The company, majority-owned by Japan’s Suzuki Motor Corp, has forecast India’s car market could more than double to five million units annually by 2015 and says it must increase supply to keep its leadership position.

“We’re preparing a project report for the third unit,” Maruti Suzuki India Chairman R.C. Bhargava said at an auto function in New Delhi, adding a final decision would be taken by the company’s board.

Maruti, which has a strong following among India’s growing middle class, is already producing at full capacity and has long waiting lists for some popular models.

It is seeking to claw back business after its market share slipped below 50 percent amid fierce competition from domestic and foreign rivals.

Bhargava estimated the cost of the proposed factory, which would be built at Maruti’s complex at Manesar in the northern state of Haryana, at 17 billion rupees (362 million dollars).

He gave no timeframe for construction of the factory, which would have a production capacity of 250,000 units.

With developed markets still in the doldrums, car makers globally are counting on India and fellow emerging market giant China to boost revenues.

India has drawn a flood of new entrants from General Motors to Ford and Renault, especially in the small car segment.

Maruti, whose strong position in India has made it Suzuki’s largest and most profitable business outside Japan, is currently setting up a second factory at its Manesar plant with an annual capacity of 300,000 units.

Its Gurgaon plant on the outskirts of New Delhi produces 700,000 units a year.

India has posted blistering car sales growth, with more than half a million cars sold in the first four months of the current fiscal year.

Car sales in India hit a record high last month on the back of soaring demand in rural areas, jumping 38 percent to 158,764, compared with 115,084 in the same month last year, according to industry figures. — AFP

The companies, which run several joint ventures including their flagship Shanghai GM, will develop a 1 liter to 1.5 liter direct-injection, turbocharged gasoline engine to be used by both sides in China and in globally sold vehicles, they said.

The work will be done in Detroit and at Shanghai’s Pan Asia Technical Automotive Center, the companies’ joint venture engineering and design center.

China is the biggest auto market by number of vehicles sold, and automakers like GM are looking to the country to drive revenues and offset weak global demand, though growth has fallen off since a boom last year fueled by tax cuts and subsidies.

Those incentives, aimed mainly at fuel-efficient vehicles, spurred a surge in sales of Wuling minivans, Chevrolet Sails and other small cars favored by cost-conscious families buying their first cars.

Keen to limit the country’s growing dependence on imported oil and clean up city skies, China’s planners are increasingly emphasizing the need for better fuel economy and emissions controls — and encouraging automakers to follow suit.

Ford Motor Co. has announced plans to introduce its “EcoBoost” line of direct-injection turbocharged engines, which provide a 20 percent increase in fuel efficiency, in the 1 liter Ford Mondeo produced at its joint venture Changan Ford Mazda Automotive Ltd., in western China’s Chongqing.

The GM-SAIC new engine project fits in with the two companies’ plans to expand sales in other developing markets, especially India. It will also develop front-wheel-drive transmissions to provide about a 10 percent improvement in fuel efficiency over conventional automatic transmissions.

“Together, we will continue to quickly provide our customers leading-edge technologies that improve fuel efficiency and deliver robust performance,” said Tom Stephens, GM’s vice chairman of global products operations.

Overall, vehicles powered by the new engines and transmissions will see up to a 20 percent improvement in carbon-dioxide emissions, he said.

The companies did not provide any financial figures for the new project. — AP

Three companies — Mahindra, Raghav Industries and Daewoo Bus — submitted binding bids earlier this week out of the six bidders that qualified in June to examine Ssangyong Motor’s accounts and business, Ssangyong said Thursday.

The car maker went into court-approved bankruptcy protection early last year amid falling sales and mounting red ink. It was majority-owned by Shanghai Automotive Industry Corp., or SAIC, one of China’s largest vehicle manufacturers, until SAIC lost management control during the bankruptcy process.

Ssangyong Motor Co., South Korea’s fifth-largest automaker, is far smaller than domestic rivals Hyundai Motor and Kia Motors Corp. It mostly manufactures light SUVs, but also makes a luxury sedan, the Chairman.

