disruption that would entail.
The sources declined to be named as the talks are private.
Visitors walk past the logo of Kia Motors at its pavilion at the India Auto Expo 2020 in Greater Noida, India, February 5, 2020. REUTERS/Anushree Fadnavis
STATE POLICY CHANGES
Kia started building the new plant in 2017 and formally inaugurated it in December, when it said the 23 million square foot facility would manufacture vehicles like its Seltos SUV for both the Indian and overseas markets.
It said the facility would “become a vital part” of its global production network in the long term.
But considering relocation within months of the inauguration highlights the challenges foreign investors face while dealing with policy changes at federal or state level in India.
Kia was caught off guard in July after the new state government in Andhra mandated companies to reserve 75% of all jobs for locals from the state, making it much harder for the company to find suitable employees, two of the sources said.
Kia has also been unnerved by the new state government’s bid to review certain financial incentives - such as breaks on electricity tax and deferred land payments - given to the company by the previous administration, one of the sources said.
After taking control of Andhra in 2019, a new government has decided to review agreements signed with several companies, including from the renewable energy sector, sparking concerns among foreign investors around sanctity of contracts in India.
The Japanese ambassador to India, given Japanese companies interest in the region, told Andhra Pradesh not to renegotiate renewables contracts as it would hit business sentiment in the region, an Aug. 7 letter seen by Reuters showed.
Prime Minister Narendra Modi’s federal government is separately working on a foreign investor protection law to safeguard against policy changes, Reuters has reported.
“This is a problem for all companies including Kia ... the cost of moving the plant would be too high and would set the company back by about two years and they have made huge investments,” said one of the sources aware of Kia’s concerns.
Exclusive: Kia in talks over moving $1.1 billion plant out of Andhra Pradesh - sources
Mahindra unveils $11,000 electric SUV as India goes green
Major Indian automakers touted their commitment to electric vehicles as Auto Expo 2020 opened to the public on Feb. 7, though each embraced a different strategy toward preparing for stronger emissions standards that take effect nationwide in April.
Mahindra & Mahindra focused on affordability in India, unveiling an electric sport utility vehicle priced at just 825,000 rupees ($11,600) for buyers who use government subsidies.
"I'm delighted to announce, ladies and gentlemen, that this will be India's most affordable passenger electric vehicle," Pawan Goenka, Mahindra managing director, said of the new eKUV100 crossover. Consumers will have "no excuse not to own [an] electric vehicle anymore."
The smiling executive drew applause from industry officials at the show near New Delhi. This year's expo in India, one of the world's largest automobile markets, comes as the government fights air pollution with the upcoming emissions standards, which will be as strong as those in Europe.
Mahindra achieved the low price for the new crossover through strict use of locally supplied parts, Goenka said, noting that in-house production of the drivetrain and other key components slashed costs. Electric vehicles in China typically sell for 100,000 to 200,000 yuan ($14,300 to $28,600), even with government subsidies.
The eKUV100, which hits the market in fiscal 2020, will run about 150 km on a charge. The battery can reach 80% full on a roughly hourlong recharging. The vehicle is expected to draw demand among urbanites and ride-hailing businesses.
Mahindra made an early bet on electric vehicles as a key growth field, acquiring an EV startup in 2010. The company has devoted 17 billion rupees, nearly $240 million, to related research and infrastructure.
Maruti Suzuki showed off an electric concept car. (Photo by Akira Hayakawa)
Tata Motors, stung after emphasizing affordability when it introduced the ultracheap Nano minicar more than a decade ago, has chosen to offer its electric Nexon SUV at a starting price of about 1.4 million rupees. Tata exhibited the crossover at the Auto Show, having debuted the vehicle at the end of January.
Tata launched the Nano with great fanfare in 2009, billing it as the world's cheapest car at 100,000 rupees. But India's growing middle class shunned the bare-bones auto. Tata has not officially ended Nano production, but it did not build or sell any of the vehicles in the April-December period.
The Indian automaker now bets on the green segment, and it regards the creation of "responsible and sustainable solutions" as a "national priority," said Natarajan Chandrasekaran, chairman of Tata Motors and the Tata Sons group holding company.
The company competes with Mahindra in EV lineups, having released electric versions of two models including the Tigor sedan. Tata Motors will roll out electric editions of at least four more models within two years, the chairman said.
Other players are hopping on the electric vehicle bandwagon in India.
"We're now at a time when we have to tackle environmental issues squarely," said Kenichi Ayukawa, president of Maruti Suzuki India, the automaker that controls about half of the country's passenger car market.
The company showed off an electric vehicle concept at the Auto Show. Maruti Suzuki India looks to expand its offerings to cover EVs, hybrids and vehicles powered by natural gas, selling a combined 1 million environmentally friendly cars over the next two to three years.
But as automakers race to develop cleaner cars, India's auto market remains soft. New-car sales dipped 13% to about 3.81 million units in 2019, dropping India to fifth place in global rankings behind Germany. Lenders are hesitant to extend money, and consumers are keeping their wallets shut.
"Improvement is expected this year, but a swift recovery is unlikely," Ayukawa said.
Infrastructure is essential to encourage consumer adoption of electric vehicles. Some cities such as Mumbai host charging stations, but this is "nowhere near the level that can accommodate a large number of EV motorists," Ayukawa said.
