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Published by FADA Journal, 2016-12-28 05:57:53

FADA Journal - December 2016

FJ_Dec_2016

Office Bearers contents

President PRESIDENT’s MESSAGE 7 Demonetisation Throws A Spanner in the Works
INDUSTRY TRACK
JOHN K PAUL 8 Auto Market Hits Demonetisation Bump
Popular Vehicles & Services Pvt Ltd
Kuttukaran Centre, Mamangalam, Kochi - 682 025
Tel: +91-484-234 1134 / 7872 / 5013
E-mail: [email protected];

[email protected]

Vice President OPINION 10 Demonetisation Puts Brakes on Indian Automobile Sector : ICRA
INSIGHT
ASHISH KALE SURVEYS & STUDIES 13 Truck 2020: Transcending Turbulence
Provincial Automobile Co. Ltd - IBM Institute of Business Value
Kingsway, Near Railway Station, Nagpur - 440 001
Tel: +91-712-391 1129 / 1150 21 J D Power Studies
E-mail: [email protected]; • BMW Ranks Highest in Both Customer Satisfaction and Sales
Satisfaction Among Luxury Brands
[email protected] • India Vehicle Quality Improves in Manufacturing but Design-
Related Quality Lags
Secretary General & Editor, FADA FUEL WATCH • Safety, Connectivity Features Increase New-Vehicle Appeal
Journal NEW ON WHEELS
26 9 Oil Price Forecasts During Trump Presidency
GULSHAN AHUJA NEWS BASKET - Steve Austin for OIL-PRICE.NET
Federation of Automobile Dealers Associations
805, Surya Kiran, 19, K G Marg, New Delhi CONSUMER CASE STUDIES 30 • Bajaj Auto Introduces Dominar 400
Telefax: +91-11-6630 4852, 2332 0095 UPGRADES & VARIANTS • New MINI Clubman Launched in India
E-mail: [email protected] • Web: fada.in
COMPETITION LAW 34 • Maruti Suzuki Receives CII-ITC Sustainability Award for CSR
ADVERTISERS’ INDEX 60 DEMONETISATION EFFECT • Hyundai Wins “Indian Manufacturer of the Year – 2016”
• Popular Vehicles & Services Forays into the Virtual World
Back Cover 2 NADA MUSINGS • President of India Visits Ashok Leyland Driver Training Institute
SALES REPORTS
V E Commercial Vehicles 59 36 NCDRC : Mahindra & Mahindra Ltd - Petitioner
Versus Ramlal Patidar - Respondent
Front Inside Cover 3
4 39 • Mercedes Benz Launches AMG C 43 4MATIC Sedan in India
Tata Capital Financial Services 6 • Renault India Rolls Out New Lodgy Stepway Range
17 • BMW Introduces X3 and X5 Petrol Variants
Back Inside Cover 25 • Volvo Unveils New V40 Hatchback and V40 Cross Country
29
Tata Motors 32 43 Competition Law Updates - G R Bhatia
33
Inside Pages 38 44 Switching to Cashless Payments
• Mahindra & Mahindra Financial Services 50
• Bagga Link 50 48 Major developments affecting Automobile Industry in US
• Kuttukaran Institute 51 52 Vehicle & Tractor Sales & Exports and Y-o-Y Growth - Nov’16
• Force Motors 54
• Marikar Group 55
• Sansera India 58
• Carazoo Online Solutions
• Prime Honda
• Automotive Manufacturers
• Olympia Honda
• Maurya Motors
• BikeDekho.com
• Lease Plan
• EY
• Lexus Motors

For Advertisement query, please contact Printed and Published by G K Ahuja on behalf of Federation of Automobile Dealers Associations,
Ankush Sethi at [email protected] 805, Surya Kiran, 19, Kasturba Gandhi Marg, New Delhi-110001.
Printed at Sita Fine Arts P Ltd, A-22, Naraina Industrial Area, Phase-II, New Delhi-110028.
Editor: G K Ahuja



President’s Message Demonetisation Throws A
Spanner in the Works

The Auto market having shown signs of resurgence & buoyancy
in the current year is back in slow lane. Demonetisation has dented
the vehicle sales more than what we had initially anticipated or
bargained for. It now appears that the cash crunch is going to
persist for some time to come.

While the long queues at the banks and ATMs leads us to conclude
that the demonetisation has hit the common man severely, current
slowdown in auto market, to my mind, has more to do with the
sentiment. I am not discounting the adverse impact of currency
shortage, though. The cash crunch has cast its shadow over the
entire chain of business activities. As a result of this all-round
slowdown and downbeat business sentiment, the people are
keeping their purchases on hold.

The normalcy is going to take time, as the new currency supply
improves and the people, particularly in the countryside and rural
areas, get used to doing transactions through the banking channel
and the digital platform. I have strong belief in the adaptability
and resilience of the Indian people, who, I hope, will, once
again,prove that they are above any challenge. I still hold the view
that the move to demonetise Rs. 500 and Rs. 1,000 notes is laudable and will stand the economy in good stead in the medium
and long terms, the immediate pain notwithstanding.

Regarding the challenges faced by the automotive retail trade, I wish to assure my fellow dealers that FADA is doing all it can
possibly do under the circumstances. FADA has written to all manufacturers for their support in reduction of huge inventories
built up at the dealerships due to the slowdown as a result of the demonetisation and also making available enhanced credits
from the banks to the dealers. FADA has also taken up with the banks and NBFCs seeking increase in credit limits for the
dealers and the vehicle buyers, including 100% funding for the vehicle purchases. Likewise, the Government has also been
requested to take steps to reduce the service charges on credit card transactions to promote the wide use of credit cards.

It is satisfying to note that the OEMs, banks, NBFCs and the Government have responded favourably and come up with some
of the measures with a view to alleviating the demonetisation pangs.

Since my previous column and as a sequel to the series of meetings already held, the office bearers of FADA have met more
OEMs individually. The FADA team also made a presentation to the Executive Committee of SIAM on issues and concerns of
automobile dealers. These meetings were held as a part of the agenda for the next year drawn up by the new FADA Council,
which includes stepping up interaction with SIAM and individual OEMs.

I am happy to inform that the response to most of the matters taken up and discussed at the meetings with various OEMs has
been positive. The interactions with SIAM and individual OEMs have led to the better understanding and helped identify the
areas of mutual interest.

I wish to assure that these interactions are not one-off. We, at FADA, wish to sustain and carry forward the dialogue in the
interest of healthy OEM-dealer relations and sustainable growth of automotive business as a whole.

While FADA takes the initiative to appraise our partners in business with our problems, we must be fully aware that there're
numerous actions that we too are responsible for. Keeping our house intact, taking a legitimate and reasonable stand and
above all convincing others of the difficulties we face are our sole responsibility.

Let us be optimistic !

Wishing You All a wonderful season ahead and a Happy & Prosperous New Year !

Yours sincerely,

John K Paul

7 December 2016

Industry Track

Auto Market Hits Demonetisation Bump

Auto market in November 2016 virtually came to a screeching customers by extending necessary help and support to
halt post demonetisation. With cash crunch and uncertainty minimise the challenges currently being experienced.”
gripping the auto market, retail vehicle sales were severely Continuing its growth momentum on the back of sustained
hit. The expectations of a resurgent November raised by the strong demand for Tiago, Tata Motors recorded sales of 13,633
crackling sales during the festive season were belied, as a passenger vehicles in the Indian market in November 2016,
result. Total vehicle sales in domestic market at 1,563,665 units clocking a growth of 14.0% compared to 11,956 passenger
fell by 5.5% y-o-y during the month of November 2016. vehicles sold in the same month last year.
Domestic sales of Toyota Kirloskar Motor (TKM) stood at
Hot selling models save the passenger vehicle market’s 11,309 units in November 2016 – up 10.0% over domestic
blushes sales tally of 10,278 units in November 2015. The company
exported 1,284 units of the Etios series in November 2016
The new models high in demand and commanding waiting compared to 1,110 units in November 2015.
periods for delivery came to the rescue of passenger vehicle N Raja, Director and Sr VP - Sales & Mktg, TKM, said:
market and helped the segment post a moderate growth of “November has been a very exciting month for us as we
1.8% in domestic sales that stood at 240,979 units in November launched the new Fortuner. We are overwhelmed by the
2016 as against 236,664 units in November last year. response it has received – over 6,200 bookings already. The
Leader in the Indian passenger market, Maruti Suzuki sale of the new Fortuner almost doubled this month year-on-
India (MSI) reported domestic sales of 126,220 units in year. The Innova Crysta and the Platinum Etios have also done
November 2016, which translated into a 14.1% growth over really well with the Crysta clocking more than 50,000 units in
domestic sales volume of 110,599 units in November 2015. just six months of its launch in India. However, demonetisation
MSI’s exports were, however, down 11.3% y-o-y to 9,065 units has had its impact on our sales, as it has affected customer
during the month of November 2016. Thanks to the surging walk-ins at dealerships, order bookings and timely deliveries.
demand for Vitara Brezza, the growth was led by the To assist customers during this phase, we have introduced
company’s UV segment that witnessed a whopping 98.1% various cashless schemes like 100% on-road funding, payments
increase in domestic sales to 17,215 units in November 2016 through E-Wallet and PayTM to ensure smooth and hassle-
from 8,688 units a year ago. free buying experiences.”
Hyundai Motor India Ltd (HMIL), the second largest player in Honda Cars India Ltd (HCIL) continued to witness slide in sales.
the passenger vehicle market, sold 40,016 units in domestic The company’s domestic sales fell sharply by 45.4% to 8,029
market during November 2016, down 8.3% compared to units in November 2016 from 14,712 units a year ago. The
43,651 units sold in November 2015. Total sales of HMIL, City sedan was the company’s bestseller with 2,658 units,
including exports, aggregated 57,093 units, which reflected a followed by Jazz with 2,655 units and Amaze with 1,971 units.
1.0% y-o-y drop. Of the two SUVs, BR-V sold 419 units and CR-V, 21 units. The
Mahindra & Mahindra (M&M) registered domestic sales of domestic sales tally for Brio and Mobilio read 202 units and
13,137 passenger vehicles (which includes UVs, cars and vans) 101 units, respectively, in November. The recently launched
in November 2016, down 32.8% vis-a-vis 19,662 units in Accord Hybrid sold 2 units.
November 2015. Demand in the rural market, which accounts
for a sizeable volume for M&M, slumped due to the
demonetization and consequent cash crunch.