“We made our decision after evaluating the offered bidding prices, fund-raising capability, management plans after acquisition, job guarantee for current employees and other terms,” Ssangyong said in a statement.

Mahindra will pay Ssangyong a deposit of 5 percent of the acquisition price it offered and Ssangyong and its top executives will sign a memorandum of understanding with the Indian company by the end of this month.

Ssangyong did not reveal how much Mahindra will pay for the stake, but South Korea’s Yonhap news agency reported, without citing the source of the information, that Mahindra offered $480 million.

The Indian sport-utility vehicle maker will conduct a final due diligence on Ssangyong next month before settling on an acquisition price in October. The final contract is scheduled to be signed in November.

Mahindra & Mahindra has long wanted to be a bigger global player, and executives say Ssangyong’s over 1,200 global dealerships, 7 models and 5 brands will help it access new markets across Europe, Russia and Latin America.

“This deal is a significant move for Mahindra & Mahindra because it takes us into a much bigger league,” said Pawan Goenka, president of Mahindra’s automotive and farm divisions. “Our long-term aspiration is to become one of the world’s top SUV players. This deal brings us closer.”

Mahindra has also been eyeing the U.S. market and analysts say Ssangyong’s technical expertise could help it make more competitive vehicles for tough American consumers.

The company also intends to bring Ssangyong SUVs to India.

Mahindra said Ssangyong will continue to function independently, with Korean management.

Mahindra executives said the offer is part equity and part debt and would wipe out the company’s long-term debt, which was $640 million in December.

“The deal has been structured in such a way that we will be getting a debt-free company,” group chief financial officer Bharat Doshi told reporters.

Datamonitor, a research group, estimates that Mahindra’s cash from operations will be $500 million this year, with cash and noncore investments worth more than $500 million, putting financing of the deal well within reach.

Datamonitor analysts said labor disputes at Ssangyong led to operating losses of over $75 million during the third quarter of 2009, and Mahindra will face challenges managing the company’s “militant trade union.”

Mahindra shares closed up 0.8 percent at 632.7 rupees ($13.4) on the Bombay Stock Exchange, after rising as much as 2.8 percent on the news. — AP

The recall, announced Thursday, affects 412,000 vehicles in the U.S. — 373,000 Avalon sedans and 39,000 Lexus LX 470 SUVs. The recall is Toyota’s largest since announcing it would fix 600,000 Sienna minivans over rusting spare tire holders in April.

Toyota has been embroiled in its recall crisis since October, when it announced a recall of 5.3 million cars and trucks to fix floor mats that can trap pedals and cause unintended acceleration. A number of recalls have followed, from sticky gas pedals to braking problems with the Prius hybrid to rusting frames in the Tacoma pickup.

Thursday’s announcement brings the size of Toyota’s recalls to about 9.5 million cars and trucks in the U.S. since October, with some recalls affecting models as old as the 1998 model year. That means of the 24.1 million vehicles Toyota has sold in the U.S. since 1998, as tracked by Wards AutoInfoBank, Toyota has recalled about 39 percent.

“I don’t think it’s going to end anytime quickly or easily,” said George Magliano, auto analyst with the consulting firm IHS-Global Insight, of the company’s recalls. “Toyota had this big run of growth. The more they grew volume and market share, the more this (quality) system started to develop cracks.”

The Avalons recalled in the U.S. range from the 2000 model year through to 2004 and have improper casting of the steering lock bar — the component that locks the steering wheel when the vehicle is shut off — that can cause a crack to form on the surface.

Over time, the crack can expand, which can cause the steering wheel to become difficult to unlock when stationary. In some circumstances, the problem can cause the steering wheel to lock up during driving, Toyota said.

Three unconfirmed accidents with no injuries have been reported because of the problem, Toyota said. It will fix the Avalon steering problem by replacing a part called the steering column bracket, which houses the lock bar.

