Maruti Skids 12 pct as Profit Outlook Worsens

Shares in Maruti Suzuki tumbled as much as 12 percent as India's top carmaker spooked investors with a surprise rise in royalty payments to its parent, forcing analysts to slash growth estimates for the company.

On Saturday, Maruti unexpectedly reported a 20 percent fall in net profit in April-June, hit by high raw material costs, an increase in royalty payments, and a weakening of the euro which hurt export revenues.

Analysts had expected a 20 percent rise in earnings.

Maruti, 54.2 percent owned by Suzuki Motor<7269.t>, has also seen competitors such as Hyundai Motors and Ford Motor Co eat into its dominant market share.

"As it is, the market is worried about the rising competition in Maruti's core product group. The royalty issue took people by surprise," said Sandip Sabharwal, chief executive of portfolio management services at Prabhudas Lilladher.

Maruti's market share in India, where the growth rate is tapering, slipped to 56 percent in April-June from 61 percent a year ago.

About two months ago, India scrapped a ceiling on royalty payments by local companies to their overseas partners. The cap had been at 5 percent of sales on domestic revenues and 8 percent on export revenues.

Following the rule change, Maruti entered into a new royalty agreement with Suzuki Motor.

Sabharwal, who doesn't hold Maruti shares for his clients, said he plans to avoid the stock until clarity emerges about the royalty issue.

Ahead of the results, 22 analysts had a buy or strong buy on Maruti, while 14 had a hold, sell or strong sell rating.

India's robust economy is boosting demand for vehicles, but companies expanding their operations and higher costs linked to tougher emission rules and rising prices of raw materials such as steel are worries for the sector.

"Raw material costs have been easing but the effect of higher royalty payments will be there in the next few quarters," said Jatin Chawla, auto analyst with the institutional desk of India Infoline.

NEGATIVE OUTLOOK

Shares in Maruti, with a market value of $8.3 billion, slumped as much as 12.1 percent in their biggest intraday fall in more than 6 years as brokerages such as UBS, Bank of America Merrill Lynch and Macquarie downgraded the stock.

By 0745 GMT, its shares had fallen 10.7 percent to 1,213.5 rupees in a broader market down 0.4 percent and a 2.5 percent drop in the auto sector index.

Trading volume in Maruti shares, viewed by some investors as a proxy for the fast-growing Indian auto sector, surged to 1.06 million shares, 12 times its average full-day volume traded over the past 30 days.

Maruti stock has fallen 16.6 percent so far this year, lagging a sector index which has risen nearly 11 percent, while the main index has gained about 3.8 percent.

Other auto firms in India which have an overseas partner are also expected to be hit by the change in royalty fees.

Shares in India's largest motorcycle maker, Hero Honda, 26 percent owned by Honda Motor Corp, fell nearly 7 percent, analysts said.

"I would expect that Hero Honda would be subject to a higher royalty because it is doing very well in India," said Deepesh Rathore, analyst with IHS GlobalInsight.

"Honda has been using Hero (Honda) as a cash cow for its other ventures in India, and I would think a re-working of royalty arrangements there would also be expected," he said.

Honda said on Monday it had no intention of selling any part of its stake in Hero Honda , denying a media report. Honda has a wholly owned unit, Honda Motorcycle and Scooters India Ltd, as well as a joint venture that makes passenger cars called Honda Siel Cars.

2011 Ford Explorer makes its debut as an evolved SUV

DEARBORN, Mich. — It never became a symbol of excess, like the Hummer, but the once wildly popular Ford Explorer had become a relic of days when gas was cheap, housing prices were rising and the idea of driving a big, truck-based SUV to the suburban supermarket was rarely questioned.
But Ford unveils its new-generation 2011 Explorer today in a different world, where unemployment is still painfully high and people are questioning the costs of everything: gas, food, college degrees.

The new car-based crossover Explorer is very different, but Ford faces a marketing challenge in a name many people link to gas-guzzlers. Jim Farley, Ford's head of marketing, says his No. 1 job will be to break down barriers people have built up against SUVs.

"My job is really to myth-bust, to really tell the story authentically and re-engage those people who lost the dream of the category," he says.

Ford is rolling out the new Explorer today in an unusual fashion, eschewing auto shows and Super Bowl ads to instead show the vehicle at a number of events around the country and on Facebook.

It hearkens back to car rollouts of the 1950s and '60s, when people would line up outside a car dealer to see the tarp pulled of the newest model.

"We really wanted to pick a day and make it Explorer day," Farley says. "We wanted to make it bigger than just an auto show."

Getting the Explorer right could extend Ford's recent winning streak. Last week, it reported $2.6 billion in earnings for the second quarter, based primarily on sales of its car models. SUVs and trucks traditionally have been far more profitable for automakers, so if Ford can woo Americans back to Explorers, it could mean even higher profits. Pricing has not been announced for the 2011.

"It is an incredibly important launch for them, between the brand recognition and the general impact on the bottom line that this vehicle could make," says Rebecca Lindland, an analyst at IHS Automotive.

During Explorer's heyday in the late 1990s and early 2000s, Ford sold about 400,000 a year. Last year, it sold just 52,000. Granted, 2009 was a terrible year for car sales, but even in 2008, sales were not much better.

