In­dia’s au­to­mo­bile in­dus­try

Business Traveller (India) - - CONTENTS -

In­dia av­er­aged an an­nual pro­duc­tion of 24 mil­lion cars last year, mak­ing it the sixth largest pro­ducer of ve­hi­cles in the world. The au­to­mo­bile in­dus­try con­trib­utes more than seven per cent to the coun­try’s GDP (Gross Do­mes­tic Prod­uct) by vol­ume. To quote our Union Min­is­ter of Heavy In­dus­tries Anant Geete at the inau­gu­ra­tion of a test track fa­cil­ity by Global Au­to­mo­tive Re­search Cen­tre (GARC), “In­dian au­to­mo­tive sec­tor plays a very im­por­tant role in the coun­try’s man­u­fac­tur­ing sec­tor and is likely to con­trib­ute 12 per cent to the coun­try’s GDP over the next decade.” (GARC is a unit un­der Na­tional Au­to­mo­tive Test­ing and R&D In­fra­struc­ture Project (NATRiP) that houses fa­cil­i­ties for com­pre­hen­sive test­ing ser­vices for cars.) He fur­ther stressed on how the In­dian gov­ern­ment is con­stantly mak­ing eͿorts to mod­ernise pro­duc­tion and en­cour­age clean, safe and eco­nom­i­cal mo­bil­ity ser­vices. By 2026, In­dia is es­ti­mated to be the third largest au­to­mo­tive mar­ket by vol­ume in the world. An in­dus­try that’s ex­pe­ri­enc­ing an ac­cel­er­ated up­ward trend, it is con­stantly at­tract­ing for­eign di­rect in­vest­ment by global man­u­fac­tur­ers. (FDI of 100 per cent is al­lowed un­der the au­to­matic route in the auto sec­tor, sub­ject to all the ap­pli­ca­ble reg­u­la­tions and laws.) In fact, the coun­try’s

bur­geon­ing au­to­mo­bile in­dus­try is one of the key driv­ers of the gov­ern­ment’s am­bi­tious “Make in In­dia” ini­tia­tive that aims to Àve­fold the ex­port of ve­hi­cles by 2026.

The mag­ni­tude and po­ten­tial of In­dia’s au­to­mo­bile in­dus­try has tempted global play­ers to ex­pand their op­er­a­tions here. This in­cludes Suzuki (Ja­pan), Nis­san (Ja­pan), Volk­swa­gen (Ger­many), Hyundai (South Korea), BMW (Ger­many), Ford (USA), Toy­ota (Ja­pan), Mercedes (Ger­many) and Honda (Ja­pan). Then there are the home­grown big­gies: Tata Mo­tors and Mahin­dra & Mahin­dra, that make com­mer­cial ve­hi­cles along with pas­sen­ger cars. Known for its ac­qui­si­tion of Jaguar Land Rover from Ford Mo­tor Com­pany at US$2.3 bil­lion in 2008, Tata Mo­tors is one of In­dia’s old­est au­to­mo­tive com­pa­nies with a rich his­tory that dates back to 1945. It has re­cently signed a part­ner­ship with Volk­swa­gen to de­velop ve­hi­cles for the do­mes­tic car mar­ket here.