For the Lexus LX 470, Toyota is recalling the 2003-2007 model years to fix a different steering shaft problem, which could cause loss of steering control. No accidents have been reported from the problem, the company said.

For both repairs, customers will begin receiving letters in August asking them to bring their cars to dealers.

The LX 470 problem also affects 9,670 vehicles in Japan, two Land Cruiser models. Toyota is recalling another 6,750 vehicles in Japan, a sedan called the Pronard, for a problem similar to that experienced by the Avalon.

Toyota has been working to overhaul its quality control after being criticized for its slow response to vehicle flaws. It is hiring thousands of engineers to check for problems and appointing chief quality officers in its major regions.

“Toyota is continuing to work diligently to address safety issues wherever they arise and to strengthen our global quality assurance operations,” said Steve St. Angelo, Toyota chief quality officer for North America.

Still, the recalls have caused the company’s sales to lag in the U.S. this year, following years of rapid growth. Sales are up 10 percent for the first six months of the year, while sales for the broader industry have increased 17 percent.

The automaker has been luring customers back into showrooms with deep discounts and promotions. They drew buyers like Mindy Cohen, who picked up a new Corolla from World Toyota in Atlanta on Thursday. Cohen said she paid about $13,500 for the compact sedan, nearly $2,000 off the sticker price. She also said that the problems with Toyota cars and trucks have been overblown.

“Even if it was an issue, it’s been fixed,” she said. “All cars have problems.”

Toyota was slapped with a record $16.4 million fine in the United States for failing to promptly tell the government about its car defects. It remains under investigation by a federal grand jury in New York and by the Securities and Exchange Commission.

The company also faces more than 200 lawsuits in the U.S. tied to accidents involving defective automobiles, the lower resale value of Toyota vehicles, and a drop in its stock value. — AP

Tim Tucker, chief executive of Ford Motor Co.’s Japan operations, said Friday he was bullish about the potential for Japan, although he declined to give a sales target or specific product plans.

Last year, Ford sold just 2,200 vehicles in Japan — a tiny fraction of a market where new car sales last year totaled about 3 million vehicles.

But Tucker, who oversaw Ford’s India business before taking his new post last month, was optimistic about potential growth, noting that Ford sold 30,000 vehicles in India last year and expects to sell 130,000 this year.

“We know we are going to grow our business,” he said at a Tokyo event to unveil the Kuga sport-utility vehicle, one of five models Ford plans to introduce in Japan through 2012.

He declined to say whether Ford would bring a hybrid model to Japan, despite several questions from reporters.

Ford, based in Dearborn, Michigan, has a successful hybrid program in the U.S. exemplified in its Fusion hybrid. But it will face stiff competition in Japan, home to strong hybrid makers Toyota Motor Corp. and Honda Motor Co.

This week, Ford introduced in the U.S. the 2011 gas-electric hybrid Lincoln MKZ sedan for about $35,000, the same price as the gasoline-engine version.

Usually hybrids cost a couple of thousand dollars more than the equivalent regular model because of the ecological technology.

“All I can say is wait,” he said on Ford’s Japan possible hybrid rollout. “You will be pleasantly surprised.”

Tucker acknowledged Ford has lagged in Japan but stressed Ford is now on an ambitious drive to attract Japanese who have never stepped into a Ford showroom before.

Ford’s new strategy to invest in manufacturing in places like India, Thailand and China is a huge opportunity to boost sales in Japan, as well as other Asian nations, according to Tucker.

Ford is better able to respond to the recent shift in small cars in Japan and the Asian region, and it can bring down costs with higher production volumes, he said.

“We are very excited about the product plan we have in place,” said Tucker. — AP

Jaisar Khan Pathan, one in a long line of farmers, is simply too scrawny.

But Pathan, and scores like him who live in the shadow of a new factory built by Tata Motors to make its ultra-cheap Nano car, are the beneficiaries of the race to transform India from a nation of small farmers to an industrialized power.