Commenting on the November numbers, Sales (Domestic + Exports) during November 2016 viz-a-viz November 2015
Pravin Shah, President & Chief Executive
(Automotive), M&M, said: “While we expected
an improved auto industry performance on the
back of the festive season and other positive
parameters such as rural demand and interest
rates softening, the sudden announcement of
demonetisation has brought in an immediate
disruption and uncertainty. We at Mahindra
are working with our network partners and

December 2016 8

Industry Track

“November saw major disruptions in the market due to the Honda Motorcycle & Scooter India (HMSI) was also in the
demonetisation and the cash crunch. We have taken several negative terrain with the company’s domestic sales slipping
constructive steps to neutralise the impact of demonetisation, by 4.0% to 299,414 units in November 2016 from 311,946
which includes squeezing the wholesales to avoid stock piling units in the corresponding month last year.
up at the dealerships. We believe that the situation will TVS Motor’s domestic two-wheeler sales at 191,499 units in
normalise in the near future and our sales performance will November 2016 were flat, inching up by just 0.5% from
improve accordingly,” Yoichiro Ueno, President and CEO, HCIL, 190,490 units a year ago.
commented. Bajaj Auto posted a negative growth of 8.4% in its two-wheeler
With sales of its compact sedan Ameo maintaining tempo, sales in the Indian market, which aggregated 139,765 units in
Volkswagen India sold 4,014 units in the Indian market in November 2016, vis-a-vis 152,663 units a year ago. Bajaj two-
November 2016, as compared to 1,942 units sold in November wheeler exports stayed in reverse gear, de-growing by 17.1%
2015, notching up a whopping 106.7% growth. y-o-y to 97,992 units in November.
Michael Mayer, Director, Volkswagen Passenger Cars India, Beating the demonetisation blues, Royal Enfield remained in
commented, ”We have witnessed an encouraging growth with top gear, witnessing an impressive 38.5% surge in domestic
our November sales welcoming new members to the sales to 55,843 units in November 2016 from 40,312 units in
Volkswagen family. Earlier this year, we launched the Ameo November 2015.
and were positive that the vehicle would succeed in drawing Another two-wheeler major, India Yamaha Motor was in
car buyers’ attention and it has lived up to our expectations.” positive territory as well, the company’s domestic sales rising
Also, the November marked an important milestone for by 19.6% y-o-y to 51,106 units in November 2016.
Volkswagen India with the introduction of ABS and Dual
Airbags as standard fitments across all Volkswagen carlines in Commercial Vehicles back in reverse gear
India.
Ford India saw its domestic sales decline steeply by 21.6% y- M&HCV sales showing promise in October after 3 depressing
o-y to 6,876 units in November 2016. The company’s exports, months went off-track again in November. The demonetisation
however, stayed on growth curve, soaring by 67.4% y-o-y to took its toll on LCV sales as well. Total domestic CV sales at
14,125 units during the month. 45,773 units in November 2016 declined by 11.6% y-o-y, with
General Motors India posted a 13.5% increase in domestic both M&HCVs and LCVs slipping into negative terrain.
sales that stood at 2,808 units in November 2016, vis-a-vis The CV market leader, Tata Motors sold 19,641 commercial
2,475 units a year back. GMI’s exports also maintained the vehicles in the domestic market during November 2016, down
growth trajectory, rising by 45.8% y-o-y during the month. 16.0% vis-a-vis the domestic CV sales tally of 23,389 units a
Riding on its latest offering – RediGo, Nissan Motor India was year ago.
in fast lane. The company’s domestic sales at 3,975 units in VE Commercial Vehicles encountered a speed-breaker and
November 2016 grew by a healthy 51.9% y-o-y, while the posted a 17.1% fall in domestic sales, which added up to 2,408
exports registered a 4.2% decline to 8,182 units in November units in November 2016, as compared to 2,905 units in
2016 from 8,538 units in November 2015. November 2015.
Renault India, driven by the strong demand for Kwid, recorded Mahindra & Mahindra witnessed a 14.0% decrease in
a 22.8% uptick in domestic sales at 9,604 units in November domestic CV sales to 12,724 units in November 2016 from
2016, as against 7,819 units in November last year. 14,801 units a year back.
Ashok Leyland was the only CV major to have bucked the
Cash crunch gives rise to Two-Wheeler woes trends. The company’s CV grew by 7.8% y-o-y to 8,605 units
in November 2016.
The two-wheeler sales took a severe hit as a result of the cash Auto market is currently going through an uncertain phase
crunch arising from the demonetisation move. Total domestic due to cash crunch and consequent slowdown in the entire
sales of two-wheelers declined by 5.9% to 1,243,251 units in chain of business activity. As a result, the new purchases are
November 2016 from 1,320,552 units a year ago. being kept on hold. The good thing is that macroeconomic
Numero Uno, Hero MotoCorp, reported domestic sales of indicators, otherwise, are encouraging. The auto market is
468,119 units in November 2016, which reflected a 13.0% expected to come back on track sometime in the second half
decline, compared to 538,180 units in November 2015. of January 2017

9 December 2016

Opinion

Demonetisation Puts Brakes on Indian Automobile Sector: ICRA

CVs (including Three-Wheelers) & Tractors Worst Affected

Passenger Vehicles – Sales witness steep fall sustenance of discounts-led sales push, and (d) restricted
pricing power in the wake of intense competition. The PV
After robust Q2FY17, domestic Passenger Vehicle (PV) industry industry is expected to sustain volume CAGR of 9-10%
grew by modest 4.5% during Oct-16 and growth further slowed (domestic + exports) over the medium term. Market share in
down during Nov-16 in the backdrop of demonetisation the domestic PV industry still remains concentrated in the
impact. While MSIL was able to withstand impact due to strong hands of few players, reflected in the fact that top four players
demand for Baleno and Brezza, other players like Hyundai and account about 80% of industry volumes. This implies that
M&M reported sharp decline in wholesale volumes. OEMs like profitability pressures on the relatively low volume players
Renault (Kwid), Toyota (Innova, Fortuner) and TML also may be even higher resulting in sustained external financing
reported double digit growth, thanks to waiting period and dependence to fund losses and capital expenditure
high share of new launches in their overall domestic volume. requirements.
Domestic UV segment has been growing at brisk pace over However, OEMs are focusing on exports volume to optimally
last few months owing to low base of last fiscal, as most of utilize their Indian operations and improve profitability.
the successful launches happened post Q2. Consequently, base
effecting is waning and the growth percentage for UV segment Two-wheeler - Sales in November hit by double
will moderate in coming quarter. During Nov-16, owing to whammy - Demonetisation & festive season aftermath
sharp decline in M&M’s volume and strong demand of Tiago,
TML emerged as the 3rd largest PV OEM. ICRA expect December The two-wheeler volumes declined by 5.9% during Nov-16
PV volume should also remain subdued, though some recovery after a healthy 8.7% growth in Oct-16 and strong volumes in
could be expected from Jan-17 onwards once liquidity Sep-16 as the demand in both these months were supported
condition improves. Exports continue to remain unperturbed by the festive season in the country. Although a nominal
and continue to grow at double digit. decline in sales was expected during the month as an

In Oct-16, ICRA revised upward its domestic PV growth aftermath of the festive
outlook to 10%-12% for FY2017e, as compared to 8.5%-9.5% season, owing to the
earlier in the backdrop of improved customer sentiment post demonetisation that was
7th Pay Commission implementation, normal monsoon after implemented at the
two consecutive years of deficient rainfall and expected pickup beginning of the month
in economic activity. However, there is possibility of and the resultant cash
downward revision given liquidity condition post crunch that ensued, the
demonetisation announcement. decline in sales was much
The industry’s profitability metrics are unlikely to see much steeper than expected. The decline in sales was more
improvement in the near term despite improved prospects of pronounced in the motorcycle segment, which de-grew 10.2%
sales volume growth in YoY during the month, while scooter volumes de-grew only
view of (a) need for marginally at 1.9% during the same period. De-growth in the
recurring expenses motorcycle segment was led by the 110-cc and 125-cc sub-
towards new product segments, even as the higher displacement motorcycles
development, (b) increase continued to fare well. With rural areas being especially hard
in fixed costs including pressed for cash in the aftermath of the demonetisation
employee costs, (c) likely scheme, the entry-segment of motorcycles (75cc-110cc),
which derives a significant proportion of sales from rural areas,
reported the highest decline in absolute volumes during the

