India- Possible Global Destination For Automobile Manufacturing

Indian automobile manufacturing has left behind the days of Ambassadors and Padmini in the pages of its history. Today India is selling more than a million passenger cars and as estimated by a number of agencies, by the end of the decade the car sales in India could double to 2 million units. I don’t have a doubt about it. With metalled roads reaching the rural India, all the used Maruti 800 will certainly go to villages along with some new and bigger cars too. And the domestic demand will persists, but the manufacturers are working for the exports with equal zeal to meet the contingencies.

However, today there is only one Indian player- Tata Motors, in car manufacturing with over 16% market share; and Mahindra and Mahindra with its Renault’s Logan will soon join as the second one. Maruti Udyog that is now a Suzuki company is at the top in car manufacturing with over 44% share. Hyundai is another volume car manufacturer with more than 15% of the market share; and is serious one with its major investment plans in India.

One in the developed country may doubt about India becoming a powerful automobile manufacturing country. It is more so when one looks at how UK and other European countries couldn’t do that in the wake of the rise of Japan and then to a limited extent South Korea as the major automobile manufacturing countries. China is coming up fast to become another Asian country in automobile manufacturing very soon. With its ambitions to become world leader in every sector of industry, no one could have any doubt about its place. However, it never means that Indian manufacturers can’t do it. Both- Tata Motors as well as Mahindra and Mahindra, as a company can make its presence important enough in the sector.

Tata Motors entry in car manufacturing with ‘Indica’ and its success was the proof of its internal strength. If Tata Motors could do the same with its Rs1-lakh car, that could be a game changer. However, Maruti Udyog of Suzuki now, will try to do its best to maintain its entry-level monopoly. As reported, it would be positioning Maruti 800 against Rs 1-lakh car, and that’s why it is not dropping it from its product line. By offering Swift with diesel engine from its new plant at Manesar, Suzuki will cut into ‘Indica’ market too. Tata Motors will have to upgrade its engine as well as the overall quality to a much higher level; and simultaneously come out with something new and more delighting to car crazy customers.

Mahindra and Mahindra couldn’t learn the tricks of car business with its Ford collaboration as Tata Motors did from its Mercedes one. May be Renault-Nissan’s tie-up for ‘Logan’ will provide that chance, and it could go for similar success as it did with Scorpio in SUV. Mahindra with Ingenio, the new platform of the SUV can prove to the market its engineering prowess. I wish one of them could have built a uniquely innovative and popular vehicle such as Mitsubishi’s mini-Pajero on one of their platform, say ‘Indica’.

Unlike China, not many Indian entrepreneurs are willing to enter automotive sector. Bajaj Auto and Ashok Leyland could do that, but it seems both the companies wish to keep sticking to its core competence unlike Tata Motors. However, with increasing market both Suzuki and Hyundai can make India its manufacturing base for models meant for export to geographically advantageous countries, and even Toyota and Honda at later stage may get into models requiring mass production in India for export. It can happen if India exhibits certain manufacturing advantages over China through better-priced and superior quality auto components.

Every auto company in India is investing in big way for increasing its capacity- Tata Motors Rs 10,000 crore; Maruti Udyog Rs 9,000 crore; Hyundai Motors Rs 5,000 crore; Mahindra &Mahiindra Rs 1,000 crore; General Motors India Rs 13,80 crore; Honda Siel Rs 920 crore, and even Ford Motor India Rs 345 crore. The industry’s investment figures totting up to more than Rs. 30,000 crore are good enough a signal for boom in the sector and its continuance. And even the newer ones such as VW, Nissan and BMW are trying to get into manufacturing of its vehicles in India.

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