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Metal Casting Technologies : June 2007
www.metals.rala.com.au 6 BRIEFINGS Domestic Car Sales in China -- Increased Consumption for Castings Metal castings for automobile componetry obviously follow the trend lines of car sales. In April, 2007 Chery Automobile became the first mainland carmaker to top the domestic car sales list since 1987 by selling 44,568. The company's sales beat the 40,071 units at Shanghai GM, a General Motors Corp. joint venture, 38,627 at Shanghai VW and 37,016 at FAW VW, two separate joint ventures of Volkswagen. The four best sellers accounted for 33% of the Mainland's car market last month, which rose 16.1% to 567,000 units, according the China Association of Automobile Manufacturers. While Volkswagen's combined sales were higher, the state-owned Chery relies on a single production facility for the domestic market. It sold 10,019 units abroad last month and exports in the first three months reached almost 30,000 vehicles, putting the company on pace to meet or exceed its full-year overseas sales target. Chery, based in Anhui province, has seven overseas assembly plants operating or being built in Russia, Egypt, Iran, Indonesia, the Ukraine and Uruguay. It was the seventh-largest carmaker on the Mainland last year and the fourth- largest producer of cars, with sales of 305,200 vehicles including 272,400 cars. Rival manufacturers also reported strong growth. Mainland and Hong Kong sales at German giant Volkswagen rose 23% during the quarter. The maker of Volkswagen and Audi brand cars moved 202,623 units during the period, including imports, up from 164,708 the year before, the company said Friday. That compared with 25% growth for General Motors, which recorded sales of 291,588 vehicles in the Mainland from January to last month. Toyota Motor Corp., a latecomer to the Mainland, sold 103,000 vehicles there and in Hong Kong during the period, up 66% from a year ago. Recurrent Price Variations Effect International Credibility of Indian Units The manufacturing cost of iron castings has risen by up to 20 percent in India due to escalating prices with industries appealing to buyers for a 13 percent increase in the buying rates. Foundries and engineering industries in India have expressed concern over frequent fluctuation of raw material prices. A release from the Institute of Indian Foundrymen, Southern India Engineering Manufacturers' Association and the Coimbatore District Small Industries Association said that the prices of all inputs to the foundries are fluctuating erratically, therefore, the foundries are unable to hold the prices to customers. Representatives from the three associations claim that prices of pig iron, melting scrap, ferro alloys and alloying elements have all gone up by 10 percent to 15 percent and say that there appears to be a shortage in the availability of pig iron since it is value-added and sold. They believe that the Government should remove the five per cent Customs Duty on scrap and pig iron. Given that supply cannot be increased immediately to meet the demand, the Government should facilitate purchase of scrap at a competitive cost from the international market. They said that frequent price change affected the credibility of the Indian units in the international market. The Government should introduce a scheme similar to the Technology Upgradation Fund for textiles to the foundries. Foundries here exported 1.2 lakh tonnes of castings worth Rs. 500 crore a year. The cost escalation had put foundries and the engineering units in a quandary. The units were looking at efforts such as joint procurement of raw materials to control the costs. The hike in interest rates and weakening of the dollar had only added to the woes of these units. Hence, they sought "concrete measures to contain raw material Profit for China's Automobile Industry China's automobile industry made a profit of 76.8 billion Yuan (about US$10 billion) in 2006, up 46% from the previous year, according to new figures. A report from the China Association of Automobile Manufacturers states that in 2006 China's auto industry sold 7.22 million vehicles, an increase of 25% over 2005, and the country overtook Japan for the first time to become the world's second-largest auto market. China's auto makers last year produced 7.28 million vehicles, up 27.32% over the previous year, making the country the third-largest auto producer in the world. The report predicted that in 2007 China's auto-market demand will reach 8 million. However, auto dealers did not have a good time in 2006, with up to 40% of them suffering heavy losses. Statistics show that of the 1,800 franchised auto dealers nationwide, about 700 were in the red, of which 300 have been merged or edged out of the market. A manager of an auto-shop franchise said another 20% of auto dealers are struggling on the brink of deficits due to fierce competition. China's auto industry has been developing rapidly in recent years, mainly driven by a sharp increase in individual buyers. In 2006, more than 100 new sedan models hit the country's market, including 36 home- grown brands. China has about 1,500 registered auto producers, of which fewer than 100 sold more than 10,000 vehicles last year. Many small manufacturers sold only 300-500 vehicles. The National Development and Reform Commission warned in December that the auto industry was overheated, which could lead to overproduction.