December 2016 10

Opinion

month. Further, with this segment accounting for more than brakes on purchasing decisions of CV fleet owners across both
60% of total motorcycle volumes, it pulled down the volumes heavy as well as small truck segment. As a result, M&HCV
of the entire product segment during the month. Mopeds, (Trucks) declined by 19.1% on YoY basis, while LCV (Trucks)
despite catering largely to rural customer base, continued to sales volumes contracted by 10.4%. In comparison to the truck
report growth supported purely by incremental volumes from segment, bus sales performed better, registering a growth of
the TVS XL100 model. 10.9% over the prior year. This we believe is supported by
Hero MotoCorp continued to be the market leader in the delivery of SRTU orders by OEMs in wake on pending order
domestic two-wheeler industry with a market share of 37.7% book. While cash crunch is certainly expected to impact
during Nov-16, although other OEMs continue to gain market sentiments in the near-term, we expect the industry to start
share. Honda continued to close-in on Hero MotoCorp, and seeing recovery from Q4 onwards owing to pre-buying before
maintained a strong lead over all other OEMs in the scooter BS-IV norms get implemented from Apr-17 onwards. In terms
segment with a market share of 57.5% during 8M FY2017. of market share movement, V E Commercial Vehicles had
TVS and Bajaj compete closely for the position of third largest gained market share in 8m FY 2017 on back of new model
player in the market, and the former has emerged as the victor launches in the Truck segment and incrementally higher share
during 8M FY2017 with a market share of 14.1%, benefiting of orders in the SRTU segment in buses. In the LCV (Truck)
from its presence across all the three product segments, while segment, the market share of key OEMs viz. M&M and Tata
the latter has presence only in the motorcycle segment. Motors has remained relatively stable in YTD FY 2017
ICRA expects domestic two-wheeler industry to grow at the compared to the prior year.
rate of 10-12% driven by broad based growth across segments Despite high financing penetration in the CV space, the impact
as has been the case over the past seven months of the fiscal. of tight liquidity is likely to cripple the road logistics sector in
Favourable budgetary allocations towards rural development, the near-term and would prompt the transport community
increased focus on creation of irrigation infrastructure as well to put their vehicle replacement or addition plans on the back
as healthy monsoon precipitation bode well for farm burner. Over the past 3-4 months, CV sales, especially M&HCVs
sentiments. Further, reasonable spell of monsoon rains during (Trucks) have been on a declining trend on account of waning
the Kharif sowing period augured well for the agricultural replacement demand, weak industrial activity and uncertainty
production for the current Kharif season. These apart, benefits related to the impact of Goods & Services Tax (GST) regime on
from pay revision vehicle prices.
(implementation of
recommendations of 7th The demand for CVs is expected to come under further
Pay Commission as well pressure, which was otherwise expected to get a boost by
as One Rank One the end of the fiscal from pre-buying following the
Pension) also supported implementation of BS-IV emission norms from April 2017
the demand to some onwards. Among the three segments of the CV industry, the
extent. While these bus segment would be the least impacted by the
demand drivers supported the recovery in two-wheeler demonetisation move in the near-term owing to a higher
growth rate during 7MFY2017, the demonetisation move of proportion of sales to institutional clients.
GoI is expected to have an adverse impact on two-wheeler Light Commercial Vehicles (LCVs) - Demonetisation halts the
sales in the near term. momentum
However, ICRA believes that the adverse impact is likely to After two years of declining, the LCV (truck) segment has been
be a short term one - a blip rather than a trend in itself. With on a recovery path driven by replacement demand and
strong structural factors and demand drivers, the two- improving viability even as the financing environment
wheeler volumes are likely to revive in the forthcoming continues to remain challenging. In 7m FY 2016, the segment
months. has registered a growth of 12.0% in volume terms aided by

Commercial Vehicles (CVs)

Sales decline sharply in November; Pre-buying remains key
hope by fiscal-end
After bouncing back in Oct-16, the domestic CV sales
contracted by a sharp 11.6% in Nov-16 as demonetisation put

11 December 2016

Opinion

replacement-led demand as well as pick-up in demand passenger segments. Comparatively, exports continue on the
consumption-driven sectors. The passenger segment of LCVs downward hill, declining sharply by 34% in 8m FY 2017 on
has also reported relatively stable growth on account of account of challenging market conditions, particularly in the
demand from corporate traveller and tourist segment. African markets, which account of sizeable proportion of three-
However, as a result of demonetisation, LCV sales declined wheeler exports from India.
sharply in November and are expected to remain subdued Overall, in line with pick-up in domestic demand, the
in the near-term. domestic 3W volumes are expected to grow around 6-8% in
FY 2017e, marginally lower than ICRA’s previous estimates.
Three-Wheelers
Tractors
Following the adverse impact of demonetisation, the domestic
three-wheeler industry sales contracted by a sharp 26% in Nov- Volumes impacted to an extent by the recent demonetisation
16 as compared to a growth of 12% reported by the industry After healthy sales in the festive season contributed to healthy
in 7m FY 2017 (i.e. Apr-Oct). After a relatively modest year, growth in domestic volumes in Sep-16 and Oct-16, the
the domestic three-wheeler industry was an upturn during domestic volumes, however, declined by 27% (YoY basis) in
the year on back of demand from issuance of fresh permits in Nov-16; the decline can be attributed to a combination of
absence of festive season in November in this fiscal as
compared to the previous year as well as adverse short term
impact of the demonetisation . Tractor exports growth, which
moderated in FY2016, has remained weak during the current
fiscal; the weak demand in the global markets has led to
marginal volume growth in 8m, FY2017. M&M has witnessed
a healthy volume growth in the current fiscal (growth of 26.2%
on YoY basis in 8m, FY2017), gaining market share across
several regions. Escorts has also recorded a healthy growth in
volumes (23.7% on YoY basis) in 8m, FY2017

December 2016 12









Insight

Enabling technology In the march toward reduction of carbon emissions and
dependence on fossil fuels, it is clear that hybridization is here
With the substantial role technology increasingly plays in the to stay. In fact, plug-in or pure electric powertrains are also
truck industry, it is somewhat obvious that enabling emerging in limited perimeter applications, such as ports and
technology is an industry imperative. More than 75 per cent in-city deliveries. While it has great promise as a practical
of truck industry executives selected it as the most important alternative, hybridization does have challenges and limitations.
external factor impacting the industry by 2020. Energy density (in batteries) is less of a concern for the truck
industry (since packaging is less restrictive than for light
The use of telematics undoubtedly requires technological vehicles). However, the cost-per-kilowatt-hour challenge will
innovation, as do areas relating to sustainability, such as affect the rate of penetration. As cost hurdles are conquered,
hybridization and alternative fuel. The industry’s relationship hybridization and regenerative braking technologies will help
with the environment will continue to be complicated and redefine the industry.
high profile. Truck OEMs must be able to respond to the rising Alternative fuel technologies will also continue to develop.
demands for environmental accountability – and technology The use of both CNG and LNG is growing in markets, though
will enable this. the refuelling infrastructure requirements for both continue
to constrain their use. To broaden their application, truck
Improving efficiency OEMs must be able to create vehicles that can switch between
technologies depending on their location and fuel status.
Improving efficiency in the vehicle will be a significant focus Retrofitting of existing fleets will also require OEMs to utilize
area for the industry that will require innovative technology. the latest technologies, including more advanced particulate
Efficiency-related areas, such as engine and auxiliary systems cleaners, aerodynamics packages and hybridization.
and powertrain, are rated extremely high among aspects of Retrofitting existing fleets is just as important as developing
the vehicle requiring innovation. To develop tomorrow’s new green vehicles. The industry will not improve its
alternative propulsion methods – such as hybrid and plug-in environmental image if it does not demonstrate efforts to clean
hybrid trucks – and improved braking systems, truck OEMs existing fleets. The perceived lack of environmental
must utilize the latest technologies. responsibility is a reality – and will remain even if it’s a
disproportionate amount of trucks causing pollution.
The predominance of technological advances related to The connected vehicle
hybridization is projected to occur in developed markets. The connectivity of the vehicle and the embedded systems
monitoring of its operations will be primary focus areas for
Research in hybrid electric truck technologies is a major focus OEMs in 2020. That said, there are still barriers to delivering
in the United States, and the progress is promising. European the full potential of the connected vehicle. One of those
Union and Japan lead in industry-government collaboration barriers is technological capability itself – underscoring again
to reduce carbon emissions and are expected to substantially how vital embracing technology will be to an OEM’s success.
contribute to innovation as well. Much of the promise in making the connected truck a reality
is in the hands of the OEMs. Advancement can only be
Emerging market players have started to move into alternative
propulsion and power technologies, but the need to satisfy
immediate demand and its drain on resources will limit their
ability to lead in the near term. On the other hand, alternative
fuels are being introduced rapidly in markets like India.

17 December 2016

Insight

achieved through extensive collaboration. Those in the While there certainly will be growth in trucking, it will not be
automotive industry rate the factors in the adoption of the at the same pace or as great as the country’s overall economic
connected vehicle in much the same way as their truck growth.
counterparts. . Services-based offerings are listed as the third-highest-rated
Truck OEMs must not shy away from investing substantially in opportunity for growth by 2020, further underscoring their
technological capabilities. It’s these capabilities that will make importance. Not only is this area key to brand differentiation,
the connected vehicle a reality and help address the various it will also serve as a growth driver across all markets, especially
sustainability issues tied to the industry. the emerging ones. Second-ranked ecosystem partnering will
also be extremely important – both as a growth driver and in
Enriching partnerships addressing environmental, regulatory and customer concerns.

Three strong growth opportunities emerge as truck OEMs look
to the future: development of emerging markets, ecosystem
partnering and creation of services-based offerings.

The growth horizon Ecosystem partnerships: Key growth engine
The emerging markets (Eastern Europe, Brazil, Russia, India Truck OEMs must step outside their own ecosystem and tap
and China) are a complicated area for the truck industry. into the innovations that exist in other industries to enable new
While numerous sectors and industries are targeting emerging business models and revenue streams. In fact, new industries
markets as a key growth engine, many truck executives are will develop to serve as the gears between those industries
conflicted about the opportunities in this area. traditionally not used to working together.
While there is recognition of the economic growth in these How and with whom to build these partnerships will become
markets, not everyone is convinced this is the best growth clearer as organizations decide on their growth strategies and
strategy for many in the industry at this time. Most of the look at some of the prevalent issues facing their industry, such
emerging markets face infrastructure challenges that make as urban traffic management, intermodal optimization and the
trucking a less than ideal transportation alternative. transition to hybrids.
Furthermore, because these countries generally don’t have As urban traffic grows, so does the need and opportunity for
the high levels of regulation that most major markets do, there truck industry leaders to work with city governments and
is no desire or need for buyers to pay for the more municipalities to develop green transit corridors in urban areas.
sophisticated, expensive trucks that are required and Truck industry companies should also embrace opportunities
manufactured elsewhere. to partner with local ports and logistics companies to integrate
However, many of these countries are making investments telematics across transport modes. With regard to hybrids,
in infrastructure that will affect the landscape in 2020. OEMs should proactively work with government entities to co-
China, in particular, is making major investments in both develop regulations, while also investigating other potential
highway and rail infrastructure, with its latest focus on rail. partnerships, such as with utility companies to create vehicle
Its large investment in high-speed rail will allow existing to-grid (V2G) systems.
tracks to increase freight traffic, which will likely increase Simply put, truck manufacturers need to work in extended
commercial traffic. partnership with other industries. Other transport modes
require effective trucking to be successful – and the truck
industry needs strong partnerships to foster growth
opportunities. Multimodal transportation of goods is an
opportunity – not a threat – to the industry.