How­ever, the coun­try’s largest pas­sen­ger com­pany is Maruti Suzuki In­dia that ac­counts for 51 per cent of the In­dian car mar­ket. A sub­sidiary of Ja­pan’s Suzuki Mo­tor Cor­po­ra­tion, it’s safe to say most In­dian fam­i­lies’ Àrst cars were Marutis. Its lat­est launches — com­pact util­ity ve­hi­cle Vi­tara Brezza and the hy­brid ver­sion of the multi-pur­pose ve­hi­cle Er­tiga, helped it sur­pass Mahin­dra & Mahin­dra as In­dia’s largest util­ity ve­hi­cle maker. Known for its util­ity cars, Mahin­dra & Mahin­dra’s Bolero and Scorpio have been its show­stop­pers for over a decade now. The ev­i­dent shift to­wards petrol en­gines by In­dian buy­ers in the last few years and the lack of petrol en­gine op­tions by Mahin­dra & Mahin­dra are con­tribut­ing fac­tors for Maruti’s sweep­ing suc­cess in this seg­ment. Its at­trac­tive price points and upped fea­tures across util­ity ve­hi­cles are fur­ther rea­sons. Fol­low­ing this pos­i­tive re­sponse, the In­dian-Ja­panese car­maker has a pipe­line of SUVs that will be launched over the next few years. One of them is co­de­named Y1K, an SUV that will make its en­try in 2019 and take on the Re­nault Kwid — an­other ve­hi­cle that’s widely seen on In­dian roads these days. Re­nault In­dia, the sub­sidiary of France-based Re­nault S.A is a fast grow­ing au­to­mo­bile com­pany that’s made its pres­ence felt since its ar­rival in 2005. The Chen­nai-head­quar­tered car­maker’s SUV Duster and afore­men­tioned bud­get ve­hi­cle Kwid have helped it gain a solid Àve per cent mar­ket share in the In­dian mar­ket. Re­cently launched here is its Àveseater cross­over Cap­tur that was re­vealed ear­lier this year in Rus­sia. Re­nault’s lat­est prod­uct brings it in the league of Hyundai Creta and the Honda BR-V.

By 2026, In­dia is es­ti­mated to be the third largest au­to­mo­tive mar­ket by vol­ume in the world.

Hyundai’s Creta has been the brand’s third best-sell­ing car in In­dia for over a year now. It’s com­mend­able to see the South Korean-In­dian car com­pany se­cure a close sec­ond po­si­tion in the In­dian mar­ket be­hind Maruti Suzuki. A rel­a­tively un­known brand when it ven­tured into In­dia in 1996, it swept away the coun­try with its Hyundai Santro. Its achieve­ments may be at­trib­uted to its man­u­fac­tur­ing prow­ess here as well. Hyundai is the largest ex­porter from In­dia, ship­ping mod­els built here to its markets over­seas. For this car­maker, In­dia ac­counts for a stag­ger­ing 13 per cent of its global sales. It’s un­der­stand­able why Hyundai has an im­pres­sive line-up for the coun­try — this in­cludes the all-new Verna, and the face-lifted Eon and Creta. Hyundai closely com­petes with Honda Cars

In­dia, a sub­sidiary of Ja­pan-based Honda that en­tered In­dia in 1995. Its prod­ucts City, Ac­cord and Jazz have been hugely pop­u­lar in the mid-seg­ment. The brand new City and WR-V have con­trib­uted to

its re­cent suc­cess — an 18 per cent growth in sales vol­ume in 2016-17. The com­pany has been re­ceiv­ing a lot of in­quiries for its top­most brands such as HR-V and Civic (it was dis­con­tin­ued in 2012), which will be in­tro­duced in In­dia soon. The next gen­er­a­tion Amaze will be un­veiled to the world at the 2018 Auto Expo that will be held in New Delhi — ex­em­pli­fy­ing the im­por­tance of the In­dian mar­ket to Honda.

An­other brand that’s been mak­ing waves in the in­dus­try is Nis­san Mo­tor In­dia. Its global strate­gic part­ner­ship with Re­nault has been ex­tended to In­dia as well; the two share their man­u­fac­tur­ing plant in Chen­nai. This al­liance, along with Hyundai Mo­tors In­dia, Tata Mo­tors and Maruti Suzuki In­dia have been deemed as the pri­mary chal­lengers of the In­dian mar­ket by Credit Suisse, Zurich­head­quar­tered global Ànan­cial ser­vices com­pany. Nis­san ar­rived in In­dia only seven years ago with the launch of its com­pact ve­hi­cle Mi­cra. Sunny fol­lowed in 2011 and its mid-sized SUV Ter­rano was in­tro­duced in the In­dian mar­ket in 2013. The com­pany re­cently launched its 2017 face-lifted Mi­cra, that is the only hatch­back in the com­pany’s In­dian port­fo­lio. Nis­san X-Trail Hy­brid, Nis­san Qashqai (SUV) and the high-end Nis­san Kicks (SUV) are in the pipe­line for the coun­try.

