Automobile manufacturers start delaying, defaulting on payments to components manufacturers

The worldwide economic slowdown has started hitting the Indian automotive industry hard. Carmakers and commercial vehicle manufacturers are cutting back on production, scaling back investments and going slow on new product launches. And now there’s the latest phenomenon – some automobile manufacturers in the country have started delaying, or defaulting on payments that they have to make to their vendors and suppliers.

The Indian auto components industry, which is currently worth around US$18 billion, is in a state of panic, and significant cuts in production and large scale employee layoffs seem to be impending. Automotive manufacturers, which used to pay their components manufacturers within 30-60 days, and now delaying payments to 90 days or more, and components manufacturers are finding that very hard to deal with.

JS Chopra, President of the Automotive Component Manufacturers Association (ACMA), recently asked the Indian government to step in and help the auto components industry via a temporary bridge policy. The components industry is facing a huge liquidity crunch, says Chopra, and unless some drastic measures are taken to help and support the industry, some players may not survive the current recession.

Tata Motors’ Lucknow, Pune plants to remain closed for six days

Tata Motors has announced that its commercial vehicle manufacturing plants in Lucknow and Pune will remains closed for six days each. This is being done to cut down on production, to match the current slowdown in demand. Tata employees at both the plants will be given paid leave for the shutdown period.

Tata Motors had also, recently, shut down its HCV plant in Jamshedpur for three days.

GM pulls out of proposed merger deal with Chrysler, Hyundai may step in

Chrysler is an iconic American brand, and it'll be a pity if the company can't find a way to get out of the mess it's currently in. Can Hyundai be its saviour...?

General Motors Corp., which is now seeking federal aid in the US to avoid collapse, may not even have have enough cash to keep its operations running till the end of this year. The carmaker, which seems to be in a dire situation, has reported a third-quarter operating loss of US$4.2 billion.

Among among other things, GM has pulled out of the proposed merger deal with Chrysler LLC, to focus on the more immediate challenge of dealing with its liquidity crunch. GM, which is now 100 years old, currently employs around 266,000 people worldwide, and has factories in 34 countries.

Chrysler LLC, which is also struggling with mounting losses and a slump in sales, is still interested in teaming up with other carmakers, which may bail the company out of its current mess. And while it was earlier being said that Tata Motors or M&M may be interested in getting into a tie-up with Chrysler, those rumours seem to be going nowhere right now.

For Chrysler, there might still be a knight in shining armour waiting in the wings. South Korea's Hyundai Motor Company has been in talks with Cerberus Capital Management, the company that owns around 81% of Chrysler, regarding the possibility of a merger or an acquisition.

There might, however, be a problem with that because Hyundai is said to be interested only in the Jeep brand, while Cerberus would rather sell all of Chrysler rather than splitting its assets and breaking up the company into small pieces. If it can’t strike a deal with Hyundai, Cerberus may again start talks with Renault-Nissan, with which it had earlier explored various partnership possibilities.

M&M launches Maxx Maxi Truck Special Edition

Mahindra & Mahindra Ltd. (M&M) has launched a ‘special edition’ Maxx Maxi Truck, which is priced at Rs 3.30 lakh, ex-showroom Chennai. Only 1,000 units of this vehicle will be made and will be fitted with an MP3 player/radio, revamped instrument panel and dashboard, uprated seat cover fabric and twin external rear view mirrors.

The Mahindra Maxx Maxi Truck will be available in a new colour – Champagne – and the bodywork will sport new, distinctive graphics. With its 63bhp, 18Kgm MDI engine, the vehicle has a top speed of around 100km/h, has a load carrying area of 37sq.ft., and can haul up to 900 kilos.

Audi R8 launched in India, priced at Rs 1.17 crore

The Audi R8 was launched in India today, in New Delhi

The Audi R8 sportscar was launched in India today, at the German embassy in New Delhi. The car is priced at Rs 1.17 crore and despite that, all the fifteen cars slated for the Indian market for 2008 have already been sold. The Audi R8 is powered by a 4.2-litre V8 engine that makes 414 horsepower, which can propel the car to a top speed of around 280km/h.

In the meanwhile, Audi India has reported that it sold 884 units during Jan-Oct 2008, a 203% increase over the 292 units sold in the corresponding period last year. With 12 dealerships across the country, and a lineup of six models (including the R8), the German carmaker seems to be doing at least reasonably well in India.