December 2016 18



Transforming the workforce Leadership is a basic component for a successful strategic
transformation. It is also a key ingredient in fostering changes
The major changes organizations must undergo to succeed in in corporate and industry cultures. According to a recent IBM
2020 will require complimentary changes in workforce. To study, top management sponsorship is the number one key
redefine their brands, OEMs need employees with new skills factor for successful change, followed by employee
in the areas of service, electrical engineering and software. involvement and honest, timely communication.
Truck OEMs can take steps now to prepare for the future, such
Truck industry executives predict the top three critical skills in as assessing the workforce to identify skills gaps or limitations.
2020 will be engineering, marketing/selling and product For example, engineering skills remain important but are
planning. However, they overlooked two key areas: software migrating from mechanical to electrical, which requires
development and leadership. Although they are among the realignment.
most important future skills, they are not rated highly by truck There will be rough spots, as large-scale change is difficult in
industry executives. Conversely, automotive executives highly established industries. Typically, the “soft” factors of
recognize how critical these skills are in transforming their change, such as changing mindsets, attitudes and cultures,
industry and products. are much more challenging than the “hard” factors of
Software capabilities will likely increase at a pace even greater structure, performance measures and incentives. However,
than the truck industry anticipates. Organizations need talent success is possible for those who embrace change – and then
to create flexible architectures, align their applications chart the bold steps and investments to implement it.
appropriately and keep pace with the evolving software An eye to the future
applications required to produce the truck of the future. Crises tend to cloud the vision of enterprises. Survival drives
tactical solutions to strategic issues. Investments shrink and
get directed to urgent priorities. Fundamental change suffers.
Resolving the globalization dilemma means decisively charting
a path toward global integration or regional specialization. At
the same time, brand redefinition requires bold moves to
comprehend and respond to the needsof thefuture. Transitioning
the brand around services and solutions may create short-
term organizational discomfort, but it is a priority for long-
term success. Technological innovation and a strong ecosystem
of partners will enable the services and solutions at the heart
of this new brand. Amid these vast industry changes, a
transformation in culture and workforce will require strong
leadership through all levels of a progressive truck enterprise.
An industry that has long struggled with both its image and
recognition for its contributions to economic growth stands
to transform itself. The promise is evident, the course
unambiguous and the need unmistakable. Opportunity must
not be lost; the time for reinvention is now

December 2016 20

Surveys & Studies

BMW Ranks Highest in Both Customer Satisfaction and
Sales Satisfaction Among Luxury Brands: J D Power

Customer Satisfaction Index (CSI) - Luxury Segment maintenance or repair work within the first 12-24 months of
vehicle ownership. The study measures overall satisfaction in
Satisfaction with the overall vehicle service process among five factors (listed in order of importance): service quality
luxury car owners in India has dropped significantly year over (43%); vehicle pick-up (17%); service advisor (14%); service
year, according to J D Power 2016 India Customer Service Index facility (14%); and service initiation (11%).
(CSI) Study - Luxury Segment, released on December 15.
Overall satisfaction with the after-sales process is 35 points
lower in 2016 than in last year ’s study (801 vs. 836,
respectively, on a 1,000-point scale). Vehicle service processes
that show the greatest year-over-year decline are performing
a pre-service inspection of the vehicle (86% vs. 90%,
respectively); providing an estimate before service (74% vs.
88%); and reviewing the completed work (89% vs. 91%).
“Given the significantly high cost of service for luxury vehicles
in India, customers want to be kept updated about the scope
of the work and an estimate of the charges,” said Mohit Arora,
Executive Director, J D Power Singapore. “Failure to follow
through on these actions results in an adverse perception of
the workshop’s performance.”
Following are additional findings of the study:
• Customers Prefer Familiarity and Proximity: More than

2 in 5 (42%) luxury vehicle owners prefer to have their
car serviced at the dealership where they bought it or at
a dealership within a convenient distance.
• Customers More Sensitive about Service Processes: Even
with the highest implementation rates of all 22 process
standards, overall satisfaction drops by 37 points from
2015, indicating heightened customer expectations in the
marketplace.
• Dealers Can Improve Customer Engagement after the
Service Visit: More than 2 in 5 (43%) customers received
a follow-up call from the dealership, a drop of 24% from
2015. Overall satisfaction among these customers is 831
points, which is 49 points higher than among those who
did not receive a follow-up call.

Study Rankings

BMW ranks highest in luxury vehicle customer service with a
score of 815 points. BMW performs particularly well in the
vehicle pick-up factor. Mercedes-Benz ranks second with a
score of 805 points.
The India Customer Service Index Study, now in its fourth year,
measures satisfaction among luxury vehicle owners who
visited an authorized dealership service centre for

21 December 2016

Surveys & Studies

Sales Satisfaction Index (SSI) - Luxury Segment updates regarding delivery of their new car—drive satisfaction
among luxury-vehicle owners. Performing these activities
Luxury-vehicle owners in India expect their dealerships to improves overall satisfaction by 91 points (to 910 on a 1,000-
engage in personalized interaction, according to J D Power point scale), compared with when they are not performed.
2016 India Sales Satisfaction Index (SSI) Study - Luxury “Luxury-vehicle owners in India are from the highest socio-
Segment, released on December 9. economic strata of the country,” said Mohit Arora. “Hence,
Undertaking certain activities—such as understanding a they look for a significant amount of personalized attention
customer’s vehicle needs, providing an explanation of the during the purchase process. Dealerships that are able to
features and their benefits, and providing proactive status deliver on such demands will assist in enhancing the
manufacturer’s brand image as well as their own reputation
in this competitive market environment.”
Following are additional key findings of the study:
• Luxury Shoppers Are Decisive: 78% of luxury-vehicle

owners knew the exact model they wanted to purchase.
Nearly 72% of these owners cite brand reputation, vehicle
quality and design as the key purchase reasons.
• Dealerships Focus on Process: 85% of luxury-car owners
received all the process-related sales standards, which
range from the pre-sale stage—such as offering a test
drive—to the post-sales stage, such as offering to set up
a service visit.
• Dealerships Lag on Communications: Only 43% of
customers were offered all communication standards,
among whom satisfaction is 49 points higher than among
those who did not receive all these standards.
• Problems during Purchase Process Hurt Satisfaction:
These problems include limited vehicle stock, payment
issues and salesperson-related issues. Satisfaction among
owners who experienced such problems is 89 points
lower, on average, than among those who did not
experience any problems.

Study Rankings

BMW ranks highest in sales satisfaction in the luxury-vehicle
market with a score of 915. BMW performs particularly well
in the delivery process and sales initiation factors. Mercedes-
Benz ranks second at 903.
The 2016 India SSI Study luxury segment examines six factors
that contribute to overall customer satisfaction with their new-
vehicle purchase experience in the luxury market. In order of
their effect on overall sales satisfaction, those factors are sales
initiation (17%); dealer facility (17%); deal & paperwork (17%);
delivery timing (17%); salesperson (16%); and delivery process
(16%). Sales satisfaction performance is reported as an index
score based on a 1,000-point scale, with a higher score
indicating greater satisfaction with the new-vehicle sales and
delivery processes. Overall satisfaction for luxury brands
averages 896 points in 2016.

Surveys & Studies

India Vehicle Quality Improves in Manufacturing • Vehicle usage has a bearing on initial quality issues. Initial
but Design-Related Quality Lags quality among customers who drive more than 750
kilometres per month is 124 PP100, compared with 87
Hyundai Leads Manufacturers with Three Model-Level Awards PP100 among those who drive less than 750 km/month.
Another study by J D Power, i.e. 2016 India Initial Quality Study
released on November 30, reveals that while new-vehicle • Vehicle quality builds advocacy. Among vehicle owners
quality in India has significantly improved during the past few who experience fewer problems than expected, 76% say
years, automakers are finding it challenging to reduce issues they “definitely would” recommend their model to family
pertaining to vehicle design. and friends, while only 42% of those who experience more
The study, now in its 20th year, measures problems that owners problems than expected say they “definitely would”
experience with new vehicles during the first 2-6 months of recommend their vehicle to others.
ownership and examines more than 200 problem symptoms
in eight vehicle categories: engine and transmission; driving Study Rankings
experience; HVAC; vehicle exterior; features, controls and
displays; vehicle interior; audio, entertainment and navigation; Hyundai receives three model-level awards. Hyundai Eon ranks
and seats. All problems are summarized as the number of highest (96 PP100) in a tie with Maruti Suzuki Alto 800 in the
problems per 100 vehicles (PP100), with a lower PP100 score entry compact segment; Hyundai i10 ranks highest in the
indicating a lower incidence of problems and higher initial quality. compact segment with 64 PP100; and Hyundai Creta, in its
The industry averages 95 PP100 in 2016, which is 25 PP100 debut year, ranks highest in the SUV segment with 68 PP100.
fewer than in 2012. While problems related to manufacturing Honda and Toyota each receive model-level awards. Honda
quality have declined by 21 PP100 in that time frame, design- Amaze and Honda City rank highest in the entry midsize and
related issues have only declined by 4 PP100. midsize segment with 43 PP100 and 58 PP100, respectively.
“Strong focus over the years on manufacturing execution is Toyota Etios Liva/Cross and Toyota Innova rank highest in the
yielding results,” said Mohit Arora. “Customers are clearly upper compact and MUV/MPV segments with 68 PP100 and
appreciating the same by citing fewer such issues during their 53 PP100, respectively.
initial vehicle ownership.” Volkswagen Polo/Cross ranks highest in the premium compact
Arora added, however, that the challenge lies in aligning segment with 55 PP100.
vehicle design to a set of optimized customer requirements The Study is based on evaluations from 8,330 vehicle owners
on fuel efficiency, HVAC effectiveness and ease of gearshift who purchased a new vehicle between Nov’15 and Jul’16. The
operations. “Given the nature of driving conditions study includes 78 vehicle models from 17 makes. The study
in India, customer sensitivity toward comfort and was fielded from May to Sep’16 in 30 cities across India.
ease of driving are likely to increase,” Arora said.
“Manufacturers that are able to integrate these into
their overall vehicle design would be in a better
position to differentiate their products and build
better advocacy for their brands.”
Key Findings
• While both petrol and diesel models have shown

strong improvement in initial quality during the
past five years, the rate of improvement for
diesel models is much higher at 31 PP100,
compared with petrol models, which have
improved by 18 PP100 during this time frame.
• Repeat buyers tend to experience more initial
quality issues, an overall 112 PP100 compared
with first-time buyers at 83 PP100. The biggest
difference emanates from design-related issues,
which averages 13 PP100 more among repeat
buyers than among first-time buyers.

