India auto industry
| Once upon a time....... There was a time in India when the portly Ambassador was India's most coveted and popular car. The Indian car buyer had to wait for months on end and even years before he could lay his hands on an ambassador or a Fiat Padmini which was usually handed over by nonchalant, supercilious salesmen. It was the Maruti 800, a product of the Japanese car giant Suzuki collaborating with Indian car maker Maruti which became a veritable watershed in the Indian auto market. It became the small car which Indian nuclear middle class families aspired to, it was compact and traffic-friendly, it also was easily maneuvered through Indian by-lanes and ‘gallis’ with ease. But now that too is history. India has become one of the world's fastest-growing car markets with scores of models plying the city roads and highways, from the home-grown Tata’s and Maruti’s to Volkswagens and Rolls Royce’s. Indians have emerged as avid car enthusiasts sporting their prized possessions as status symbols and speed machines. Foreign car companies have discovered the Indian consumer as well as the R & D potential in the Indian technical fraternity and are setting up manufacturing plants right and left across the country at lower costs. The growing desire for cars also is a sign that Indian roads are finally good enough for international cars to ride on. There are many four to six lane highways in India now and the Golden Quadrilateral, which passes through New Delhi, Calcutta, Madras and Mumbai proves that the Indian government takes infrastructure development very seriously. Millions of Indian families will enter the car boom bracket in the next two years according to surveys. The auto boom in 2004 was with a 29 per cent growth rate was followed by a lull in 2005 due to meteoric fuel costs and more stringent anti-emission policies implemented by the Indian government. Increasing Auto Loan interest rates from the bank also added to the slowdown. But all indicators in 2005 say that household income in India is galloping towards a double-digit pace and 24 million households should be able to ride in a new car by 2007. The Indian automobile market is projected to grow by 7% next year. The economy is booming and the middle class is getting easy finance schemes to upgrade to four wheelers from scooters and motorcycles. In post-liberalization India, backward linkages into the manufacturing of auto components have enabled many Indian vendors to foray in to core manufacturing. Trends in new-age Indian auto industry The Customer is King: The most obvious aspect is the proliferation of new manufacturers and the extension of demand in to all sub-segments like mid-size, premium mid-size and super-luxury car segments instead of being limited to the small car segment. The entry of foreign companies and the emerging stiff competition has enabled the setting up of a firm manufacturing foundation, which are allowing companies to develop new products from Indian soil. The Indian government is embarking on setting stringent standards on emission and safety related parameters for the auto industry and this has in turn elevated the general standards in a crowded market. Features like anti-lock braking systems, common rail injection, airbags and tiptronic transmission are now becoming customary in most mid-size and first-rate small cars. To speed things up, the average Indian car buyer is increasingly savvy with his auto-facts and is a highly informed buyer, networked via the internet and a spate of foreign and local journals and cable channels keeping him up to speed on the what, when, where and why of the auto world. Small car to dominate The small car is still the best suited to Indian city roads and will see more competition in future. But, extremely attractive interest rates for car financing and competitive market policies do forecast that the mid-size car will be increasingly affordable in the long run. Component Manufacturing Component manufacturers have also had to augment their production capacities to match global quality standards because of the integration with international markets. A number of multinational component manufacturers such as Delphi, Visteon and Johnson Controls set up base in India, and the competition has caused many Indian companies to become coveted suppliers in global markets. Bharat Forge and Sundram Fasteners are even planning on acquiring assets abroad to increase economies of scale to a global level. Auto Finance Some experts feel that the main enabler in the auto boom scene in India is the easy availability of car finance and reasonable interest rates. Banks are going to any lengths to lure customers in need of car loans. According to industry estimates, 80% of the one million cars sold in 2004 were financed by bank loans. Outsourcing Global auto makers are increasingly looking to India for a broad choice of requirements like components, designs and R&D. The dangers of the boom India has one of the world's highest accident rates, with more than 80,000 deaths a year. The Traffic Control system is highly understaffed and traffic rules are more the exception than the rule on Indian roads. There has been hardly any planning for the consequences of burgeoning traffic as well as its impact on the environment and the economy. The rising global oil prices are also raising questions about the sustainability of the auto boom in India. Urban planning is so weak that traffic congestion is threatening the economic life of urban India. Companies are unable to plan viable logistics for congested cities and are looking for fresh pastures out of India. The mass majority of the Indian population who depend on public transport and their own two feet or traditional methods like bullock carts are being waylaid for the swanky Gen-X middle class maverick. Upper Class Indians are looking to own Ferraris and Aston Martins, which are slated for launch in India soon. Yet, there is no looking back. The auto revolution is here to stay. Indians are stepping up to global standards of consumerism and auto mania. The invasion of cutting-edge technology, the ever increasing numbers of players in the market and the integration with the international R and D network through multinational car manufacturers have poised India to become one of the world’s leading production and export hubs instead of being limited to an assembling workshop. Related Articles Hawaii
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