Next year, Audi will be assembling around 640 units of the A4 sedan and 380 units of the A6, in India. The company hopes to be selling up to 3,000 units per annum by 2010, and up to 10,000 units per year by 2015. Audi will also have 18 dealerships in India by end-2010.

Farmtrac North America LLC, Escorts tractor unit in the US halts operations

No more Escorts tractors for America, as Farmtrac North America LLC shuts down...

The global economic recession has claimed another victim – Escorts – which has been forced to shut down its tractor operations in the US market. Farmtrac North America LLC, the Escorts subsidiary which used to handle the sales of the company’s tractors in the American market, has closed its operations.

‘In the later half of the year 2007, the crisis in the secondary mortgage credit market caused the consumer sentiment to hit an all-time low. This was compounded by sharp increase in petrol prices, unfavourable weather conditions in the company's major geographical markets, and an unfavourable exchange rate scenario. Despite best efforts, the market for tractors was reduced and in January 2008, the company halted the assembly of tractors,’ said Rohtash Mal, executive director and chief executive officer for Escorts Agri Machinery Group, speaking to a national newspaper in India.

In happier times, Farmtrac North America LLC had about 300 distributors in the US and sold around 2,500 tractors per annum. Escorts is now said to be looking at various options that may allow it to revive its US subsidiary.

Hyundai joins the weight watchers club

Hyundai believes lighter is better...

Like with almost anything these days, when it comes to cars, light is right. And Hyundai Motor India Ltd. (HMIL) quite agrees with that. So much so, that the company is taking significant steps to make sure that its cars get lighter in the near future – something that will help Hyundai cut down on costs and also improve its cars’ fuel efficiency.

According to some reports in the media, HMIL is offering incentives for all ideas that can help reduce the weight of its cars – the company is offering Rs 100 for every gram saved. And it seems to be working, for this year, HMIL’s engineers and R&D staff are said to have come up with ideas that did lead to a weight reduction of 380gm for each Hyundai car.

HMIL has started working on a new initiative called the i-Project, which is aimed at finding ways of reducing costs and weight. A team of Indian and Korean engineers are said to be working on this project, which also intends to include HMIL’s components suppliers.

Other manufacturers like Maruti Suzuki have also worked on similar initiatives earlier, where the company worked with its components suppliers towards reducing the weight of each component, so the cars would also end up being lighter. With other factors remaining constant, lighter cars offer better performance and improved fuel efficiency.

ACMA requests a ‘Bridge Policy’ to help survive the global economic crisis

JS Chopra, President - ACMA, is calling for immediate action from the Indian government to help and support the domestic auto components industry

The auto components industry in India is deeply concerned about its growth prospects in the immediate future, as it faces what it calls, rather dramatically, ‘the oncoming of a winter of despair.’

‘At an emergency meeting of ACMA's Executive Committee, to discuss the current economic crises and its impact on the auto-component manufacturing sector, the association has voiced the need for an immediate redressal package comprising of a 2-3 year ‘bridge policy’ to enable the industry survive the current economic crises,’ said J S Chopra, President, ACMA.

While ACMA remains positive about the long term prospects of the auto and auto components industry, the short term poses daunting challenges that has dampened the mood and affected the earlier positive mindset of the industry, which will lead to slowdown in capex if the liquidity in the financial system does not improve soon and unless interest rates become more moderate.

In the domestic market, the crippling liquidity crunch has slowed down vehicle demand, especially in the commercial vehicle industry. Payments from OEMs to vendors are getting delayed, loans for capacity expansion are difficult to secure and even disbursement of those loans that have already approved by banks, is being deferred.

Furthermore, the exchange rate remains uncertain, and a strong dollar has already increased the landed cost of imported machine tools and raw materials by 14%, setting a much higher price benchmark for domestic commodity pricing. Inflation continues to be very high at 11% and raw material prices have not gone down significantly.

Alloy steel prices remain particularly strong and have not shown reduction commensurate with price of alloying elements like Nickel, Molybdenum, and Chromium etc. To make matters worse, steel manufacturers are seeking the re-imposition of customs duty on steel, which will further push up the prices of basic raw material for the domestic industry.

On the exports front, global outsourcing to large traditional markets like the US have taken a stiff beating and has seen a reduction of up to 30-40% in many cases. The SMEs are the worst affected as they lack the muscle to withstand such severe shock impacts. The overall exports growth of the auto-component industry has slumped to a meager 6% in the period April-September 2008, as compared to a +25% CAGR over the last five years. The total export of auto components was US$3.6 billion in 2007-08.

