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Old 5th May 2009, 11:44   #1
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Default Free trade Agreements, any impact on the car scene here?

India and Thailand have a free trade agreement. So what does it mean for the auto industry.
In the list given, there are lots of auto components like flywheels etc.,
So dues it mean that if a manufacturer imports stuff as CKDs they will save a lot of duty?

Any trade experts like to comment on this one?

Last edited by tsk1979 : 5th May 2009 at 11:47.
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Old 5th May 2009, 13:33   #2
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Why do you think Honda and Toyota are making hay (or spinning hay into gold! )?
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Old 5th May 2009, 17:50   #3
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On the Innova for example, TKM India makes all transmissions and ships out to Thailand and local consumption and Thailand makes all engines?? etc and ships to both countries. This way, they dont need 2 exclusive transmission facilities. Honda also has a similar strategy for the City.

Last edited by Mpower : 5th May 2009 at 18:12.
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Old 5th May 2009, 20:56   #4
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So im guessing when the fortuner makes it to our shores we may have a bit of concession.
Why couldn't toyota do the same with the Prado and the camry.
Same with Honda Why make The Crv a Cbu when the accord is going the CKD route.
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Old 5th May 2009, 23:49   #5
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One answer, Volumes in the market.

An assembly line needs to justify its investment, a press shop too (for sheet metal parts), be it in India and/or Thailand.

You have sufficient volumes justifying the investment, you can win, remember you also need to put a really obscene amount of money in tools & dies, say the die for a front fender of the Ambassador in India costs 5 crores, multiply the number into the number of press lines you have (no of machines pressing out sheet metal parts of the same type)

Just the assembly line won't suffice, you need dies as well. Dies are relevant to the particular body shape or form of the final sheet metal product. You also need a paintshop if you are going to have a press brake shop - the machine which punches out parts of sheet metal is called press brake.

Again, you need a press brake to trim the metal from continous colled rolled sheets of metal.

Expensive to replicate a factory, that's why CBU/CKD help. Say the accord gets all its parts imported, you can then tailor your assembly line/trim line to accept that car.
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Old 6th May 2009, 12:33   #6
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Guys the Free Trade Agreement between the two countries are from long time and it is nothing new.
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Old 8th August 2009, 13:15   #7
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Thumbs up India, South Korea ink free trade pact

Does this mean that Hyundai cars and parts will be cheaper now?

Source: India, South Korea ink free trade pact- Foreign Trade-Economy-News-The Economic Times

NEW DELHI: India and South Korea signed a comprehensive economic partnership agreement on Friday which will make Korean consumer products and
auto-parts cheaper in India.

The deal excludes fully built-up vehicles, and provides for easier movement of contractual service providers and professionals between the two countries and treatment of investments from the one another’s country at par with domestic investments.

This is the second CEPA signed by India, the other being with Singapore. This is also India’s first bilateral trade agreement with an OECD country.

As per the agreement, South Korea will eliminate duties on 93% of its industrial and agricultural products and India will do the same on 85% of its goods. India has excluded sensitive items farm products, textile items and built up automobiles from tariff elimination commitments. Duties will be phased out on most of these products in the next eight years.

The Indian subsidiary of Korean electronic goods manufacturer, Samsung India, pointed out that the pact will further strengthen business relationship between the two countries. “It will become easier to get new technology and innovative products into the country. Besides, the move will attract more Korean investments into India and vice-versa,” Samsung India deputy managing director R Zutshi told ET.

South Korean auto manufacturers with operations in India, too, are celebrating the pact as gradual elimination of the 12% duty on auto components would considerably bring down their input costs.

“It will make us more price competitive. Though the actual benefits of the FTA will result in a few years, but the reduction in duties on components and other automotive parts will bring down their effective prices and help create price advantage from our Indian operations,” Hyundai Motor India spokesman said.

The Indian industry is looking at the pact as an opportunity to bridge the bilateral trade deficit in favour of South Korea and improve export of services.

“We have projected a doubling of trade between India and South Korea within the next 5 years. Of the $10.2 billion bilateral trade for the period April 2008-February 2009, India had a deficit of $4.6 billion with Korea and this imbalance has to be corrected through greater market access for exports from India, said Ficci secretary general Amit Mitra.

Liberalisation in movement of service professionals is among the major gains expected for Indian industry out of the India–Korea CEPA, CII director general Chandrajit Banerjee pointed out. “India has a comparative advantage in services, such as IT/ITeS, Educational Services etc. We welcome the market access provided by Korea for Indian service providers”, said Mr. Banerjee.

CII expects Korean investments to flow into sectors like chemicals, food processing and metals. Both countries have committed to provide national treatment and protect each other’s investments to give a boost to bilateral investments in all sectors except these specifically exempted from it, an official release said.

The CEPA will come into force after it is ratified by the Korean National Assembly and the notifications to bring it into effect are made by the two countries.
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Old 8th August 2009, 13:36   #8
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Funny. Had seen that news item, and was considering creating a thread, when GTO's thread on the EU's treaty comes up, I wait if somebody posts this news item there, and now this thread.

I have serious doubts if that will impact Hyundai in anyway. AFAICT, Hyundai's best sellers have highly localised components. At best, the components would be sourced from Korea. Or components would be directly sourced by the Korean parent from Indian component makers. Either way, we have something.


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Old 31st January 2012, 11:44   #9
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Default The India EU Free Trade Agreement for cars

Europe's carmakers are crying foul over a proposed trade agreement between the European Union and India, which they say would restrict access to one of their most important but highly protected markets.
The industry, led by Germany's powerful VDA carmakers' association, says the agreement as discussed would grant Indian-built cars immediate duty-free access to the EU but would only reduce the tariff barrier to European vehicle exports to a level of 30 per cent, which would stay intact indefinitely.

Full Text: Europe's carmakers hit out at India trade deal - FT Specials News - IBNLive

If it goes through, would it make European luxury brands significantly cheaper? A cut from 60% to 30% is pretty substantial.
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