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The Korean carmaker is halting sales of its top-selling vehicle in the US and South Korea owing to concerns about sticking door locks. However, this will not affect Hyundai’s India sales, say analysts.
First, it was Japan’s Toyota and Honda, then India’s Maruti, and now Korean chaebol Hyundai is facing a total recall of its recently launched ‘2011 Sonata sedan’ cars due to concerns about sticking door locks.
Acting on a handful of customer complaints, Hyundai Motor intends to carry out a voluntary recall of its new Sonatas produced in Korea and the US to replace some front-door latches, the company said in its official statement.
However, this will not affect Indian sales of the vehicle, as it’s a different model. “This will not impact sales of Sonata in India, as the YF Sonata model being sold in the US and South Korea is a new one, while in India the Sonata Transform is sold,” said Hyundai’s spokesperson Rajiv Mitra.
Automobile dealers and analysts also do not believe that the problems with the new Sonata model launched in the US will affect Hyundai’s sales in India, especially because of the low volume of Sonata car sales in the domestic market. “Sonata hardly contributes to the Indian volumes, as the Indian market is concentrated more on small vehicles, so sales will not be affected” an analyst from a brokerage said.
The Sonata is Hyundai's largest-selling vehicle, with global sales of 120,028 cars in 2009. The 2011 Sonata model went on sale only two weeks ago. There are currently only about 5,000 cars in the US inventory, and about 1,300 cars have been sold. In India, Hyundai sold 500 imported Sonata cars in 2009.
According to a report by Autoweek.com, Hyundai spokesman Miles Johnson was quoted stating that the problem involves a lock malfunction that occurs when front-seat passengers try to open their doors from the inside while depressing the lock button at the same time. When that happens, the interior door handles don't return to their original positions, trapping the passenger until the lock button is pressed again.
Mr Johnson also stated that Hyundai has become highly sensitive to product issues amidst a series of high-profile congressional hearings involving its Japanese competitor Toyota Motors.
Analysts in India believe that owing to these global issues, exporters are becoming more cautious about product quality. “They are themselves reviewing product quality and checking safety norms that apply in different markets,” the analyst said.
The recall will affect YF Sonatas produced in Korea until 6th December, which is around 46,000 units, and those produced at Hyundai Motor Manufacturing in Alabama (HMMA) and sold to customers until 16th February, which are nearly 1,300 units, the company said.
“Since the launch of the Sonata in Korea last September, Hyundai Motors discovered a mechanical problem with its front-door latches which, in very rare instances, will not close properly. To avoid a possible occurrence of the problem, Hyundai has been applying modified parts to some of its Korean and US production models,” the company said.
The company says that it will officially notify Korea's ministry of land, transport and maritime affairs in Korea and the National Highway Traffic Safety Administration (NHTSA) in the US of the voluntary recall this week.
Johnson said Hyundai engineers were trying today to determine whether the malfunction even warranted notification to the National Highway Traffic Safety Administration, which governs product recalls.
Consumers are happy with Hyundai’s decision to recall. Paul Landerman blogged on Autoweek
“That's awfully sweet of Hyundai, given the light at Toyota's dissatisfaction.” Another blogger said “Pretty sad when the Koreans can get it right. Maybe Toyota can learn from them”.
The power ministry has estimated coal imports of 48 million tonnes in FY10-11, sharply higher than the expected imports of 28mt in the current fiscal, as domestic supply shrinks due to issues like environmental clearance and Naxalite threats
India’s coal imports for power production are likely to rise to 48 million tonnes (mt) in the next fiscal, sharply higher than the expected imports of 28mt for FY09-10. Both private and public power utilities are likely to contribute to this high figure. Despite India being a coal-rich country, delay in mining activities at captive coal blocks, inferior quality of coal and hindrances in domestic coal transportation has increased power utilities’ dependence on imported coal.