On the other hand, imports of auto-components continue to rise unabated at a high growth rate of almost 50%, with total imports growing to US$5.3 billion during 2007-08. Consequently, India, today, is a net importer of auto components.

ACMA has made the following specific recommendations to tide over the current situation and to ensure that the current slowdown does not snowball into a full fledged recession in the coming months:

1. Customs duty on key raw materials, especially all categories of alloy and non-alloy steels, should be reduced to zero.

2. Ongoing and approved funding by the banks for capex requirements of the industry should continue without any disruption.

3. The government should take immediate steps to shore up liquidity in the financial system and evolve special loan schemes for the auto components industry at concessional rates of interest.

4. Loans for SMEs should be rolled over by a few quarters to allow them more time to pay back.

5. Special precaution should be taken to ensure that infrastructure projects do not get delayed or deferred at this time of economic crises. Such large projects would provide the much needed multiplier effect for the automotive industry.

6. CRR and SLR should be further cut by RBI to bring in more liquidity in the system.

7. The government should take a pause in making any further cuts in import duties. In fact, in view of the increasing imbalance in the import/export of auto-components, the government should consider revising the customs duties on auto components as a temporary measure.

Chopra also appealed to vehicle manufacturers to take special efforts to support the component manufacturers during this trying phase, and to avoid payment delays at all costs, as such delays would result in serious cash flow problems for most suppliers.

Chopra emphasized that while the auto components industry was confident about its long term prospects, it was necessary to provide some immediate relief to the industry to sustain growth over the next a few months, and to ensure that the momentum built over the last five years is continued to meet the vision of the AMP 2016.

M&M in JV with TMI Pacific to form Mahindra Automotive Australia

Mahindra & Mahindra Ltd. (M&M) has entered into a joint venture agreement with its existing partner, TMI Pacific, a local Australian importer and distributor of vehicles. The agreement will lead to the formation of a new company called Mahindra Automotive Australia, which will continue the marketing, promotion and retail of Mahindra vehicles in Australia. Mahindra will be the major shareholder in the new company, with an 80 percent stake, while TMI Pacific will retain the rest.

‘Over the past 18 months TMI Pacific has successfully laid the foundation and carved a niche in the Australian landscape for the Mahindra range of utility vehicles,’ said Michael Tynan, Chairman, TMI Pacific and the Tynan Motor Group of companies. ‘Working alongside Mahindra, we have built brand presence and believe that the stake that Mahindra is putting in Australian soil and the commitment they are showing to becoming even more strongly involved in our market is a testament to their belief in it. We welcome this positive move forward,’ he added.

‘We are delighted to extend our relationship with TMI Pacific, which has contributed in large measure to the success of the Mahindra brand in Australia. As we merge to form a new entity, our collective dedication will ensure that the Mahindra brand will become further ingrained in the Australian market,’ said Dr Pawan Goenka, President - Automotive Sector, Mahindra & Mahindra Ltd.

‘TMI Pacific has worked tirelessly since the launch of the Mahindra Pik-Up last year and has helped make Mahindra a household name in Australia, demonstrating that it is indeed the right partner for Mahindra in Australia,’ said Pravin Shah, Executive Vice President - Automotive Sector, International Operations, M&M.

Under the new structure, which will be in effect as of this week, Michael Tynan will become a Director and bring his rich experience of the Australian Auto Industry to the new venture. Chief Operations Officer, Claire Tynan, has been promoted to CEO, while the current team of head office staff and network of dealers around the country will remain unchanged. As before, their mandate will be to continue the growth and distribution of the Mahindra brand of vehicles throughout Australia.

Gabriel India’s new plant inaugurated in Parwanoo

Gabriel India Ltd. (GIL), Anand Automotive Systems’ flagship company, inaugurated its new plant yesterday, in Parwanoo, Himachal Pradesh. Prem Kumar Dhumal, the chief minister of Himachal Pradesh inaugurated the plant, where GIL will manufacture front forks and rear shock absorbers for two-wheelers, as well as suspension components for four-wheelers.

GIL’s new plant will cater to the requirements of Indian OEMs as well as the replacement market. The plant, which currently employs around 200 people and will benefit from various tax subsidies that are being offered in Himachal Pradesh, has an installed capacity of 2.4 million shock absorbers, 300,000 front fork units and 400,000 suspension strut units per annum.

