Business

Automotive

Car makers race into India— Delhi

Preface

Cross an Indian street and it probably won’t be news to you that car sales on the Subcontinent are booming here.

27 November 2009

Cross an Indian street and it probably won’t be news to you that car sales on the Subcontinent are booming here. Survive the crossing and it may be difficult to fathom that there are more on the way. While governments in North America and Europe have been raiding their treasuries to bail out their domestic motor industries, India has been quietly getting on with selling more cars than ever.

Car sales are predicted to triple over the next decade to some six million vehicles, making the country the hot destination for embattled car makers the world over. Korea’s Hyundai Motor Corporation says that in 2010 India will put more money into the company’s coffers than China. Meanwhile, Nissan, Renault, Toyota, Honda, General Motors, Ford, Volkswagen and Fiat are all lining up to get a slice of a market where sales jumped 34 per cent year on year in October.

The lion’s share of the local car market goes to small cars, which hold about 75 per cent of total sales. Cheap, fuel-efficient and more comfortable than the ubiquitous motor bikes and mopeds that buzz around India’s roads, small cars are increasingly popular with the country’s rising aspirational middle classes looking to purchase their first car and ditch the two-wheeler.

“The main consideration is price,” says P Balendran, General Motors India’s vice president of corporate affairs. “It’s the affordability of small cars that makes them so attractive. Small cars here are generally priced between $2,500 and $3,000 [€1,700 and €2,000].” Indian carmaker Tata Motors grabbed headlines early this year with the launch of its Nano minicar, which was billed as the Indian people’s car and went on sale for 115,000 rupees, or about €1,600. Spurred by the success of the Nano, local and international car makers are planning similar moves, with at least seven small cars set to hit India’s roads over the next two years.

Hyundai Motor India and Fiat India are both working on small cars designed specifically for the Indian market. Honda is doing likewise and says it is due to have its offering – codenamed 2CV – in Indian showrooms by 2011.

Meanwhile, Nissan-Renault has teamed up with Indian carmaker Bajaj Auto to get a low-cost small car on the roads in 2012. US firms General Motors and Ford are expected to have their small car servings – the Beat and the Figo, respectively – out the door shortly. Keen to join in the party, Volkswagen will be bringing its Polo car to India in early 2010.

Meanwhile, companies supplying parts for the Nano are reaping the rewards as the international contingent signs them up to produce parts for their own small cars, which are being manufactured at locations around the country. It is all combining to turn India into a 21st Century Detroit making small cars adapted to Indian market — which means cheap and tough, according to GM’s Balendran. “The price makes it Indian, as does the fuel efficiency. The infrastructure, the roads, here are not so good.”

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