23 December 2016



Surveys & Studies

Study Rankings About the Study
Hyundai receives five of the eight awards: Eon (entry compact
car); i10 (compact car); Grand i10 (upper compact car); Elite The 2016 APEAL Study, now in its 18th year, serves as the
i20/ Active (premium compact car, in a tie with the Honda industry benchmark for new-vehicle appeal. The APEAL study,
Jazz); and Creta (SUV, in a tie with the Mahindra Scorpio). which examines how gratifying a new vehicle is to own and
Honda receives three awards: Jazz (premium compact car, in drive, is used extensively by OEMs worldwide to help them
a tie with the Hyundai Elite i20/ Active); Amaze (entry midsize design and develop more appealing vehicles and by consumers
car); and City (midsize car, in a tie with the Maruti Suzuki Ciaz). to help them in their purchase decisions. The study measures
Maruti Suzuki receives an award in the midsize segment for satisfaction across 10 performance categories: vehicle exterior;
the Ciaz, which ties with the Honda City. Toyota receives an vehicle interior; storage and space; audio/entertainment/
award in the MUV/ MPVfor the Innova, while Mahindra navigation; seats; heating, ventilation and air conditioning
receives an award in the SUV segment for the Scorpio, which (HVAC); driving dynamics; engine/ transmission; visibility and
ties with the Hyundai Creta. driving safety; and fuel economy.
Hyundai’s Eon, i10 and Creta; Honda’s Amaze and City; and
Toyota’s Innova also rank highest in their respective segments The 2016 India APEAL Study is based on responses from 8,323
in the J D Power 2016 India Initial Quality Study(IQS). owners, who purchased a new vehicle from November 2015
through July 2016. The study was fielded from May through
September 2016 in 30 cities across India

Engagement of Service Tax Consultant

A service tax consultant – Ms Puloma Dalal, FCA based in Mumbai, has been engaged by FADA on retainership to help
members deal with the complexities of service tax law and procedures. She will, on reference made by FADA, guide and
give legal opinion on various issues relating to service tax as applicable to automobile dealers.
FADA will forward the queries raised by members to Ms Puloma Dalal for her opinion. Members seeking legal opinion or
clarification on any point with regard to service tax will pay a nominal amount of Rs. 1,000 per query + Service Tax.
While Ms Puloma Dalal will, essentially, give legal position and clarification, supported by case law, on various service
tax issues raised by FADA members, those wanting to engage her as counsel to fight their cases in litigation, will have to
pay separately as per terms that may be mutually agreed to.
Members seeking clarification or legal position relating to service tax as relevant to automobile dealers, may send their
queries, accompanied by a payment of Rs. 1,150 (including ST @ 15%) per query, by way of a cheque/DD in favour of
Federation of Automobile Dealers Associations, to FADA office at 804-805, Surya Kiran, 19, K G Marg, New Delhi.

25 December 2016

Fuel Watch

9 Oil Price Forecasts During Trump Presidency

Steve Austin for OIL-PRICE.NET

We're on a roll when it comes to accurately predicting major 2. Keystone XL pipeline
geopolitical events and their impact on oil prices. In our article A major objective on Trump's agenda, construction of the
titled Takeover of Oil by Militias" published in 2012, we Keystone 'XL' pipeline will finally see the light of the day in
successfully anticipated that Islamic militants (ISIS) would use the coming months. Keystone XL is actually the fourth phase
oil revenues to fund the formation of their own theocracy. of the Keystone project that began in 2005. The proposed
In 2013, in our article titled "OPEC and oil prices - is the story 1,180 mile long pipeline will carry about 830,000 barrels of
over" we, rightly, predicted that Saudi Arabia's failure in oil per day from Alberta, Canada to Steele City, Nebraska.
ensuring that OPEC countries adhered to the quota system as Indeed, the Keystone pipeline already transports oil from
well as the reference prices would cause the cartel to crumble Canada and the XL line would increase the inflow of oil.
and become irrelevant. Also the same year, by mathematically In keeping with the philosophy of running a business
analysing the evolution of oil prices, we predicted high efficiently, the XL pipeline will replace crude oil transportation
volatility ahead. As it turned out, oil prices plunged 40% a few by train - an expensive, inefficient and accident-prone
months later. Clinchingly, adept at it, we also surmised that a operation - with, well, a pipeline - an alternative both cheaper
disagreement between Russia and Saudi Arabia over a planned and more ecological, if one really cares to see beyond party
gas pipeline would lead to the Syrian civil war, which we also line rhetoric. Yet, the pipeline is still a chimera. So what's
detailed in later articles. causing the massive opposition to the Keystone XL project?
In May 2015, while crude oil was hovering at $50 from the Well, President Obama put the project on hold as the pipeline
previous high of $115 in June, we warned that it would plummet would have passed along fragile ecosystems.
further. Within a few months oil prices fell to the $20s. The election has shifted everything. Easily and quite visibly,
Here are our 9 predictions for the next 4 years regarding the Donald Trump will remove the roadblocks on the path of the
geoplolitics of oil under President Trump. Keystone XL project. TransCanada, the company behind the
1. Lower oil prices pipeline is going to reapply for permits. So, with the
Donald Trump, despite popular belief that "money buys votes", presidential permit, the oil will cruise along to enrich the US.
got presidency for less. Like the true businessman that he is, Effectively, the pipeline will flood the US market with cheap
Donald Trump won by delivering the goods for much cheaper Canadian crude oil, to the delight of US refiners and dismay
than the competition. This philosophy which he brings along of US producers, who will see the price of WTI oil - and their
to the White House will have tremendous repercussions on profits - come down. According to the US State Department,
oil price and the energy industry. the proposed project could generate 42,000 jobs spread over
The moot point is that Trump is pro-drilling. As a matter of a period of two years. But after the pipeline is built, any net
fact, there are many more untapped shale pockets waiting to long-term job growth will likely be north of the Canadian
be explored in the US. That should make things easy. After all, border, as US producers’ profits - and payroll - shrink.
to put things in perspective, it was hydraulic fracturing and One benefit of the pipeline is, of course, security. By shifting
horizontal drilling that put the US firmly on the path towards crude imports to the friendly Canadian neighbours to the
energy security. Further, Trump may also end the moratorium North and away from Gulf states, the fewer dollars end up
on drilling in Alaska, while easing oil exploration in the funding the export of Islam fundamentalism. Thanks to the
Southeastern Outer Continental Shelf (OCS). pipeline, import of crude from Gulf States - and the financial
Trump's 'America First' plan will reverberate on the energy influence of Gulf States, notably Saudi Arabia on US politicians
corridors too. With the House now on his side, nothing stands - will be reduced as well. More the oil, lower the prices.
in the way of Trump delivering on his promise to run the United 3. Divided oil industry
States of America like an efficient, competitive business. And To sum up, Trump's presidency will increase contentions in
all that new oil barreling down into an already oversupplied the oil industry because some stand to win and others stand
market means low oil prices. Crude oil, which fuels and to lose. It's a race out there.
lubricates the proverbial gear train of the American economy, The winners are refiners and consumers, as the focus shifts to
is guaranteed to come down and stay low in terms of price. a pro-infrastructure revolution. Yes, we'll explain.