HMIL starts shipping the i20 to Europe

The Hyundai i20 is being manufactured at HMIL's plant at Sriperumbudur

While the Hyundai i20, which is being manufactured at HMIL’s plant at Sriperumbudur, is yet to be launched in India, the company has started shipping the car to European markets. Europe is the biggest car market for Hyundai Motor India Ltd., which is the biggest car exporter in India, and ships about 50% of its exports to Europe.

The first consignment of 2,820 units of the Hyundai i20 is being shipped to the UK, Germany, Greece, Austria, Croatia, Spain, Belgium, Holland and Hungary. In 2009, Hyundai hopes to be exporting its cars to 110 countries, across Asia Pacific, Latin America, Africa, Europe and the Middle East.

Ford Ikon revamped yet again, new petrol and diesel variants launched

The 'new' Ford Ikon. Is this car on its way to becoming the next HM Ambassador...?

Ford India is not yet ready to let the long-serving Ikon drive off into the sunset. The company has launched revamped petrol and diesel versions of the decade old car, priced at Rs 4.59 lakh and Rs 5.19 lakh (ex-showroom Delhi) respectively.

The diesel variant of the Ikon will now be fitted with Ford’s 1.4-litre DuraTorq TDCi engine, while the petrol variant will continue with the earlier 1.3-litre engine. ‘The Ford Ikon continues to be a leader in its segment and caters to customers with a combination of superior fuel efficiency and improved engine performance,’ says Michael Boneham, President, Ford India.

Hmmm… in our humble opinion, launching mildly revamped versions of a ten year old car is not going to take Ford India anywhere. With the Japanese and Korean companies pulling out all the stops and launching their latest cars in the Indian market, Ford had better hurry up and launch some new cars – and we mean new cars, not old cars with reworked grilles, bumpers, headlamps and taillamps – in India. Also, we hope Ford’s small car for India, which the company hopes to launch by 2010, will be on time…

Chinese carmaker FAW, in collaboration with Ural India, may set up shop in Singur

In addition to small cars, FAW also makes luxury sedans like the car you see here - its top-of-the-range Hongqi HQ3. But does anyone in India want Chinese cars...?

While West Bengal lost the Nano project due to an ill-timed, poorly intentioned political drama, there might just still be some hope for Singur. Representatives of a Chinese carmaker, FAW, are said to have met Bengal chief minister Buddhadeb Bhattacharjee recently, with a view to exploring the possibility of setting up a small car manufacturing plant in Singur. Apart from Singur, other locations at Kalyani, Kharagpur and Haldia may also be considered for this project.

FAW, in collaboration with an Indo-Russian joint venture – Ural India – is considering setting up a car manufacturing unit in India, at an investment of about Rs 1,500 crore. The company wants to launch a small car, which could be priced at around Rs 1.5 lakh, in the Indian market by 2010.

The West Bengal state government owns 11% of Ural India, and if FAW does come to India, it will be in a joint venture with this company. Of course, the two big questions here are whether these two companies would really have the technical competence to pull off such an ambitious, and whether there is, at all, a market in India for a Chinese car. But that, only time will tell…

M&M announces senior level organizational changes

Mahindra & Mahindra has announced senior level organizational changes in the company, with Vinay Sanghi, earlier CEO of Mahindra First Choice Wheels, being appointed as Chief – New Business Development, for M&M’s After-Market Sector. Sanghi is said to have been instrumental in the success of Mahindra First Choice Wheels.

M&M’s After-Market Sector focuses on the untapped potential in the after-market space, covering multi-brand pre-owned vehicles, servicing, spares and the financial instruments and exchange platforms which support this business ecosystem. The business units in the After-Market Sector include Mahindra Spares Business, Mahindra First Choice Wheels (purchase and sale of pre-owned vehicles) and Mahindra First Choice Services Ltd. (multi-brand service chain).

Shubhabrata Saha, earlier the Vice President - sales and marketing, Mahindra Spares Business, has now been appointed as the CEO of Mahindra First Choice Wheels. With degrees in electrical engineering and business management, Saha has been with the Mahindra Group for the last seven years, and has earlier worked with Cummins India, Exxon Mobil, Allied Domecq Spirits and Blow Plast.

