Business Drive

Suzuki Motor Q1 profit falls

Suzuki Motor Corp reported a 17 percent fall in quarterly profit as rising raw materials costs erased its gains from higher sales, and it kept its forecasts without the help of more favourable currency rates.

April-June operating profit at Suzuki was 33.80 billion yen ($313.1 million), compared with an average estimate of 36.0 billion yen in a Reuters poll of eight brokerages. First-quarter net profit rose 6.9 percent to 26.03 billion yen on revenue of 910.4 billion yen, up 1.8 percent.

For the business year to the end of next March, Suzuki kept its forecast for an operating profit of 140 billion yen and net profit of 80 billion yen, down 6.3 percent and 0.3 percent from last year. It kept its currency assumptions unchanged for the year, setting a more cautious 95 yen to the dollar and 150 yen to the euro for the second half of the year.

Consensus forecasts from 17 brokerages call for an operating profit of 146.9 billion yen and net profit of 83 billion yen. Last week, Suzuki's majority-owned Indian unit, Maruti Suzuki India Ltd reported a 7 percent fall in first-quarter profit also hit by high input costs.

Suzuki, a maker of compact cars and SUVs, has been moving upmarket with higher-margin cars such as the Swift and SX-4 models, while also increasing sales of cars built for General Motors Corp's Opel and Fiat SpA.

The robust sales have brought production at its plant in Hungary rocketing to a pace of 300,000 units a year, a rise of 30 percent so far this year. Still, shares of Suzuki have been battered in the past month on worries about the possibility of a prolonged inflation-driven sales slowdown in India, its biggest market.

The stock is down 29 percent in the year to date, faring worse than Tokyo's transport sub-index, which dropped 19 percent.

Renault invites Bajaj auto for India venture

Renault has invited India's Bajaj Auto Ltd to join a $1 billion manufacturing alliance with partner Nissan Motor Co , the Economic Times reported yesterday.

Renault and Nissan, which are developing a $2,500 car with motorbike maker Bajaj, are also negotiating with the Indian firm to extend their venture to distribute the Renault and Nissan vehicles that will be made in Chennai, the paper said.

Bajaj Auto?s managing director, Rajiv Bajaj declined comment, the paper said.

A spokesman for Renault in India was not immediately available for comment.

Renault, which makes the no-frills Logan sedan in a venture with utility vehicle Mahindra & Mahindra Ltd, had previously agreed to distribute the Renault/Nissan vehicles through the venture with Mahindra.

Mahindra earlier this year pulled out of the manufacturing alliance with Renault and Nissan in Chennai, which will start production in 2010 and will have a annual capacity for 400,000 vehicles in seven years.

Hyundai i20 manufacturing in India only

Hyundai Motors India Limited plans to manufacture its new model i20 solely in India. The company has already shifted its manufacturing bases to India for its small cars and has made India as its manufacturing and exports hub for small cars. It also plans to double its exports target in coming times.

The new i20 shall be revealed in September at the Paris Motor Show 2008. The company has no plans to phase out its popular model Hyundai Getz in near future.

Hyundai is world's fifth largest car manufacturer and second largest in India.

Indian customers can expect the new model in India by the end of the current calendar year. The new I20 would be powered by the latest Kappa engine from Hyundai which has recently been installed in the new version of i10.

"With the launch of these models, the contribution from Indian operation to overall global sale of Hyundai will increase to 15 per cent in a couple of years from the current 12 per cent," said, Managing Director, Hyundai Motors India Limited, HS Lheem.

He also stated that the new engine is exclusively being manufactured in India and the new i20 powered by this engine would compete effectively with similar cars in the small car segment.