India’s advantage as an ideal cost-competitive hub is the key
Onlookers gather at a pavilion during the 10th auto expo at Pragati Maidan in New Delhi recently. The 2008 version of auto expo in New Delhi, which saw unveiling of world’s cheapest car Nano by Tata Motors, catapulted India’s image from just being an auto market to emerging auto-manufacturing giant. This faith of global players in the Indian auto market was further confirmed at the just concluded biennial mega event in New Delhi which saw Japanese auto majors Toyota and Honda unveiling their global strategic models, both compact cars, especially designed and developed for the Indian market.
And this was not all. Be it the mass market players like Maruti Suzuki, Hyundai and Tata Motors or those keen on tapping the fast-growing luxury segment like Skoda, BMW, Mercedes-Benz, Audi or Volkswagen — all were there at the mega show announcing India launch of their latest models and unveiling their concepts.
One automaker that presented itself as a ‘complete brand’ was General Motors, which is not only making efforts to tap the maximum selling compact segment but is also looking at the luxury segment.
Through the highly competitive pricing of its new compact car ‘Beat’, it could have triggered a price war in the mass selling segment.
The growing clout of Indian automakers was clearly underlined by a recent survey by leading consultancy firm KPMG, which said that global automotive market share winners over the next five years would include various new Chinese and Indian vehicle manufacturers, along with leaders like Hyundai/Kia, Toyota, Honda and Volkswagen.
From the current ranking of 11th largest passenger car market, India will jump to the seventh spot in the next five years. And it is not just about cars; India is also world’s second largest two-wheeler market and fourth largest commercial vehicle market, besides emerging as a quality component manufacturing base with low-cost advantage. So, auto experts were not at all surprised with Honda’s decision to export crucial components from its new plant in Rajasthan to its headquarters in Japan, while Hyundai and Suzuki Motors have already made India as their export hubs.
Concept vehicles For the record, the week-long show, jointly organised by the Automotive Component Manufacturers Association (ACMA), the Society of Indian Automobile Manufacturers (SIAM) and the Confederation of Indian Industry (CII) since 1986, saw participation of over 2,100 exhibitors and launch of 25 new models (the biggest ever so far), besides unveiling of over two-dozen concept vehicles. It was a huge hit as far as footfalls were concerned as almost 20-lakh auto-enthusiasts, apart from those eyeing serious business opportunities, witnessed the extravaganza.
The auto show also helped companies gauge the mood of their Indian customers and accordingly plan their future launches in the booming market that recorded growth despite economic slowdown even as the markets in the U.S. and Europe fared badly.
One segment that has caught everybody’s attention is the scope of battery-operated cars. It was precisely for this reason that some major carmakers like General Motors, Renault, Hyundai, Tata Motors and Maruti Suzuki announced their plans to bring “green cars” in the near future. India is also being seen as a major source of e-cars for global markets.
On the other hand, the commercial vehicle segment saw global players like Volvo, Navistar, Tata Motors, Ashok Leyland and Mercedes-Benz renewing their focus on the Indian market, thanks to the boom in the infrastructure sector and consistent economic growth.
India is also poised to emerge as a major destination for hi-end biking, besides consolidating its position as mass bike market and its major exporter.
The entry of iconic Harley Davidson brand and Ducati bikes in India are examples of it, while other players like Ducati, Yamaha, Suzuki and Honda are bullish on the idea.
Similarly, the presence of component manufacturers in huge numbers, which included dedicated stalls from countries like China, Germany and Italy did not surprise Indian industry.
Besides seeing huge domestic potential, emergence of India as a manufacturing hub for exports has prompted them to make a beeline for the sub-continent. Interestingly, the domestic auto component industry is targeting a six-fold growth in exports by 2016.
Pointing out that component sourcing by both domestic and global auto majors turned out to be a major activity at this year’s show, ACMA President Jayant Davar said, “India’s advantage as an ideal cost-competitive hub is the key, and this is going to prop up component exports in a big way in the years to come.” From around $20 billion in 2009, 20 per cent of which would be exports, Indian auto component industry is likely to touch $45 billion, of which 50 per cent would be from exports.