They are part of a tectonic shift as millions move off the land into an uncertain future, even as others wage land battles that have blocked some of the world’s most powerful companies from building power plants, mines and factories.

The conflict over land has fueled a violent Maoist insurgency across much of India’s least developed regions. The insurgency, which Prime Minister Manmohan Singh has called India’s top internal security threat, claimed 908 lives in 2009 and rebels were blamed for a May train derailment that killed 145 more.

Some say India is trying to industrialize too fast, without the education and infrastructure in place to give the rural poor a fighting chance.

“How long did the industrial revolution take to be implemented in the West? Two hundred years. You want to replicate the same model and squeeze it into 20 years. That’s not possible. The fallout will be massive,” said Bhaskar Goswami, an economist at the Forum for Biotechnology and Food Security in New Delhi.

Against this backdrop of strife, Pathan’s story is the ideal of what could be achieved if the more than 50 percent of Indians who live off the land get a real stake in the new economy. It’s a principle that advocates of market capitalism and human rights activists can agree on, but that often fails to materialize across rural India, where stories of powerful business interests and corrupt officials conspiring to throw poor farmers off their land are all too common.

Around the Tata plant in Sanand, in the western state of Gujarat, people have begun to talk of the “Nano effect.”

Go down a narrow lane that runs to dirt not 15 minutes from the factory and amid the gamboling goats of Chharodi village, you will find 25 new homes.

Property prices have risen sharply — from 50 to 400 percent — and men are making fortunes brokering land deals.

The village head says three dozen of the 3,000 people in Chharodi have gotten work from contractors. The Nano factory hasn’t given them jobs directly, but it has offered a toehold in the industrial economy. They remain farmers, but a growing part of their income comes from informal business ventures or work for contractors.

Pathan and his three brothers sold the government one-third of their family farm to make way for the Nano plant. They were paid 20 million rupees ($432,900) — a fortune even in Gujarat, one of India’s richest states.

Ask the Pathan brothers what they did with this money, and they grin like schoolboys.

They bought 2.7 hectares (6.6 acres) of land — more than doubling their initial landholding — three kilometers (two miles) away, where they are preparing to plant their first crop.

They bought seven tractors and three Bolero jeeps, which they use for contracting work at the Nano site, raking in 455,000 rupees ($9,848) a month.

They are rebuilding their family home. Gone is the mud and thatch. Today their angular concrete two-story is the biggest on the block.

“You’ve done a damn good job out here,” Pathan says of Ratan Tata, who heads the Tata group’s sprawling industrial empire.

The “Nano effect” can be attributed, in part, to the state’s scrupulous care in avoiding conflict with the high-profile project.

The Nano factory and adjacent vendor park sit on 445 hectares (1,100 acres), most of which belonged to a government agricultural university that used it for grazing and experimental farming. Just seven families sold off a portion of their holdings to make way for an access road. The value of the rest of their property skyrocketed after Tata Motors came to town.

Those who sold got a decent price and, living up to Gujarat’s renowned business savvy, demonstrated more entrepreneurial zeal and money management skills than the average subsistence farmer.

State officials also scuttled plans for a 177 square kilometer (68 square mile) industrial zone around the factory after locals protested. They now plan to put it on fallow land about 10 kilometers (six miles) away.

___

Elsewhere in India, powerful multinationals, including South Korean steel giant Posco, India’s Tata Steel, and U.K.-listed Vedanta Resources are all embroiled in land fights.

Violent farmer protests over land, led by opposition politicians, forced Tata Motors to move the Nano factory site from West Bengal state to Gujarat, delaying full-scale production by nearly two years.

Even business-friendly Gujarat is vulnerable to land fights. Farmers opposed to a cement plant they say cuts off a crucial irrigation pond complain of harassment by police and stone-throwing company goons. A proposed nuclear power plant has come up against opposition from locals who say it would displace 10,000 families. Others protest that a proposed special economic zone would destroy 3,000 hectares (7,400 acres) of mangrove trees, which protect the coastline and support a local fishing industry that employs 10,000 people.