December 2016 26

Fuel Watch

The refineries in the US, to a large extent, have failed to catch and intelligence deals with Russia; the US and Europe arming
up with the remarkable surge in domestic oil production. Lack Al-Qaeda styled militias against a secular regime in Syria.
of pipelines to transport crude to the refineries is costing the Turkey buying crude oil from (gasp!) ISIS.
country and how. Brace yourself, the world is in turmoil. We'll see friends and
Production of crude oil has risen from 5.6 million barrels per foes of yesteryears interchange in the name of business and
day in 2011 to 9.4 million barrels a day in 2015. Our own necessity. And crude oil of course.
forecast at oil-price.net for 2016 is 8.8 million barrels per day. 5. New oil pipelines to Europe
Much of the domestic oil production coming from low Essentially, the Syrian war was caused by two pipelines.
permeability formations in Bakken, Eagle Ford and Permian The Persian Gulf has the world's largest known natural gas
Basin are Light Tight Oil (LTO). Yet, most of the refineries are reserves. The problem is that part of the site belongs to Qatar
calibrated to process the imported medium to heavier crude. and the other part lies in Iran. Qatar's part is called North
Technically, it's possible to recalibrate the refining process to Field, while Iran's is called North Pars. The Syrian war is a fight
process light crude. Hence, if some onerous tasks in the over access to this natural gas.
infrastructure are removed, the consumers stand to gain. The proposed Qatar-Turkey pipeline, running through Syria
Now, let's look at the loser's side of this argument. would have affected Russia's role as a supplier of natural gas.
Unfortunately, it's the oil producers. Fracking is an expensive Currently, a quarter of Europe's gas is supplied by Russia's
process. In spite of advances in technology and increase in Gasprom for heating, cooking and other purposes. Not
the number of wells, production costs are still humongous. surprisingly, Russians desire to maintain their market share.
Hence, low oil prices will render many fracking operations Europe wants to reduce this dependency, as capricious Russia
unviable. True, a Republican house may attempt to re-open had cut-off gas supplies in 2009 over Ukraine gas disputes.
Federal land to oil exploration. However, it is unlikely that a The US supports Europe's move on this pipeline. Russia,
"rush for crude" will take place like in 2013 when crude oil naturally, isn't pleased. So Syria, which is an ally of Russia,
prices ruled the roost. rejected the pipeline. Instead, Syria gave impetus to the Iran-
Here's another way to look at it: refiners are old money and Iraq-Syria pipeline that would have carried gas to Europe
frackers are new money. Trump, it has to be said, is ferociously bypassing Qatar. Syria, thus, earned the wrath of Qatar, Turkey,
old money. He will like to see old money win. and not to mention the US too.
4. Fast changing geopolitical alliances When the gamble is over billions of dollars and a continent's
Putin likes Trump's style of running business. Like Trump, Putin energy dependency, can the means be underestimated? With
is an ex CEO, who runs his country like one. Putin was one of Trump warming up to Putin, very little stands in the way of
the firsts to congratulate Trump on his massive win. Indeed, the new Russia - Turkey (TurkStream) pipeline transporting
during his campaign Trump praised Putin's strong stance in natural gas under the Black Sea. The pipeline will help Russia's
fighting ISIS. For the first time, a slavic Slovene-born First Lady Gazprom to bypass Ukraine as a transit point. In the wake of
will be at the White House. Whether she will endeavour to recent agreements on discounted gas prices, it remains to be
redecorate the place with traditional Russian Babushka dolls seen how Russia wrestles to profit from the pipeline. Yet, one
remains to be seen. More importantly, Melania Trump has thing is clear. Once this pipeline is built, natural gas tankers
played an active role in managing Trump's businesses, and it from Qatar transiting through the Suez canal will no longer
is reasonable to expect that she will play an active political be financially viable - safe for a steep discount.
role, here and abroad, as First Lady. Indeed, there are many 6. Europe's leadership decline
aspects in which Trump and Putin see eye-to-eye. Now that we have explained Trump's comfy relation with
This may be surprising, as Russia has been America's arch- Putin, let's look at the ramifications for Europe. Well, with
enemy since the end of WW2, a period spanning 70 years. Putin's energy empire set to tighten its grip on Europe under
Bilateral relations between the countries have curdled in Trump's presidency, Europe stands to lose. After all, Europe
recent times with huge open disagreements over Syria. The has grown accustomed for the last 70 years to the US taxpayer
US has called out Russia's role in Ukraine, while Russia laughed footing part of its defence bill and that too is about to change.
at the US by granting asylum to whistleblower, Edward Snowden. Trump has criticised the low defence spending of NATO's
Imagine, then, the surprise in seeing how fast geopolitical European members during his campaign. He has stated that
alliances change this day. The Brits leaving the EU; Turkey, he would abandon US allies in Europe, if they did not spend
NATO's second most powerful member power, inking defence more on defence. It's nothing short of an epic shift.

27 December 2016











New on Wheels

Sleek as it is savvy, the new MINI Clubman is the epitome of MINI Driving Modes enable an individualised vehicle set-up
form meets function. The interior is as practical as it is striking focusing on either ride comfort, sportiness or efficiency,
with numerous storage facilities, a large glove compartment, according to driver’s preference. In addition to the standard
storage compartments in split doors and door pockets. Using MID mode there is a choice of SPORT and GREEN mode.
the cargo function, boot capacity can be increased from 360 Driver assistance systems include Cruise control and optional
litres to 1,250 litres by folding down the rear backrest with its features like rear view camera, Parking Assistant and Head-
40: 20: 40 split. Up Display.
Another exciting feature is Easy Opener, which allows the The exciting world of MINI Connected comes with Radio MINI
driver to open the boot via remote or simply by a foot waved Visual Boost. Full functionality is available through the app
below the rear bumper. The optional alarm system illuminates downloaded via iTunes or Google Play Store. Bluetooth mobile
the red LED status light integrated in fin antenna allowing the connectivity, AUX-IN socket, USB interface guarantee round
car to be located easily in a crowd. the clock infotainment. The optional MINI Wired package
Driving excitement gives you a raft of tools to keep the offers an 8.8 inch touch screen with Touchpad controller,
adrenaline pumping in the new MINI Clubman. The 2-litre 4- Navigation System Professional, MINI Connected XL and a 20
cylinder engine with TwinPower Turbo Technology makes the GB internal hard drive for all media storage.
new MINI Clubman higher on performance and lighter on fuel. The new MINI Clubman is stacked with cutting-edge safety
It mobilises a peak output of 141 kW/192 hp and a maximum technology. The standard safety equipment comprises of Front
torque of 280 Nm torque. It sprints from 100 km/hr in 7.2 and Passenger Airbags, Brake Assist, 3-Point Seat Belts,
seconds and the top speed is 228 km/hr. Dynamic Stability Control, Crash Sensor, Anti-lock Braking
The standard 8-speed automatic steptronic transmission System, Cornering Brake Control and Run-flat Indicator.
provides for even more efficient, comfortable and sporty The standard MINIMALISM technology includes an auto start/
driving due to a broader gear spread and smaller engine speed stop function, brake energy recuperation, active cooling air
steps. The optional sports automatic steptronic transmission flaps and electromechanical power steering
with shift paddles makes for even sportier driving.

33 December 2016

News Basket

Maruti Suzuki Receives CII-ITC
Sustainability Award for CSR

Maruti Suzuki India (MSIL) received the CII-ITC Sustainability taking integrated measures on specific road stretches, are
Award 2016 for its CSR initiatives on December 6. other ways in which the Company contributes to road safety.
The award was received by R C Bhargava, Chairman, MSIL from The Company has trained more than 3 million people in over
Prakash Javadekar, Hon’ble Minister of HRD, Govt of India. a decade.
The award, ‘Corporate Excellence – Commendation of Skill Development: Maruti Suzuki strives to offer India’s youth
Significant Achievement’ in CSR Domain Excellence, was a skills relevant to the industry requirement through its ‘Skill
recognition for the company’s exemplary performance in Development’, a pan-India initiative. The company works in
positively impacting the business and society by taking a partnership with over 140 Government ITIs to offer vocational
strategic approach to CSR. training to the youth through a curriculum that is designed to
Committed to create a long-term stakeholder value and benefit address the skill gap existing in the industry. Thousands of
millions of lives through its CSR programmes, the company youth across the country have found gainful employment
strategically addresses issues and concerns that are of national under this initiative.
interest and relevant to the local community. Community Development: The company considers local
MSIL works to address road safety issues, create employable community as the direct stakeholder group. Maruti Suzuki has
force by skilling youth in the automobile industry and taken various community development initiatives related to
undertake integrated water, sanitation and school upgradation water and sanitation, education and infrastructure
programmes in village communities. development. By adopting an inclusive and holistic approach
CSR has always been an integral part of Maruti Suzuki’s the Company believes in implementing sustainable solutions
business approach and strategy. resulting in long-term benefits to the communities.
Road Safety: The company’s main focus is driving training, as
“driver fault” is identified as the major cause of road accidents.
By supporting driving training of underprivileged youth, the
Company is able to enhance their employability while making
roads safer. Creating awareness among school children, and

Hyundai Motor India Wins “Indian Manufacturer of the Year – 2016”

Hyundai Motor India Ltd (HMIL) was adjudged the “Indian support areas, spanning over 3-4 days by expert assessors of
Manufacturer of the Year – 2016” - the highest recognition Frost & Sullivan at the company sites.
conferred to any manufacturer, by Frost & Sullivan at the India While receiving this award, Y K Koo, MD & CEO, HMIL said,
Manufacturing Excellence Awards 2016 on December 13. “Receiving this award is a great honour for HMIL. It validates
Out of 93 entries selected for the award from an overall our beliefs of excellence. We have been early adopters of
shortlist of 102 sites derived from an even larger base of making in India policy and exporting to world from India. Our
contestants, HMIL was adjudged the winner for this coveted products are recognised for their advanced design, quality and
award. Participants were put through a stringent assessment performance created from a world class manufacturing facility.
process spread across every functions, both in core and We take pride in our world class manufacturing facilities,
strong technological capability with a high degree of
automation along with skilled manpower, making award
winning products. I thank and appreciate Frost and Sullivan
for instituting this very important platform which brings
manufacturing excellence to the forefront.”

The award was handed over by Aroop Zutshi, Global President
& Managing Partner, Frost and Sullivan.

December 2016 34

News Basket

Popular Vehicles & Services
Forays into the Virtual World

Popular Vehicles & Services is all set to showcase a About Popular Vehicles & Services
futuristic Journey with the introduction of India's first Popular Vehicles & Services, also a part of the Kuttukaran
Virtual Reality Auto Showroom. The Popular VR Group, was amongst the first batch of dealerships appointed
Experience is designed to give prospective customers a by Maruti Suzuki in the country. Established in the year 1984
three dimensional look, feel and feature of their dream with the opening of Maruti’s 1st outlet in the State of Kerala at
car. Popular VR will allow customers to virtually experience Trivandrum, the company has evolved rapidly over the years
any car from within the showroom or from the comfort and has grown from strength to strength. The unwavering
of their home or office. Customers can inspect vehicles, dedication, commitment and innovation have ensured
choose from different models or check out the different synonymy of Popular with Maruti Suzuki in Kerala. After
colours and understand the new features. The high- establishing the business in Kerala, Popular Vehicles & Services
resolution 3600 video will make you think you are sitting forayed into Chennai in the year 2002, perhaps the first dealer
in the car. It offers a user-controlled 3600 view of the car in the country to establish its territory outside its home state.
both from inside, as well as outside. It even let's you take The company has one of the largest networks for Maruti Suzuki
a virtual test drive. By bringing forward this concept; in the country consisting of 7 dealerships, 3 NEXA outlets, 38
customers at remote locations will get an opportunity to Service centres, 10 Used Car outlets and 6 Driving Schools.
virtually view showrooms and cars, which are otherwise
available in the main cities.
This Project is spearheaded by Paul K John of Kuttukaran
Group.

