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Monday, 29 Apr 2013
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Falling markets undither auto majors expansion plans

 

Annual sales of luxury cars stand at just over 20,000 vehicles, or about 1 per cent of the total car market in India and in FY13 the luxury car sales actually came down by 14 per cent. But this has not hampered luxury car makers expansion plans. To expand their market shares the game plan is to enter the small car segment with production facilities in India.

 

While, Mercedes-Benz is doubling the assembly capacity at its Pune plant, Audi India proposes to increase its domestic production capacity so that it can meet around 90 per cent of the demand for Audi vehicles domestically. Another luxury car manufacturer, Jaguar Land Rover unit of Tata Motors is mulling full production, using local parts in India.

 

The latest company to join the bandwagon is the Mumbai based DC Design. The company will set up a manufacturing facility in Sanand, Gujarat with an investment of Rs 60 crore by 2014. With this investment proposal DC Design has joined the line with other luxury car makers like Mercedes-Benz, Audi etc, who are keen on expansion in India.

 

The above trait is seen in non-luxury car segment also. Despite a 6.7 per cent fall in annual car sales in 2012-13, market leaders like Maruti, Honda and Ford have not curtailed their expansion plans.

 

Maruti Suzuki has already declared an investment of Rs 1,925 crore for setting up a passenger cars manufacturing unit, Plant C at Manesar, Haryana. Work on this plant is expected to start after the completion of Plant B, which is scheduled to be completed by Dec 2013.

 

Ford India has started work on its passenger cars unit in Sanand, Gujarat. The Rs 5,000 crore plant is scheduled to be completed by 2015.

 

Honda Cars India (HCI) has announced an investment of Rs 2,500 crore to double the capacity, to set up a diesel engine component production line and a forging unit at Tapukara in Rajasthan. The diesel engine unit proposed at Tapukara will be the largest plant of Honda globally and would be used to supply parts to other Honda facilities in Europe.

 

Renault Nissan India is considering investing more than Rs 1,700 crore for setting up a second plant in Chennai. Renault Nissan invested Rs 4,500 crore for setting up its first plant at Chennai which started commercial production in May 2010.

 

Top-5 Passenger car projects in India-Cost wise
Promoter
Project Name
Cost(Rs.Crore)
Maruti Suzuki India Passenger Cars (Mahesana) Phase I
6,000
Ford India Passenger Cars (Sanand)
5,000
PSA Peugeot Citroen Passenger Cars (Sanand)
4,000
Maruti Suzuki India Passenger Cars (Manesar) [Plant C]
1,925
Maruti Suzuki India Passenger Cars (Manesar) Expansion [Plant B]
1,676

 

According to Society of Indian Automobile Manufactures (SIAM), production of passenger Vehicles in India has shown tremendous growth as it has more then doubled from 2004 to 2012.

 

Passenger Car Chart_ProjectsToday

 

As per the KPMG Global Automotive Executive survey, an average of nearly 6 out of 10 respondents said they will increase their investments in the BRIC countries, where China was the first choice for investment, followed by India, Russia and Brazil, and then South Africa, in fifth place.

 

India is emerging as one of the world's fastest growing passenger car markets with the annual car sales poised to rebound from the first annual decline in a decade and rise as much as 5 per cent over the next year.

 

Manufacturing Sector Developments

 

 

 

Infrastructure sector Developments

 

 

Power Sector Developments

 

 
  • The Tamil Nadu Government is planning to set up the Sillahalla 2,000 MW underground power station in Nilgiris district. The project estimated to cost Rs 7,000 crore is expected to be completed in two phases by 2023.
  • Aravali Power Company started commercial operation of 500 MW Unit III of its Indira Gandhi Superthermal Power Project (IGSTPP) at Jhajjar in Haryana.
  • The Cabinet Committee on Investments (CCI) cleared 13 power projects worth Rs 33,000 crore. These 13 projects include 10 transmission, one hydro and two thermal projects
  • Neyveli Lignite Corporation (NLC) has invited bids to provide consultancy services for 3x660 MW Ghatampur thermal power project in Uttar Pradesh.
  • Tata Power will invest Rs 230 crore to set up a 28.8 MW solar power plant in Satara, Maharashtra.

 

Quote of the week:

 

Hironori Kanayama_ProjectsToday

Hironori Kanayama
President & CEO, Honda Cars India ltd

"The potential is very high here. Our investment is based on such long-term projections."

 

 
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