According to the HS Brahma, secretary, ministry of power, public and private power utilities will together import 48mt of coal in the next fiscal. The import volume has been planned to ensure regular fuel supply to Indian power plants. Australia, Indonesia and South Africa are the major countries catering to India’s coal demand.
As per a PTI report, the total coal requirement during the 11th Five Year Plan (2007-12) is expected to touch 700 million tonnes, and the demand from power companies is likely to be at 550 million tonnes. A major portion of this requirement is likely to be met through coal imports.
The constant increase in coal imports by Indian power utilities is ironical, given that India has the fourth-largest reserves of coal in the world. However, effective utilisation of these reserves has hit roadblocks like environmental clearances, rehabilitation issues and the Naxalite movement.
Power utilities are increasingly looking at coal imports as an easier option to ensure coal linkages for their plants. With a large of number of captive coal blocks stuck in various pre-implementation stages, companies are more comfortable with their dependence on coal imports.
Coal blocks allotted for captive use to various power utilities as early as 2008, are still in the environmental clearance stage. The coal block allotted to GMR Energy in Orissa is one of the many examples. It is still in the environmental clearance phase, but company officials claim the coal linkage for the project has been secured and the plant will go on steam as scheduled, despite the delay in mining activity.
Similarly, Adani Group’s power plant in Tiroda (Maharashtra) hit a roadblock after two of its coal blocks in Lohara were refused environmental clearance.
Pramod Menon, chief financial officer, JSW Energy Ltd, confirms the necessity of imported coal. “Domestic coal has its own challenge; if we want to ramp up capacity, there are issues. We have tried to enter the space very differently, with a mix of domestic coal and imported coal. We generally take three to five years for exploration after allocation of a coal block. A lot of capacity is coming in, but we have to wait and watch out for the challenges which these capacities will face in procuring domestic coal. The reason for this is that we are not seeing a huge amount of coal capacity actually coming on-stream,” he said.
Coal linkages through imports have become extremely important for power utilities to ensure timely commissioning of their planned power capacities. An excellent example of this is the Videocon group. It has been able to achieve financial closure for its Gujarat power project due to assured coal linkages through imports. However, a second power project of the same group in Chhattisgarh still awaits financial closure. The coal supply for this plant will depend on captive coal blocks which have not been allotted. The group is confident that the Gujarat plant will be completed on schedule, but it refused to provide a timeline for the Chhattisgarh project as the coal linkages have not yet been secured.
Operational power plants in the country are also under constant threat of irregular coal supply due to mining and transportation issues. According to the Central Electricity Authority data, around 22 thermal power stations (TPS) were in the critical list with less than seven days of coal supply. Of these, 13 TPS are in the super-critical list with less than four days of coal supply. The number of TPSs in the critical list has been constant for several months, with no improvement in the coal supply scenario. The main reasons cited for the coal shortage are delay in coal imports or reduced coal supplies from the captive coal blocks for these plants.
India’s major coal reserves lie in the ‘red’ belt or the Naxal-affected regions of the country. Power plants fuelled by coal blocks in these regions face issues like irregular supply. Coal India Ltd, India’s largest coal supplier, is also seriously looking at the coal import option. CIL officials had earlier admitted to transportation problems from coal mines in the Naxal-affected regions of Jharkhand, Orissa, Maharashtra, Madhya Pradesh and Chhattisgarh.
National Thermal Power Corporation Ltd (NTPC), which is India’s largest power producer, plans to import coal in large quantities from Australia, despite the fact that domestic coal blocks have been allotted to each of its projects. It has already imported 9mt of the targeted 12.5mt during the current financial year (2009-10). NTPC’s thermal power stations at Farakka and Khalagaon have been on the super-critical list for several months due to inadequate coal supply.
Ballooning debt is likely to force several countries to default and the US to cut spending, according to Harvard University Professor Kenneth Rogoff, who in 2008 predicted the failure of big American banks. The US is likely to tighten monetary policy before cutting government spending, sending “shockwaves” through financial markets, Rogoff said.