Indian auto industry in top gear despite global gloom

By V. Jagannathan, IANS,

Chennai : Even as global auto majors went into reverse gear in 2009, the Indian industry largely bucked the trend, launching new models for the domestic market and registering significant growth in exports.

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The year saw the commercial rollout of the world’s cheapest car, Tata Nano, as also some expensive models like the Rs.37.5-million (about $750,000) Phantom and the Rs.25-million ($250,000) Ghost (both from Rolls Royce), apart from Volkswagen’s famed Beetle, priced at Rs.2 million ($40,000).

During the year, the overall car market grew around 15 percent over 2008, and a similar pattern is expected in 2010, experts maintain.

According to Neeraj Garg, Volkswagen India group sales director: “Car manufacturers are betting on hatchbacks in the B+ segment. We expect the segment to constitute nearly 75 percent of volumes in the coming years.”

According to Garg, the B+ segment is expected to grow 30 percent by virtue of new launches from Nissan (unnamed model), Ford (Figo), Volkswagen (Polo), and General Motors (Beat).

Spark, the compact car from General Motors, will now come in an electric version, thanks to a tie-up with Bangalore’s Reva Electric Car Co.

“We expect the electric Spark to be launched next November. We will provide the battery kit and use GM’s dealer network to distribute our models,” said Reva co-founder and deputy chairman Chetan Maini.

Apart from Nano and the high-end Rolls Royce models, 2009 saw a slew of other launches.

Japan’s Honda launched the Jazz, the homegrown Mahindra and Mahindra unveiled its multi-purpose Xylo, Italy’s Fiat drove in its hatchback Grande Punto, and Tata Motors introduced Jaguar and Land Rover, the iconic British brands it acquired last year.

Similarly, Maruti Suzuki debuted its Ritz, South Korea’s Hyundai launched the diesel i20, the Czech Republic’s Skoda showcased the new Laura while Japan’s Toyota rolled out the latest version of sports utility vehicle Land Cruiser.

Ernst and Young has predicted the Indian passenger car market to grow at 12 percent annually over the next five years to touch 3.75 million units by 2014 from 1.89 million units at present.

“The industry’s turnover is estimated to touch $155 billion by 2016,” said analysts with Ernst and Young, adding this would make the Indian auto industry the seventh largest in the world, and the third largest by 2030, behind China and the US.

The government’s Automotive Mission Plan also envisages India emerging as the world’s seventh largest carmaker by 2016, contributing over 10 percent to the country’s $1.2-trillion economy from under five percent at present.

India is also expected to consolidate its position as an automobile hub, with 2.75 million units to be sold overseas and about a million units in the domestic market.

“India and China are the only markets that have remained profitable,” said Pawan Goenka, president of the Society of Indian Automobile Manufacturers (SIAM), an industry lobby for the auto sector in India.

With the Indian auto industry growing at 15-25 percent annually for the past five years, spurred by demand from the country’s large middle class with growing disposable incomes, some companies in the country like Maruti Suzuki have even outgrown their parents.

The auto industry feels the government’s initiatives — like more funds for roads and highways with special focus on rural infrastructure — would also go a long way in helping the industry.

The two-wheeler industry too logged good growth with motorcycles and gearless scooters leading the way.

While Mahindra and Mahindra debuted with its two-wheeler during the year after it bought the Kinetic group’s business, the Pune-based Bajaj Auto announced its decision to exit the scooters business that had become a household name with the “Hamara Bajaj” campaign.

Bajaj also lost a patent case against TVS Motor, which then launched a few models to fill in gaps in product portfolio. “We would like to be present in each segment,” said TVS marketing president H.S. Goindi.

Players in the commercial vehicles segment, which was severely hit by the recession, are similarly upbeat.

“With the economy reviving and growth predicted at over 7 percent, commercial vehicle segment can expect good times ahead,” said Ashok Leyland chief operating officer Vinod Dasari.

Commercial vehicle manufacturers sold more buses thanks to the funds provided under the Jawaharlal Nehru Urban Renewal Mission (JNURM). But the Hero group exited the commercial vehicle joint venture with Daimler, citing tough market conditions.

Industry insiders maintain that next year will see the entry of Daimler with its light commercial vehicle Fuso Canter. The German company is expected to commission its Indian plant in 2012. General Motors also has a pact with China’s Shanghai Automotive Industry Corp to make light commercial vehicles in India by 2011.

Milestones for Indian automobile industry during 2009:


-Bus-making venture between Tata Motors and Brazil’s Marcopolo goes on stream at Dharwad, Karnataka

-Maruti Suzuki’s first consignment of A Star cars despatched to Europe

-Ashok Leyland bags order to supply 875 low-floor CNG buses from Delhi Transport Corp

-Ashok Leyland bags $10.5-million order from Honduran Army for supply of vehicles


-Maruti’s Swift becomes the first model to touch 300,000 in sales in the shortest time of three years and eight months


-Tata Motors launches world’s cheapest car Nano


-Mahindra and Mahindra launches two-wheelers


-Maruti launches premium hatchback Ritz

-Tata Motors concludes an agreement for amending bridge finance loan raised for acquiring Jaguar and Land Rover, extending the final maturity of $1 billion to Dec 31, 2010.


-First Nano delivered in Mumbai


-Maruti decides to transform Gurgaon plant into engine assembly and machine facility and shift production to Manesar

-Ford India announces the launch of small car Figo

-General Motors signs agreement with Reva to develop electric car


-Tata Motors raises $750 million through global depository receipts and convertible notes

-Mahindra and Mahindra launches 0.5-tonne four-wheel compact truck at Rs.165,000


-H.W. Park takes over as new Hyundai Motors chief executive


-Maruti exports 100,000 A Star units

-Mahindra and Mahindra signs joint venture agreement with Yueda, China to set up a tractor plant there

(Venkatachari Jagannathan can be contacted at [email protected])