Indian policymakers are trying to figure out how to broaden the “Nano effect” and help land losers across the country become stakeholders too. Critics say their failure so far to do so has dragged down India’s growth and left the mass of poor rural Indians with little to show for their nation’s progress.

Too often, farmers who sell their land to make way for industry quickly spend that money, then struggle to make a living with outdated skills.

“The compensation is usually for consumption. Within no time the money is used up,” said Nayan Raval, a top adviser to the Gujarat Industrial Development Corporation, which promotes business development. “Only a few enlightened farmers invest it.”

Biswajit Mohanty, a lands rights activist in the eastern state of Orissa, says that in poorer areas, land acquisition rules are twisted to accommodate business interests, usually mining conglomerates, which often force farmers to give up their land for a pittance.

“In most cases, the government does not follow the procedure, and village councils are manipulated or threatened to agree to sell land,” he said. Anger at the expropriations has helped the Maoist rebels recruit new cadres to fight the government.

Two proposed national laws, drafted in response to clashes over land acquisition, would introduce minimum protections for the displaced. Some states, including Gujarat, give farmers back a fraction of the land they’ve vacated after it has been upgraded with roads and electricity, or give preference to original land owners when allocating new industrial zones.

“Land is a finite resource,” said Arvind Agarwal, managing director of Gujarat Industrial Development Corporation. “Sixty percent of Gujaratis and 70 percent of the country depend on land. You have to meet their aspirations.”

But many say such measures can only help some people, some of the time.

Even industrialization’s staunchest advocates acknowledge that the transition out of agriculture — or for tens of millions of nomadic tribal people, a pre-agricultural lifestyle — typically takes generations.

Even in Sanand, few have made a direct leap from farm to factory without a helping hand.

Tata Motors, which declined comment for this article, says 95 percent of the factory’s 2,400 employees are locals, most trained at government technical institutes.

Gujarat officials enrolled 1,500 young people from surrounding villages in a skills training program it launched the same month the Nano deal was signed.

While the entrepreneurial skill of the Gujarati people and the state’s care with training and land acquisition surely contributed to the “Nano effect,” so too did infrastructure. Without roads and electricity — absent in swaths of India — the villagers of Chharodi would not be able to ply their new trades.

“People who lose their land have to be stakeholders,” said Swaminathan Aiyar, a columnist and fellow at the Cato Institute in Washington D.C. “All disruption has short term big disadvantages. The question is what happens in the long term. If there is infrastructure and electricity, there are so many opportunities.”

Just ask farmer Pathan.

“Bring more companies,” he says, grinning. — AP

Sales rose 19.4 percent from a year earlier to just over 1 million vehicles, the China Association of Automobile Manufacturers said. Growth has fallen steadily since March, when sales grew by 63 percent.

Automakers are looking to China, the biggest auto market by number of vehicles sold, to drive sales amid weak global demand. Sales this year are forecast to grow by no more than 20 percent, well off 2009’s stunning 45 percent rise.

“Growth is definitely slowing, though sales still remain strong,” said Zhang Xin, an auto industry analyst for Guotai Jun’an Securities in Beijing.

Sales in the United States rose 14 percent in June over a year earlier but demand weakened as customers worried about the economy.

In China, automakers face rising costs and labor tensions, highlighted by recent strikes at parts suppliers affiliated with Honda Motor Co. and Toyota Motor Corp. that disrupted production.

“China’s auto industry faces a possible crisis of rising costs and should not just pursue remarkable sales numbers,” Zhang said. “The recent labor unrest should be an alert.”

China passed the United States last year as the biggest auto market on the strength of sales tax cuts, subsidies to rural buyers and incentives to encourage drivers to switch to cleaner vehicles.

June sales were driven by an 83 percent spike in purchases of commercial multipurpose vehicles, while purchases of sedans grew by only 10 percent, the CAAM said.

For the first half of the year, sales rose 47.7 percent from a year earlier to just over 9 million units, the group said.