About 96% of American consumers know the Explorer brand name, says Mark Fields, Ford's executive vice president and president of The Americas. But the primary reason they've said "no" to buying one is fuel economy, he says.

"We really want to take away the reasons people have to not buy SUVs," he says.

Ford spent a lot of time working on improving the Explorer's fuel economy. The new version weighs 100 pounds less than the last Explorer, and it's more aerodynamic.

Official fuel-economy numbers are not yet out, but Ford says the 2011 will get 20% to 30% better government mileage ratings. Lindland says she expects ratings to come in even better: She thinks engineers will find a way for at least one engine option to get more than 30 mpg on the highway. "Thirty mpg is the new mantra. Everyone is looking for that 30 mpg threshold. I hope they get it."

In creating the new model, the company studied customers' needs. Amy Marentic, Ford's large cars and crossover marketing manager, said marketing folks went out and stayed in the homes of 20 or so Explorer owners. The marketing executives went through their closets, went with them on their errand runs and ate dinner with them.

"We spent time with them so we could anticipate their needs," she says.

They found folks still yearned for a vehicle they could take off-road occasionally, holding onto the fantasy of an adventure vehicle, but needed a vehicle that could carry seven people and a lot of stuff.

Also from the research came the idea of a terrain-management system that adjusts the four-wheel-drive characteristics based on the driver simply turning a knob to select road conditions, such as sand, snow and mud. They also improved the company's signature SYNC voice-controlled entertainment system and expanded it into a system they now are calling MyFord Touch.

Based on the Taurus platform, the 2011 Explorer should have a more car-like ride.

"Customers have evolved, but the SUV has not evolved," she said. "We want to change that."

Car parts and car accessories

2012 BMW 6-series Rendered – Future Cars

BMW’s next big coupe will correct the sins of the past—and get more power.

Along with the X3, the 6-series is the oldest BMW on the market. Launched at the Frankfurt auto show in the fall of 2003, the current car has carried on for seven years, supported by a convertible version launched in 2004 and a very modest face lift in late 2007. Now it’s time to move on, and this is what we believe the next-generation 6-series will look like. It will be launched in late 2010 or early 2011 and draw heavily from the Gran Coupé concept car BMW unveiled at the Beijing auto show earlier this year.

Shop for cheap BMW car parts online

AUDI RS7 CONCEPT CAR

Designed by Adriano Mudri.

Click HERE for more pics and info…

The Audi RS7 Concept is a design study of a sportscar that adopts and combines several styling cues from the Audi Group models, from the R8-inspired rear end to the Lamborghini-trademark scissor doors. The author is Austrian Adriano Mudri.

Shop online the cheap car parts

Replacing Car Parts in Inexpensive Way

Have a need for replacement parts for your car? Well it seems that replacing some parts of our car needs some finances too and when you’re not ready for the expenses might as well look for alternative solution. Maintaining a car is expensive and as they say it’s like having another baby in the family. You have to take care of it or you’ll suffer if the car suddenly stopped in the middle of the highway. Well this will not happen to you if all the parts of your car is in good condition and checked regularly. Maintenance should always have regularity in checkups and conditioning just like humans. You always have to check your car engine, car battery, car lights, oil, car brakes and your car tires whenever you travel especially if you’re travelling to distant locations.

When it comes to parts replacement you can replace it with used auto body parts as long as you have a supplier that you can trust to sell you high quality products like EverDrive which is committed to give their clients quality used auto parts. You can be assured you’re getting the right part, right quality and right price for your car. Well they can guarantee all their products with a 3-year warranty and with a price of up to 50% lower than new part prices. That’s a good deal to resist so try their products and enjoy replacing your car parts with less expenses.

Honda To Launch Plug-In Hybrid Car in 2013, A Year After Toyota

It's been a time of turmoil for Honda lately, with the company doubling down on hybrids and pulling back on its clean-diesel efforts.

Now, according to a Reuters report, the company will introduce both a plug-in hybrid and a fully electric car for the 2013 model year. The electric car will be offered in the U.S. market first, to compete against such upcoming entries as the 2011 Nissan Leaf.

By 2013, the company plans to have no fewer than five hybrids for sale. It now offers the 2010 Honda Civic Hybrid sedan and the Insight dedicated hybrid hatchback. Its 2011 CR-Z hybrid two-seat sports car arrives this summer.

The fourth model is expected to be a hybrid version of the Fit subcompact, but no details have come to light yet on the fifth and final hybrid.

Honda is also considering manufacturing the Insight in one of its U.S. plants, most likely to reduce costs so it can lower the price below its current $20,400 level.

It may make two other hybrids in the U.S. too, one of them most probably the Civic Hybrid, since Civics are already built in North America.

Honda's proposed plug-in would compete against a plug-in model of the Toyota Prius hybrid. That vehicle, currently known by the cumbersome name of 2012 Toyota Prius Plug-In Hybrid, will hit dealers in very early 2012. Honda's plug-in would trail it by roughly a year.

Tomorrow, Honda's president Takanobu Ito will hold a news conference to provide some details of the new models and the results of its sweeping reshuffle of its portfolio, according to Japanese business daily Nikkei.