India to be 4th largest passenger vehicle market

New Delhi: India will become the world's fourth largest passenger vehicle market in the next three years but will require an investment of about $20 billion to build up to nine new plants to meet the demand by then, reports PTI quoting global consultant Booz&Co.

The Indian passenger vehicle (PV) market will touch 3.5 million units mark in the next three years, it said.

"By next three years, India will be the fourth largest PV market in the world. Only the US, China and Japan will be ahead of India," Booz&Co partner Vikas Sehgal told PTI.

Currently, the domestic PV market is the world's seventh largest and it is likely to grow at 15%-20% every year till 2013, he added.

According to Society of Indian Automobile Manufacturers (SIAM), the PV market stood at about 2 million units in 2009-10 and is expected to reach 2.4 million units in this fiscal.

"India will even cross Japan by selling about five million PVs by 2017-18," Mr Sehgal said.

In order to reach to such a mammoth size, auto makers will constantly need addition of capacities to meet demand.

"India, in next three years, will need 6 to 9 new car plants with an average annual capacity of 1.5 lakh units...

This will require at least $15-$20 billion investment," Mr Sehgal said.

The auto makers will not only have to add capacities, but will also have to expand distribution network, strengthen component sourcing chain and enhance R&D capabilities, he added.

Under the Automotive Mission Plan (AMP), the Indian market had earlier set a target to become a $145 billion by 2016, for which $35-40 billion investment is required.

According to rating agency Fitch, the growth of Indian PV market will slow down to 15% in 2011 and profits of the companies are likely to be moderate due to inflationary pressure and huge capacity addition. During 2010, the total PV sales grew at about 30%.

Fitch had, however, said that ongoing large capacity additions by many auto makers will create a demand-supply mismatch in the short-to-medium term until demand rises sufficiently to fully absorb the new capacity.

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No tax worse than inflation: says Chidambaram

New Delhi: Concerned over high inflation, Union home minister P Chidamabaram today expressed doubt on whether the government had all instruments to check price rise, reports PTI.

"Inflation is high, food inflation is very high... we are not sure whether we have all the tools in hands to control food inflation," Mr Chidambaram said at a function organised by Skoch Consultancy.

Mr Chidambaram, who served as finance minister before moving to the home ministry in the previous UPA regime, said while there is a duty to maintain price stability, some administrative prices have to be corrected.

His remark came in the backdrop of an Empowered Group of Ministers (EGoM) headed by finance minister Pranab Mukherjee postponing a meeting to hike fuel prices indefinitely on oil minister Murli Deora's insistence.

Mr Chidambaram said there is no tax worse than inflation.

"If you have high income that is eaten by inflation," he added.

Food inflation rose to a 10-week high of 14.44% for the week ended 18th December 18 on the back of a rise in onion prices by almost 40% on an annual basis, touching Rs75-Rs80 per kg in the retail market.

Overall inflation was 7.48% for the month of November 2010.

The price rise is also quite steep in the case of tomatoes and green vegetables, among other agri-commodities.

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M&M launches Thar CRDe in Kerala market

Mahindra & Mahindra (M&M) Ltd, market leader in utility vehicles has introduced the Thar CRDe, 4x4 off-roader in the Kerala market.

It is priced at Rs6.11 lakh for BS IV variant (ex-showroom price) Kochi.

Kerala has been the largest market for such vehicles and the company was totally geared to meet any requirements, Behram Dhabher, general manager (vehicle development) said.

The Thar aims to play a significant role in shaping the lifestyle vehicle segment both in urban and rural India.

Consumers are looking for a different lifestyle as they seek adventure and a fun experience which the vehicle will offer, he said.

The Thar is a manual 4x4 machine coupled with a powerful CRDe 105 BHP engine and driven by wire technology, which is capable of providing it variable speeds and acceleration.

On Wednesday, M&M ended 1.17% down at Rs771.05 on the Bombay Stock Exchange, while the benchmark Sensex declined 0.96% to 20,301 points.

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