In a report this week, the Nielsen Co. said its annual “China auto trend” survey found buying sentiment has fallen sharply as the effect of Beijing’s economic stimulus spending fades and housing costs rise. The share of people surveyed who plan to buy in the next 12 months dropped by 21 percentage points from a year earlier to 32 percent.

General Motors Co. says China became its biggest national market in the first half of the year, overtaking the United States for the first time as sales rose nearly 50 percent to 1.2 million vehicles.

Ford Motor Co. says its first-half sales in China rose 53 percent from a year earlier to 301,524 vehicles.

China’s domestic automakers do not release such detailed figures but say sales are growing strongly. — AP

Toyota Motor Corp. President Akio Toyoda says raising wages brings benefits because it creates more customers who can buy Toyota vehicles. He says workers and managers in China should work more cooperatively because they both have the same goal of building quality cars.

Toyota as well as rival Honda Motor Corp. have repeatedly halted production at car assembly plants in China since mid-May because of strikes at affiliated suppliers.

The strikes have inspired labor unrest at a number of factories in China, where workers have complained about poor conditions. — AP

Toyota Motor Corp. spokesman Paul Nolasco said recalls in overseas markets will follow soon, totaling about 270,000 vehicles globally. That includes: 138,000 vehicles in the U.S., 15,000 in Europe, 10,000 in the Middle East, 6,000 in China, 4,000 in Canada, and 8,000 in other regions.

Toyota told the Japanese government Monday it was recalling 91,903 vehicles for flaws in the valve springs, a crucial engine component, that could make the automobile stall while in motion. “We apologize for inconveniencing our customers. We hope to fix the problem soon,” Nolasco said.

The quality problem affecting top-of-the-line products comes as Toyota struggles to move on from massive global recalls that started in October. It already has recalled more than 8.5 million vehicles for various problems, including sticking gas pedals, braking software glitches and defective floor mats.

The world’s top automaker was fined a record $16.4 million in the United States for responding too slowly when the recall crisis erupted.

The latest woes come on top of a recall last week for 17,000 Lexus hybrids after testing showed fuel can spill during a rear-end crash.

Analysts said Monday’s recall did little to instill consumer confidence after Toyota President Akio Toyoda, facing shareholders last month, vowed to improve vehicle quality inspections.

“It is not doing a good job in communicating a message about what exactly it is doing to beef up quality checks,” said Shotaro Noguchi, auto analyst with Nomura Securities Co. in Tokyo. “So it is hard for people to believe Toyota is taking the customer’s view as it is promising to do.”

The company announced the latest quality problems last week. Some 180,000 of the defective automobiles were sold overseas, 138,000 of them in the United States.

No accidents or injuries have been reported because of the defect. About 220 complaints have been reported.

Toyota said it was replacing the valve spring in the recalled vehicles, produced between July 2005 and August 2008 — Lexus models GS350, GS450h, GS460, IS350, LS460, LS600h, LS600hL and Crown models.

Toyota also faces more than 200 lawsuits in the U.S. tied to accidents involving defective automobiles, the lower resale value of Toyota vehicles, and a drop in its stock value.

The Tokyo market reacted with calm to Toyota’s recall news. Toyota shares gained 0.5 percent to finish at 3,035 yen. — AP

“The defective engines, whose valve springs are not working properly, may halt in the worst case scenario while driving,” Toyota spokesman Hideto Yukawa said. “The company is preparing for taking market measures as soon as possible.”

The spokesman did not rule out a recall announcement in the future.

The defective 4.6-litre V8 and 3.5-litre V6 engines are installed in eight top line models, including some hybrids — the Lexus GS350, GS450h, GS460, IS350, LS460, LS600h and LS600hL as well as Crown sedans, he said.

As many as 270,000 units worldwide, including some 90,000 cars in Japan, may be affected if the company decides to pull the models.

The world’s largest automaker has been hit by a series of safety recalls and has pulled around 10 million vehicles worldwide since late last year. — AFP