Toyota to spend US$680 million towards setting up second plant in India

Toyota Motor Corp. has announced that it will spend a total of $680 million towards setting up its second car manufacturing unit in India, near Bangalore, from where it will manufacture the small car it intends to launch in the Indian market.

Toyota’s new plant could be ready for production by 2010, and in addition to the all-new small car, the Japanese giant will also manufacture the new Corolla Altis from its new plant. The new plant will start with initial capacity of 100,000 units a year, bringing Toyota's total capacity to 160,000 units per annum.

With its new small car – which is expected to cost about Rs four lakh – Toyota will look at garnering big volumes in the Indian market, which is something that has eluded the company so far.

Hyundai unveils new common-rail diesel-powered R-Engine

Starting next year, the new Hyundai common-rail diesel R-Engine will be used on the company's SUVs and large saloons, probably including the Sonata

Hyundai has unveiled details of its newest diesel powerplant, the R-Engine. Available in displacements of 2.0- and 2.2-litres, these new, four-cylinder engines produce 184PS/392Nm and 200PS/436Nm respectively, which, according to Hyundai, is more than what most rival companies’ V6 engines produce.

‘With diesels becoming cleaner and more fuel efficient all the time, there's a growing demand for diesel powerplants worldwide, and Hyundai is well positioned to supply the market with the very best diesel technology,’ said Dr Hyun-Soon Lee, president of Hyundai’s Corporate Research and Development division.

The Hyundai R-Engine benefits from a third-generation common rail system, with piezo-electric injectors to deliver fuel at 1800-bar, for an unprecedented degree of accuracy and control. It also features an electronic variable geometry turbocharger and an advanced engine control unit (air system-based charge control).

The all-aluminium, 16-valve, DOHC R-Engines are fitted with a lower balance shaft which has been encased in a stiffened ladder frame housing for increased rigidity and lower NVH characteristics. Weight saving features include serpentine belt with isolation pulley, a plastic head cover, plastic intake manifold and plastic oil filter housing.

To achieve Euro-5 emissions compliancy, the R-Engine is fitted with a close-coupled diesel particulate filter plus highly efficient exhaust gas recirculation with by-pass valve. Over 500 prototype engines were built during the 42-month-long development period, which encompassed a wide variety performance and emissions tests, endurance as well as NVH, cooling and lubrication studies. Finally, the engine was installed in vehicles and subjected to exhaustive testing under all imaginable environmental conditions.

Hyundai’s R-Engine will enter production next year and will see its first application in new SUV vehicles and large saloons, probably including the new Sonata. With sales of diesel cars growing in India, we are certain we'll see the R-Engine here next year...

M&M sees overall decline in sales in October 2008

Mahindra & Mahindra Ltd. has announced its October 2008 automotive sales figures. M&M’s domestic volumes for the month of October 2008 stood at 19,899 units, as against 23,578 units in October 2007 – a decline of 15.6%. M&M sold a total of 20,282 vehicles (domestic + exports) in October 2008, as against 24,679 vehicles (domestic + exports) sold in October 2007. The company exported 383 units in October 2008, as against 1,101 units exported in October 2007.

For the month of October 2008, domestic sales of M&M tractors were 11,001 units, compared to 10,500 units for the same period last year. Exports during the month were 538 units, against 686 units for the corresponding period in 2007. Total sales (domestic + exports) for the month were 11,539 units, as compared to 11,186 units for the same period last year.

Tata Motors October 2008 sales down 20%

Tata Motors sales took a beating last month...

Tata Motors has reported that its total sales in October 2008 decreased 20% to 39,729 vehicles, compared to 49,354 vehicles sold in October 2007.

The company's sales of commercial vehicles in October 2008, in the domestic market, were 19,154 units – a decrease of 29%, compared to 27,103 vehicles sold in October 2007. LCV sales decreased 10% to 11,833 units, compared to October 2007.

The company's medium and heavy commercial vehicle sales were 7,321 units in October 2008, a decline of 48% over October 2007.

The total sales of Tata Motors passenger vehicles were 17,014 units in the domestic market in October 2008, a decline of 6% over 18,021 vehicles sold in October 2007. Exports decreased 16% to 3,561 vehicles, compared to 4,230 vehicles in October 2007.

GM India sales up 5.31% in October 2008

General Motors India (GMI) has reported a 5.31% increase in its domestic sales, at 6,465 units, in October, against 6,139 units in the year-ago period.

