Middle East Situation Likely To Strain Supply Chains

Middle East Situation Likely To Strain Supply Chains

With the share market in India showing signs of being affected by the developments in the Middle East, it is quite likely that the supply chains, including those that influence the auto industry, will see some signs of strain eventually if not at once. 
The likely reasons for this is the effect of an escalation in crude oil prices primarily. The others would involve shipping route disruptions such that the cargo ships carrying automotive parts, tools and equipment are unable to navigate their usual shipping lanes. This would result in delays and cost escalation as longer routes are chosen for safe passage. The example of Tesla and Volvo suspending manufacturing in early 2024 due to the conflict in the Red Sea is not yet lost. 
In terms of trade and tariffs, the conflicts and tensions between countries can be detrimental. The cost for manufacturers using materials like steel and aluminum can escalate at a rapid pace. 
With the Middle East known for its oil reserves, the current conflict and the way it is progressing is already having an effect on the crude prices. If it gets bad than this, large importing markets like India could see their crude import bills rise further. As it is, the prices of fossil fuels are already high with over 200 percent taxes. 
Any disruption in oil supply will impart considerable volatility, transportation cost increase and strain on an economy that is already fighting post-Covid inflation. 

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    Renault Nissan Automotive India Crosses 4.5 Million Powertrain Manufacturing Milestone

    Renault Nissan Automotive India

    Renault Nissan Automotive India (RNAIPL), the unique dedicated manufacturing facility for the Renault Nissan Alliance, has manufactured over 4.5 million powertrain units at its facility in Oragadam, Chennai (India). This includes 2.83 million engines and 1.67 million gearboxes since the start of production in 2010.

    The facility produces Renault and Nissan cars for India and export markets with over 2.75 million cars produced since start of operations in 2010. The state-of-the-art manufacturing facility also includes end-to-end capabilities for production of engines from melting of aluminium ingots, casting the molten metal into various engine parts such as the cylinder head and cylinder block at the casting shop, machining them to the perfect size and dimensions at the machining shop and assembling them together at the assembly shop. The plant has the capacity to produce engines with ranges from 800cc to 1500cc.

    RNAIPL also houses all facilities required for manufacturing gearboxes including gear machining, shaft machining, clutch house machining and gear heat treatment.

    Since start of production in May 2010, Renault Nissan Automotive India has produced seven different types of engines and three varieties of gearboxes. RNAIPL’s Powertrain reached the production milestone of one million engines in 2016, within six years of start of production and has also produced more than 160,000 units of EV reducer components for exports.

    Keerthi Prakash, MD, Renault Nissan Automotive India, said, “The production of 4.5 million powertrain units is a very important milestone for RNAIPL. In addition to powering the cars produced at our Chennai plant, we have also exported powertrain units and components to other countries around the world. Looking to the future, as part of the USD 600 million investment announced by the Renault Nissan alliance, we are readying our infrastructure to produce the engines and gearboxes for our new models.” 

    One of the top variant engines that is currently produced by RNAIPL is the HR10 TURBO engine that features the unique mirror bore cylinder coating technology used in sports cars such as the Nissan GT-R. The technology reduces resistance inside the engine, cutting weight, improving heat management and combustion to deliver smooth acceleration and efficient fuel use.

    RNAIPL’s plant uses robotic vision camera technology to ensure complete quality confirmation during the production of powertrain units and the sequential process flow ensures that each unit does not proceed to the next stage in manufacturing until it has been confirmed and certified for its quality.

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      Aluminium Association of India Ask Centre To Hike Import Duty And Encourage Domestic Production

      Aluminium

      The Aluminium Association of India (AAI), the apex body representing aluminium producers in India, has submitted its pre-budget representation to the Department for Promotion of Industry and Internal Trade (DPIIT) under Ministry of Commerce, Government of India.

      It emphasises aluminium’s crucial role in India’s continued growth, especially as the nation envisions becoming a ‘Viksit Bharat’ by 2047. High aluminium usage is an established marker of advanced economies, given the metal’s extensive use in both present and futuristic applications. This has led several nations like USA, Malaysia and Indonesia to designate aluminium as a ‘strategic sector’.

      As per industry estimates, India’s per capita consumption of aluminium is still around 3kg per annum, compared to the global average of 12kg. However, the sector is facing major challenges in attracting fresh investments, despite domestic demand for aluminium set to reach 10 MTPA by 2030. So far, the Indian aluminium industry has invested over USD 20 billion, to expand production capacity to 4.2 MTPA to meet the growing demand. However, a further investment of about USD 40 billion over the next 6 years will be needed to meet the expected demand of 10 MTPA, while also creating more jobs within India.

      AAI states that given that aluminium is a strategic metal with extensive usage in defence, aerospace and sunrise sectors of renewables, electric vehicles, power transmission and sustainable infrastructure, it is paramount for India to be self-sufficient in aluminium production. Towards encouraging fresh investments, aluminium producers have requested the Central Government to safeguard the industry from surging imports.

      The industry body states that over the past couple of years, imports of primary aluminium have doubled while there has also been a significant surge in low-quality scrap and downstream products, especially from China.

      Industry members have highlighted that the influx of imports in the domestic market is a deterrent to making new investments in the sector, even when India has all the necessary ingredients to emerge as a global aluminium hub. According to them, the primary reason for the surge in imports is the low import duties on primary/downstream products and a prevalent duty difference between primary goods and scrap in aluminium. This is unlike other key non-ferrous metals, where the duty for scrap and primary is at par.