With SUVs get­ting in­creas­ingly pop­u­lar in the In­dian mar­ket, an­other name that’s man­aged to carve its own niche is Ford In­dia’s EcoS­port. Thanks to this strik­ing prod­uct, Ford rose to be­come the Àfth largest player in this seg­ment. This year, Ford is gear­ing up to launch some of its new-gen­er­a­tion oͿer­ings from its global port­fo­lio in In­dia. This will be­gin with the new EcoS­port that will be in­tro­duced shortly. Its new gen­er­a­tion Figo and As­pire mod­els are also ru­moured to be dis­played at the 2018 Auto Expo. Ford launched its pre­mium oͿer­ing — Ford Mus­tang — ear­lier this year. Its lat­est ver­sion that will be un­veiled glob­ally this year, will reach In­dian shores by 2018. An­other pop­u­lar oͿer­ing by Ford is its En­deav­our, which also has an up­date in store.

Owned by Ford Mo­tor Com­pany un­der its Pre­mier Au­to­mo­tive Group is Volvo Cars, that has big plans for the In­dian mar­ket. The com­pany is con­sid­er­ing as­sem­bling its cars here, with the aim of grab­bing ten per cent of mar­ket share in the high-end seg­ment by 2020. It sells a range of pre­mium ve­hi­cles and SUVs in­clud­ing Volvo S90, Volvo XC90 and Volvo V40. The car­maker’s low­est priced model is at `26 lakh, po­si­tion­ing it along­side the rest of the luxe au­to­mo­tive brands in the coun­try. The all-new sec­ond-gen­er­a­tion Volvo XC60 pre­mium com­pact SUV will be launch­ing in In­dia next year.

The gov­ern­ment of In­dia is also giv­ing promi­nence to elec­tric ve­hi­cles un­der FAME In­dia (Faster Adop­tion and Man­u­fac­tur­ing of (Hy­brid &) Elec­tric Ve­hi­cles in In­dia) scheme.

Speak­ing of lux­ury car­mak­ers, it’s un­fair not to men­tion the Ger­man heavy­weights that have con­quered In­dia’s pre­mium mar­ket with panache. Catch hold of Busi­ness Trav­eller In­dia’s June-July is­sue to read a de­tailed story fea­tur­ing the con­tri­bu­tion of Audi, BMW, Mercedes-Benz and Volk­swa­gen to the In­dian au­to­mo­tive in­dus­try or visit busi­nesstrav­

The gov­ern­ment of In­dia is also giv­ing promi­nence to elec­tric ve­hi­cles un­der FAME In­dia (Faster Adop­tion and Man­u­fac­tur­ing of (Hy­brid &) Elec­tric Ve­hi­cles in In­dia) scheme. And if you think this is just an as­pi­ra­tion, the fol­low­ing is for the cyn­ics Nag­pur re­cently be­came the Àrst In­dian city to have an all-elec­tric cab Áeet. Ola Cabs, In­dia’s home­grown taxi ag­gre­ga­tor, de­ployed about 100 elec­tric ve­hi­cles from Mahin­dra & Mahin­dra and 100 e-rick­shaws from Ki­netic in the Ma­ha­rash­tra city. Na­tional Ther­mal Power Cor­po­ra­tion, the state-run power gi­ant, has also set up In­dia’s Àrst elec­tric ve­hi­cle charg­ing sta­tions in Delhi and Noida.

This pol­icy shift is also ev­i­dent by the state­ments made by power min­is­ter Piyush Goyal that soon all gov­ern­ment o΀cials and agen­cies will be us­ing elec­tric ve­hi­cles only. Ac­cord­ing to him, the goal of the gov­ern­ment is “to have no diesel or petrol car sales in the coun­try by 2030”. Ac­cord­ing to Na­tional In­sti­tu­tion for Trans­form­ing In­dia, also called NITI Aayog’s road-map, our mo­bil­ity in­dus­try will be driven by three pil­lars — “shared, con­nected and elec­tric”. Not only will this re­duce our de­pen­dency on oil im­ports, it will also lead to sav­ings of al­most US$60 bil­lion in en­ergy costs un­til the es­ti­mated pe­riod.

Cloc­wise from top: Hyundai Verna, Nis­san Mi­cra; and Honda WR-V

Left and below: Maruti Suzuki Vi­tara Brezza; Re­nault Kwid

Top: Volvo XC60

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