President of India Visits Ashok Leyland Driver Training Institute

Ashok Leyland hosted the Hon’ble President of India – Pranab President’s office for the last six years and have been able
Mukherjee – at the company’s Driver Training Institute (DTI) to live up to the trust they bear in our organisation.”
in Chhindwara, Madhya Pradesh on December 14. The
Hon’ble President was at the Institute to get a better insight Set up in 1995 at Namakkal, Ashok Leyland Driver Training
into Ashok Leyland’s initiatives in the area of driver training. programme is a pioneer of driver training in India, Ashok
During his visit, he was taken on a tour of the Institute where Leyland becoming the first company to recognise the vital
he experienced the modern technology, simulator and role of a driver in the transport industry. With nine institutes
infrastructure used in training drivers. across India, the company has taken on the responsibility of
Speaking on the occasion, Vinod K Dasari, MD & CEO, Ashok imparting training in safe driving techniques to commercial
Leyland said, “It is an honour for Ashok Leyland to host vehicle drivers in India. Ashok Leyland has, in all, trained eight
our Hon’ble President, Pranab Mukherjee, at our Driver lakh drivers in its institutes across the country.
Training Institute in Chhindwara. Over the years, our
institutes have evolved as Centres of Excellence, where the The training curriculum at the Institute covers all aspects of
drivers are prepared to handle the wheels of commercial driving and varies from training for beginners to refresher
vehicles and sensitised to the responsibility of holding life course training, fuel saving techniques to safe transportation
both on and off the road. Ashok Leyland is proud to have of hazardous goods, etc. All service-training centres are
had the distinction of having trained drivers for the equipped with the latest aggregates, general and special
tools, technical handouts and audiovisual equipment that is

continuously updated. The company also
offers well-equipped Mobile Training
Vans pan India through experienced
trainers and instructors, where courses
are conducted primarily on
familiarisation and maintenance of Ashok
Leyland products

35 December 2016

Consumer Case Studies

National Consumer Disputes Redressal Commission, New Delhi

Dr B C Gupta, Presiding Member

Mahindra & Mahindra Ltd - Petitioner

Versus

Ramlal Patidar – Respondent

Revision Petition No. 2743 of 2006 Decided on 08.11.2016

(Against the Order in Appeal No. 1166/2004 of the State Commission Madhya Pradesh)

Consumer Protection Act, 1986 - Sections 15, 17, 19 and 21 – Automobile – Supply of old model defective tractor as new one
– State Commission has brought our clearly that OPs had sold a tractor manufactured in year 2001 to Complainant, making
him believe that year of manufacture of tractor was 2002 – On registration certificate year of manufacture has been
mentioned as 2001, whereas in insurance policy, the year has been stated to be 2002 – Sate Commission also brought out
clearly that tractor had to be repaired many times because of being defective – Manufacturer cannot escape its liability in
the matter because dealer is selling a product duly manufactured by them only – There is no illegality, irregularity or
jurisdictional error in order passed by State Commission - Revision Petition allowed. (Paras 7 to 10)

Important Point

Manufacturer cannot escape its liability with regard to a product because the dealer is selling the product duly
manufactured by them only.

Order

1. Dr B C Gupta, Presiding Member - This revision petition delivered, the year of manufacture in the insurance
has been filed under section 21(b) of the CPA, 1986,
against the impugned orders dated 14.02.2006 and documents was mentioned as 2002, whereas in the
registration certificate, it was mentioned as model 2001
21.03.2006, passed by the Madhya Pradesh State and in this way, a fraud was committed with the
Consumer Disputes Redressal Commission, Bhopal
(hereinafter referred to as “the State Commission”) in First Complainant. Besides, many defects were found in the
tractor, which required repair works. The OP Nos. 1 & 2
Appeal No. 1166/2004, Ramlal Patidar vs Radheyshyam sent their mechanics and got the repairs done. Various
& Ors, vide which, while allowing the appeal, the order
passed by the District Consumer Disputes Redressal parts of the tractor were also found to be old and of
inferior quality. The Complainant made a report with the
Forum, Dhar, dated 13.05.2004, in Consumer Complaint local police about the fraud, forgery and cheating done
No. 79/2003, dismissing the said complaint filed by the
present Respondent No. 1, was set aside. with him. A legal notice dated 28.04.2003 was also sent
to the OPs, which was received by them, but they did not
give any reply. The manufacturer, Mahindra & Mahindra
2. Briefly stated, the facts of the case are that the sent their reply, wherein it was directed to examine the
Complainant/Respondent No. 1, Ramlal Patidar facts narrated in the notice. The Complainant filed the
purchased a tractor from OPs 1 & 2/Respondents No. 2 & consumer complaint in question, seeking directions to the
3 - Jamna Tractors, who were dealers of the said tractor, OPs that he should be provided a tractor of model 2002
manufactured by the present Petitioner, Mahindra & of Mahindra & Mahindra or, in the alternative, the amount
Mahindra, after obtaining loan from the OP-5/State Bank of Rs. 2,88,580 be refunded to him along with interest.
of Indore. The said tractor was purchased on 23.11.2002
for an amount of Rs. 2,88,580. The main allegation made 3. The District Forum, vide their order dated 08.8.2003,
by the Complainant is that the tractor was sold in the dismissed the complaint after taking into account the
averments of the parties. Being aggrieved by the said
year 2002, whereas it was a 2001 model tractor. It has order, the Complainant challenged the same by way of
been alleged in the consumer complaint that the dealers,
OP Nos. 1 & 2 obtained blank signed stamp papers from an appeal before the State Commission, which was
allowed vide order dated 14.02.2006. It was observed by
the son of the Complainant on the pretext of preparation the State Commission that the Respondents had sold the
of the necessary documents. When the tractor was

December 2016 36









Upgrades & Variants

BMW Introduces X3 and X5 Petrol Variants

The new BMW X3 xDrive28i and the new BMW X5 xDrive35i The eight-speed Steptronic transmission is available with
were launched in India on December 7. With this launch, the Automatic Hold Function in the new BMW X3 xDrive28i. The
trendsetters with BMW X factor are now available in petrol new eight-speed Sport Steptronic automatic transmission in
variants offering dynamic ability, unbeatable efficiency and the BMW X5 xDrive35i performs smooth, almost imperceptible
exquisite comfort both on and off road. gear shifts. At any time, in any gear, the transmission
BMW X3 xDrive28i and BMW X5 xDrive35i will be locally collaborates perfectly with the engine, enabling it to develop
produced at BMW Plant Chennai. BMW X3 and BMW X5 its full power and efficiency.
brands are now available across the country in both petrol BMW xDrive, an intelligent all-wheel-drive system, in the new
and diesel variants. BMW X3 and BMW X5 monitors the driving situation
Frank Schloeder, President (act.), BMW Group India said, constantly, is quick to respond and is more efficient than ever.
“BMW petrol engines are a potent mixture of dynamics and The compact, low-weight and efficient all-wheel-drive system
efficiency, and with the launch of the new BMW X3 and new distributes the engine’s power between the front and rear
BMW X5 in petrol variants, we are offering our customers yet axle exactly to suit the driving situation and the surface. With
another form of ‘Sheer Driving Pleasure’. These latest xDrive and Dynamic Stability Control (DSC), the vehicle remains
generation of BMW engines guarantee a thrilling power directionally stable and distributes drive power flexibly
delivery & excellent responsiveness, which generates a dynamic between the two axles for optimum grip and safety.
proposition on the road and gives assured driving pleasure.” BMW EfficientDynamics doubles the Sheer Driving Pleasure
The Ex-Showroom prices (New Delhi) are as follows - with features such as Auto Start-Stop, ECO PRO mode, Brake-
X3 xDrive28i xLine : Rs. 54,90,000 Energy Regeneration, Intelligent Lightweight Construction,
X5 xDrive35i Design Pure Experience (5 seater) : Rs. 73,50,000. Electronic Power Steering, 50:50 Weight Distribution and
The innovative petrol engines from the BMW many other innovative technologies. Using the Driving
EfficientDynamics family offer considerably more spirited Experience Control switch, the driver is able to choose
power delivery as well as spontaneous responsiveness even between different driving modes to suit the driving conditions.
at low engine speeds, thanks to BMW TwinPower Turbo BMW ConnectedDrive offers numerous features, pioneering
Technology. The two-litre four cylinder petrol engine of the infotainment and unique connectivity. BMW Navigation
new BMW X3 xDrive28i produces an output of 180 kW / 245 system Professional with 3D maps (integrated GPS) along with
hp and a maximum torque of 350 Nm at 1,250 – 4,800 rpm. BMW apps reflects the high-level of sophisticated technology
The car accelerates from 0 -100 km / hr in just 6.5 seconds. standards. Systems such as the iDrive Touch with handwriting
The three-litre inline six cylinder petrol engine of the new recognition (including a 26-cm HD colour display) , high-end
BMW X5 xDrive35i produces an output of 225 kW / 306 hp Surround Sound system from Harman Kardon, rear-view
and a maximum torque of 400 Nm at 1,200 – 5,000 rpm. The camera and touch screen are available in BMW X5 xDrive35i
car accelerates from 0 -100 km / hr in just 6.5 seconds. Design Pure Experience. The new BMW X3 xDrive28i xLine
comes with iDrive Touch controller with 22.3 cms HD colour
display, hi-fi loudspeaker system and Rear View camera.