Mahindra unveils $11,000 electric SUV as India goes green
Major Indian automakers touted their commitment to electric vehicles as Auto Expo 2020 opened to the public on Feb. 7, though each embraced a different strategy toward preparing for stronger emissions standards that take effect nationwide in April.
Mahindra & Mahindra focused on affordability in India, unveiling an electric sport utility vehicle priced at just 825,000 rupees ($11,600) for buyers who use government subsidies.
"I'm delighted to announce, ladies and gentlemen, that this will be India's most affordable passenger electric vehicle," Pawan Goenka, Mahindra managing director, said of the new eKUV100 crossover. Consumers will have "no excuse not to own [an] electric vehicle anymore."
The smiling executive drew applause from industry officials at the show near New Delhi. This year's expo in India, one of the world's largest automobile markets, comes as the government fights air pollution with the upcoming emissions standards, which will be as strong as those in Europe.
Mahindra achieved the low price for the new crossover through strict use of locally supplied parts, Goenka said, noting that in-house production of the drivetrain and other key components slashed costs. Electric vehicles in China typically sell for 100,000 to 200,000 yuan ($14,300 to $28,600), even with government subsidies.
The eKUV100, which hits the market in fiscal 2020, will run about 150 km on a charge. The battery can reach 80% full on a roughly hourlong recharging. The vehicle is expected to draw demand among urbanites and ride-hailing businesses.
Mahindra made an early bet on electric vehicles as a key growth field, acquiring an EV startup in 2010. The company has devoted 17 billion rupees, nearly $240 million, to related research and infrastructure.
Tata Motors, stung after emphasizing affordability when it introduced the ultracheap Nano minicar more than a decade ago, has chosen to offer its electric Nexon SUV at a starting price of about 1.4 million rupees. Tata exhibited the crossover at the Auto Show, having debuted the vehicle at the end of January.
Tata launched the Nano with great fanfare in 2009, billing it as the world's cheapest car at 100,000 rupees. But India's growing middle class shunned the bare-bones auto. Tata has not officially ended Nano production, but it did not build or sell any of the vehicles in the April-December period.
The Indian automaker now bets on the green segment, and it regards the creation of "responsible and sustainable solutions" as a "national priority," said Natarajan Chandrasekaran, chairman of Tata Motors and the Tata Sons group holding company.
The company competes with Mahindra in EV lineups, having released electric versions of two models including the Tigor sedan. Tata Motors will roll out electric editions of at least four more models within two years, the chairman said.
Other players are hopping on the electric vehicle bandwagon in India.
"We're now at a time when we have to tackle environmental issues squarely," said Kenichi Ayukawa, president of Maruti Suzuki India, the automaker that controls about half of the country's passenger car market.
The company showed off an electric vehicle concept at the Auto Show. Maruti Suzuki India looks to expand its offerings to cover EVs, hybrids and vehicles powered by natural gas, selling a combined 1 million environmentally friendly cars over the next two to three years.
But as automakers race to develop cleaner cars, India's auto market remains soft. New-car sales dipped 13% to about 3.81 million units in 2019, dropping India to fifth place in global rankings behind Germany. Lenders are hesitant to extend money, and consumers are keeping their wallets shut.
"Improvement is expected this year, but a swift recovery is unlikely," Ayukawa said.
Infrastructure is essential to encourage consumer adoption of electric vehicles. Some cities such as Mumbai host charging stations, but this is "nowhere near the level that can accommodate a large number of EV motorists," Ayukawa said.
Mahindra unveils $11,000 electric SUV as India goes green
TVS Motor Company Acquires Norton Motorcycles - CarandBike
One of India's leading two-wheeler manufacturers, TVS Motor Company has announced the acquisition of British brand Norton Motorcycles. In a statement, TVS has said that the company has acquired Norton Motorcycles in an all-cash deal of GBP 16 million (around ₹ 153 crore in current exchange rates), by acquiring certain assets of Norton Motorcycles (UK) Limited through one of TVS Motor's overseas subsidiaries. The TVS statement says that this will be one of the most interesting acquisitions of a storied motorcycle brand in recent times, and will reflect TVS Motor Company's and India's rapidly rising prominence in the international two-wheeler market.
@suryakiran @Ashwin @VCheng @nair @_Anonymous_ @rockstarIN @randomradio
interesting times ahead.
Royal Enfield (- Eicher), BSA(- Mahindra) and Norton (-Tvs) Three classic British brands at Indian Ownership.
One of India's leading two-wheeler manufacturers, TVS Motor Company has announced the acquisition of British brand Norton Motorcycles. In a statement, TVS has said that the company has acquired Norton Motorcycles in an all-cash deal of GBP 16 million (around ₹ 153 crore in current exchange rates), by acquiring certain assets of Norton Motorcycles (UK) Limited through one of TVS Motor's overseas subsidiaries. The TVS statement says that this will be one of the most interesting acquisitions of a storied motorcycle brand in recent times, and will reflect TVS Motor Company's and India's rapidly rising prominence in the international two-wheeler market.
@suryakiran @Ashwin @VCheng @nair @_Anonymous_ @rockstarIN @randomradio
interesting times ahead.
Royal Enfield (- Eicher), BSA(- Mahindra) and Norton (-Tvs) Three classic British brands at Indian Ownership.