      AAI states it is therefore requesting the Central Government to help ensure the nation’s self-sufficiency and attract new investments by increasing the import duty on primary/downstream products to 10 percent from the existing 7.5 percent. Additionally, to control cheap imports, the duty on aluminium scrap also needs to be set at 7.5 percent, at par with other aluminium products. This measure would encourage the recycling of domestic scrap and limit the influx of low-quality foreign scrap, helping strengthen the circular economy.

      To ensure global competitiveness, it is essential that policies nurture a sustainable environment, fostering growth for the domestic industry while positioning India as a leader in the global market. This will provide some relief to the industry, already burdened by high tax and regulatory charges.

      At present, the industry incurs around 17 percent of its cost of production in taxes, levies, and regulatory compliance charges. To ease this burden, the AAI has proposed an urgent rationalising of duties on crucial raw materials.

      The domestic aluminium industry’s existing investments in capacity have led to the creation of over 800,000 direct and indirect jobs and spurred the development of more than 4,000 small and medium enterprises (SMEs) in remote regions, particularly in the downstream sector. According to the AAI, the additional investment of USD 40 billion to meet domestic demand would align with the Prime Minister's vision for an ‘Atmanirbhar Bharat’, while also creating 2 million livelihood opportunities across the country. With government support in the form of duty rationalisation and enhanced import restrictions, the domestic producers are confident of contributing to India's journey toward self-reliance.

      Representational image courses: Victor Kovshevny/Flickr

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        KG Mobility To Develop SUVs With Technology From Chery

        KG Mobility To Develop SUVs With Technology From Chery

        KG Mobility of Korea – known previously as SsangYong Motor – will develop a series of SUVs on a platform licensed from China’s Chery Automobile Co. In this direction, KG Mobility signed a strategic partnership and platform license agreement with Chery Automobile Co. in October 2024.

        The agreement (claimed to have a span of eight years) was signed in the presence of KGM Mobility Chairman Jea-sun Kwak, company CEO Ki-young Hwang, and Chery Group's Chairman Yin Tongyue. Cherry Automobile Co. President Zhang Guibing was also present at the signing ceremony.

        Encompassing the development of cutting-edge technology, reduce product development time and adapt to market changes, the strategic collaboration agreement between Chery Automobile Co. and KG Mobility is expected to enable the latter to build mid-to-large SUVs that provide differentiated mobility value.

        The agreement includes sharing the intellectual property of the T2X platform, claim sources. T2X is a technology the Chinese automaker Chery Automobile Co. uses to manufacture plug-in hybrid vehicles.

        To enable KG Mobility to respond to market changes quickly and also to roll out models for global markets, the strategic collaboration marks a significant development for the KG Group of Korea.

        The regulatory filing notes, sources cited, highlight that the area to be impacted includes all countries in the world except China and United States.

        Hwak mentioned, "As a member of the KG Group family, KGM has successfully launched new models such as the Torres EVX and Actyon, as well as various improved models, boosting sales volumes and reinforcing our global market penetration while achieving business normalisation. Through this strategic partnership and technical collaboration with Chery Automobile, we will be able to develop a wider range of models, shorten development times, and launch new models that meet customer needs, allowing us to respond to the rapidly changing automotive market."

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          Stellantis CEO Visits Indian Operations

          Stellantis CEO Visits Indian Operations

          In what is termed as the Netherland-headquartered automotive group’s long-term vision for India, Stellantis CEO Carlos Tavares was in India recently to see the operations of Jeep and Citroen. These two are among the leading automotive brands within the group that is home to 14 well regarded automotive brands in the world including Chrysler and Fiat. They are present in India – Jeep since 2016 approximately and Citroen since 2021 – and have been making in roads into India with new launches and facelifts. 
          Paying visit to the group’s Ranjangaon (Pune) plant where the Jeep products are made besides that of Tata Motors since Stellantis has a JV with Tata Motors in India, Tavares is known to meticulously audit the Jeep as well as Citroen offerings. He is also known to have engaged with the local leadership team, select dealer partners and a few others in his effort to gather valuable market feedback that should help put in place a successful strategy for growth. 
          Tavares has been increasingly under pressure post the less encouraging financial results the Stellantis Group recorded in the first half of the current calendar year. He is being criticised for cutting too deep in terms of his 'lean' strategy. 
          In the past one year roughly, Stellantis has been battling falling sales, shrinking profit margins and a slew of executive departures. The dealers seem to be frustrated. The investors and union workers don’t seem to be happy either, according to a news report by Nora Naughton in Business Insider
          Created from the merger of FCA Automobiles and the PSA Groupe, Stellantis is claimed to be struggling in USA with Jeep and other brands facing criticism over issues concerning reliability and abrupt discontinuation of models that have been central to the image of a brand simply to keep costs low. A household brand for over 40 years, Stellantis almost abruptly discontinued the Fiat brand in India just before the BS 6 norms came into force. 
          The two brands in India – Jeep and Citroen – have also seen a change of charge often in the last few years, which does not imply well in terms of customer assurance and market commitment. 
          While the Citroen Basalt has been well-received, Jeep as a brand has not launched an entirely all-new next generation model of any of its offerings for some years now. In a highly competitive market like India, this may not work in favour of the brand named after the iconic Ford and Willys Jeeps of World War II.  

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