41 December 2016

Upgrades & Variants

Volvo Unveils New V40 Hatchback and V40 Cross Country

Volvo Auto India (VAI) unveiled new V40 and V40 Cross • Dynamic stability & Traction control
Country on December 15 along with the opening of new 3S • Emergency Brake Assist with ABS
facility in Kochi – Kerala Volvo. • Side Impact Protection
• Whiplash Protection.
At the inauguration of new showroom along with the two new
car launches, Tom von Bonsdorff, MD, VAI said, “The launch Powertrain
of V40 and V40 Cross Country along with the new 3S facility
in the heart of Kochi emphasises our commitment to garner a Volvo V40 and V40 Cross country come with sub-2L powerful
10% segment share in the medium-term. The car was well and efficient diesel engine with 6-Speed automatic FWD. Volvo
received when we launched the Cross Country in mid 2013 was the first car brand to introduce DPF as standard across all
and V40 in June 2015. With a refreshed look and even more its carlines. DPF reduces particle emission (PM2.5 & PM10)
features, this version will find traction among young buyers by at least 95%.
across India. We are now geared up for leveraging the potential
of the Kerala market with our new partner and 3S facility. The Key Features
state-of-the art showroom built on new Volvo retail • Full LED Headlamps
experience, is spread over 8,000 sq ft and the adjoining • Leathers Upholstery
workshop equipped with latest experienced technicians will • Interior Air Quality system that reduced PM2.5% and
be able to attend to customers.”
PM10 by 95%
Design • Power operated front seats with drivers memory
• Personal car communicators with keyless entry & drive
New Volvo V40 and V40 Cross Country gets the Full-LED • Fixed Panoramic Sunroof
Thor’s Hammers headlamp cluster, a new waterfall design • Bluetooth & USB enabled High Performance audio system
grille with the large Iron mark to make this car look even • Gear shift paddles
more cool. The interiors come with 3 different leathers trims • Park assist pilot + Park Assist, front & rear
for the V40 and 5 leathers trims for the V40 cross country • Rear parking camera
including dual-tone. A new set of wheel design for both • City safety.
models enhance the look further.
Price (Ex-Showroom, Delhi)
Safety • V40 D3 R-Design – Rs. 28.53 lakh
• V40 D3 Kinetic- Rs. 25.49 lakh
The refreshed V40 and V40 Cross Country have the following • V40 CC D3 Inscription – Rs. 29.40 lakh
safety features: • V40 CC T4 Momentum – Rs. 27.20 lakh

• World-first Pedestrian Airbag
• Safety Cage
• 2-stage front airbags with drivers knee bag
• Pre-tensioners for front seats

December 2016 42

Competition Law Updates

Opel fined for price-fixing by The British Columbia Supreme Court held that it could hear a
Danish prosecutors standalone damages claim against Höegh brought by a
proposed class of purchasers of new vehicles alleging that
Opel Denmark admitted that multiple shipping companies were colluding to raise prices of
they had ordered their vehicle shipments into Canada. Justice Myers ruled that the
dealers to fix prices of used plaintiffs had established jurisdiction in British Columbia even
cars and agreed to pay a fine though Höegh lacked business presence in the province, and
of 8.25 million kroner (€1.1 had never shipped new vehicles into it.
million) to the Danish Hoegh was also accused of colluding to artificially raise prices
prosecutors. in international markets, and thus the Court held that the
company cannot escape liability as it may have refrained from
Opel had reported itself to doing business in a jurisdiction because it was not one of the
Denmark’s Competition and markets allocated to it in the alleged anticompetitive
Consumer Authority, agreement.
disclosing that it told its Toyota, Ford and Nissan v. Competition Commission of India
G R Bhatia, Partner & Head, – Appeal Nos. [60, 61 & 62 of 2014] before the COMPAT
Competition Law Practice Group, The CCI vide its order dated 27th July 2015 had found 14 car
Luthra & Luthra Law Office dealers to fix minimum retail companies to have violated sections 3 & 4 of the Competition
prices for used leasing, rental Act, 2002 (Act). They were appealed before the Competition
and demo cars between mid- Appellate Tribunal.
2010 and February 2014. The Director of Denmark’s The COMPAT pronounced its order on 9th Dec’16 and disposed
competition enforcer called this offence a “detriment to off the appeal while modifying the Commission’s order.
consumers” and said that it was encouraging that the company The COMPAT directed the car companies to remove the
reported its own misconduct. restrictions on the Original Equipment Suppliers (OES’s) for
selling spare parts in the aftermarket within one year. The car
Opel had also launched a new compliance program prior to companies are directed not to impose any restrictions on the
the settlement and this settlement was considered as a OES and Authorized dealers from selling spare parts/diagnostic
‘reward’ to the company for settling the matter out of court. tools, etc. to independent repairers.
While directing the Commission to obtain relevant statistics
Australia’s authorities begin criminal prosecution of an and determine the amount of penalty only after verification,
alleged cartelist for the second time the COMPAT mandated the appellant car companies to pay a
2% penalty on average annual turnover of spare parts in the
Australia’s competition watchdog recently charged shipping aftermarket, immediately preceding three years before the
company Kawasaki Kisen Kaisha (known as K Line) for an year of enquiry.
alleged cartel conduct linked to the international shipping of Constitutionality of the CCI challenged by car companies
cars, trucks and buses into Australia between July 2009 and Several car companies, BMW, Mahindra etc. apart from filing
2012 affecting the Australian market. an appeal before the COMPAT, had also instituted a case by
way of Writ petitions before the Delhi High Court against the
This is the second time the Australian authorities has order of the Commission passed on 27th July 2015 finding a
commenced criminal prosecution of an allergist cartelist. K violation of Sections 3 & 4 of the Competition Act, 2002.
Line has been previously fined for participating in a cartel that The judgment was reserved on 29th January 2016 and is still
affected international vehicle shipping services. awaited. Though the constitutionality of the Commission was
one of the challenges in the writ petitions, it will be interesting
Japan’s Fair Trade Commission had ordered the company to to see whether the Hon’ble High Court considers the recent
pay a ¥5.7 billion (€40 million) fine in 2014 and in the same judgment of the COMPAT while deciding on several issues like
year, subsequent to an investigation by the US Department penalty to be imposed on the car companies, etc
of Justice, K Line had pleaded guilty and was asked to pay a
criminal fine of $67.7 million (€62.7 million) for conspiring
to fix prices and rig bids for car shipments to and from the
US.

Canadian court rejects challenge to its jurisdiction

A Canadian court recently rejected a challenge to its
jurisdiction brought by vessel operator Höegh Autoliners. The
Autoliner had been charged for allegedly colluding to fix the
price of shipping new automobiles into British Columbia.

43 December 2016











NADA Musings

and discouraging automakers from using foreign plants to Commerce Department. Many big suppliers, however, are
supply the American market. His proposal to put tariffs of as global and make parts in every region of the world.
much as 35% on vehicles imported from Mexico has stunned The parts industry’s largest American trade group, the Motor
auto executives, who have built their business models on open & Equipment Manufacturers Association, said its member
borders for cars, trucks and the thousands of parts in them. companies employed more than 734,000 workers in the United
Imported vehicles are an integral part of the American market States, and generated another 2.9 million jobs in related
and account for more than 40% of its annual volume. Last businesses. The industry is acutely sensitive to changes in trade
year, about eight million cars, trucks and sport utilities sold in policies that could have a ripple effect on its ability to ship
the United States were built elsewhere, primarily in Mexico, parts in and out of the country.
Canada, Japan and Korea. Nearly all of them enter the market In addition to Trump’s focus on trade issues, the industry is
free of tariffs that would increase sticker prices significantly. expecting policies that diverge from the Obama administration’s
Increasing the price of an imported vehicle with tariffs could enthusiastic support of electric cars, including the $7,500 tax
reduce overall vehicle sales and exert economic pressure on credits that encouraged consumers to buy them, and for the
manufacturers as well as on freight haulers, dealerships and testing and development of self-driving vehicles.
independent service centres. In a November 10 letter to the Trump transition team, the
And if Trump chooses to impose tariffs on auto parts produced Auto Alliance asked for clarity on policy changes as soon as
abroad and shipped to plants in the United States, the impact possible. It is also more focused on self-interest than politics.
will spread further. In its eight-page letter, the Auto Alliance laid out several goals
Last year, auto parts worth $143 billion were imported into - including repeating its position that the government re-
the United States, about 35% of them from Mexico, compared evaluates its timetable for automakers to achieve fleetwide
with $81 billion in parts that were exported, according to the fuel economy of 54.5 miles a gallon.

Toyota Unlocks its Engine Technology, Could Sell to Rivals

Long guarded about what was beneath the hood of its Toshiyuki Mizushima, President, Toyota Powertrain Company,
pioneering Prius cars, Toyota Motor Corp plans to open up its said, “Toyota suppliers produce a lot of technology, which can
powertrain technology to rivals, hoping this will boost sales only be used by Toyota. We want to change that to a system
and speed up the industry's shift to lower-emission vehicles. where we develop technology with our suppliers at an earlier
The world's largest automaker company announced that it stage ... so they can make that technology available to non-
would expand its gasoline hybrid technology development and Toyota customers.”
would consider selling complete powertrain modules - engines, The move should help auto parts companies such as Denso
transmissions and other drive components - to its competitors. and Aisin spread their customer base and compete better
The prospect of giving rivals access to "one-size-fits-all" against global rivals including Robert Bosch and Continental.
powertrains comes, as cars are increasingly dependent on Currently, Toyota accounts for around half the annual sales at
computerized components, making it easier to design similar Denso and Aisin.
parts across model ranges. The industry has moved on from In opening up itsproprietary technology, Toyota isacknowledging
competing largely on mechanical engineering. the escalating costs of R&D, as global automakers vie to
That trend will likely accelerate, as automakers face pressure develop hybrid and all-electric cars, self-driving cars and cars
from regulators to further cut car emissions and develop more connected to mobile technology. Toyota's R&D spend last year
long-range electric vehicles. was 73% more than in 2010 at around $9 billion, while
As cars become more like glorified computers, automakers spending at Volkswagen, its biggest competitor, more than
are standardizing many mechanical parts and competing more doubled over the same period.
on style and packaging - giving drivers a bigger range of Automakers are cramming as much technology as possible
features from automated parking to cockpit concierges. into each vehicle, while limiting price increases. Toyota and
For Toyota, this is a big departure from having a tightly-knit its suppliers expect their newer production platform will mean
network of suppliers keeping much of their jointly developed making a lot more of fewer common parts across its models,
technology exclusive so as to have an engineering competitive and selling them to other automakers to earn back more of
edge on rivals. the money spent on R&D

49 December 2016

MAURYA MOTORS LIMITED

Tata Authorised Dealer for Passenger & Commercial Vehicles

Plot No. C-1, Industrial Area
Patliputra

Patna - 800 013

Phones: 92636 32685 / 92636 39260 / 92346 66948
E-mail: [email protected]
[email protected]

December 2016 50


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