The sales comprised 855 units of the Chevrolet Tavera, 934 units of the Chevrolet Aveo sedan and Aveo U-VA hatchback, 153 units of the Chevrolet Optra sedan, 4,390 units of the Chevrolet Spark hatchback, and 133 units of the Chevrolet Captiva SUV.

‘Our sales have been primarily driven by the Chevrolet Spark, which has registered all time high sales in October 2008 since its launch,’ said P Balendran, Vice-President, GMI.

Israel may buy the Mahindra Scorpio for its armed forces

The cheap and cheerful Mahindra Scorpio may now do duty with the IDF

According to reports in the media, Israel Defence Forces (IDF) is evaluating the Mahindra Scorpio MUV for its use and may consider a bulk purchase of the vehicle. If IDF does decide to go ahead with the purchase, it’s likely to go for the automatic version of the Scorpio, which was recently launched in India.

IDF is said to be interested in getting the Scorpio because the vehicle offers all the functionality of more expensive vehicles at a much lower cost.

VW to source auto components worth Rs 6,000 crore from India, by 2010

By 2010, Volkswagen will source auto components worth Rs 6,000 crore from India

Volkswagen AG will soon start sourcing automotive components from India in a very big way. Over the next two years, VW will, for its global operations, source automotive components worth more than Rs 6,000 crore from India. However, it’s interesting to note that this figure would still be a tiny fraction – less than 1.5% – of the total amount that VW spends on buying automotive components every year, from all over the world.

Volkswagen, which is setting up a new manufacturing unit near Pune, will also look at achieving up to 70% localization in its cars produced in India, within two years of the plant getting operational, which is expected to happen by end-2009.

HMIL shelves plans to export i10 to the US

The Hyundai i10 isn't going to the US after all...

With the global economic slowdown, Hyundai Motor India Ltd. (HMIL) is now feeling the heat with regard to its exports operations, with up to 25% of its export orders having been put on hold.

‘Many dealers from our major markets like South Africa, Colombia and Iceland have asked us to put shipments on hold. They have not given us any time when they would like to pick up the orders,’ says HS Lheem, MD, Hyundai India.

HMIL, which had planned to enter the already-shrinking US car market with the i10 hatchback, is facing trouble with homologating the car in America. The company is said to have shelved its plans to launch the i10 in the US and is instead looking at other markets like Australia and New Zealand.

‘Our feasibility study found that the i10 is not suitable for the US market and needed many modifications. We have decided not to pursue it further. In the future, we may look at the US market with the i20 hatchback,’ says Lheem. ‘We are now looking at countries like Australia, New Zealand and the Philippines. This, however, will take time to materialise,’ he adds.

During the April-September period this year, HMIL exported 120,649 units, as against 67,626 units in the year-ago period, up 78.4%. The company exports cars to about 100 countries and had set a production target of 530,000 units by the end of 2008, and 600,000 units by next year, 50% of which was for the export market.

Despite the slowdown, HMIL is confident of meeting its exports targets. The company will also start exporting the new i20 hatchback later this month. This car will replace the older Getz in many of Hyundai’s markets worldwide.

Mercedes-Benz Jan-Oct 2008 sales up 47%

Recession or not, Mercedes-Benz is steaming ahead in India!

Even as various carmakers struggle to keep things going at an even pace, Mercedes-Benz seems to be doing well beyond expectations. Mercedes-Benz India has not only taken competition from BMW, Audi and Volvo in its stride, the company has actually had a 47% growth in sales in the period January-October 2008 compared with the corresponding period in 2007.

In order to boost sales and take extra care of its customers’ needs, Mercedes-Benz India has started providing a one-year additional service warranty, and is offering a differential pricing scheme for bulk purchases for high-end tour and taxi operators. The company is also ramping up its spares availability and service facilities.

Mercedes-Benz has already sold around 3,145 cars in India this year, compared to 2,491 cars it sold here last year. Up to 70% of all Mercedes cars sold in India last year were sold through finance schemes, while the percentage has fallen to less than 60% this year. However, that has not had any negative impact on the company’s sales.

Early next year, Mercedes-Benz will be moving its operations from its current location in Pimpri (on the outskirts of Pune) to Chakan, also near Pune. The company’s new plant would have an annual production capacity of 5,000 cars. Also, by January 2009, Mercedes-Benz may consider a price hike across its entire range, partly due to the effects of the fluctuating rupee-to-euro exchange rate.