Friday, July 18, 2008

Tata Motors and Maruti wish to do

GM, the world’s largest carmaker, has two manufacturing units in India; Hyundai and Suzuki, undoubtedly the world’s most ingenious small-car manufacturers, intend to make India their global or regional hubs for compact cars. The two are reportedly working on products that will specifically appeal to the Indian market, and also sell in the global markets. When asked about his company’s commitment towards India, Gyaneshwar Sen, GM (Marketing), Honda SIEL, says, “Off course, I think our actions show our commitment towards India.”

Explaining further, Sen adds that there are three factors that prove it. First, Honda has launched the latest global models in India. Second, the car company has increased its capacity from 65,000 to 100,000 units a year. In addition, once its new plant in Rajasthan is set up, the annual capacity will more than double immediately to 160,000 units, and later to 200,000 units. Third, Honda plans to launch a globally-sold premium compact model in India soon. Now that will add to what Tata Motors and Maruti wish to do.

Stating his confidence in India, Emmanuel Bulle, Director, Fitch Ratings, says, “India can indeed become a major player in terms of sales and manufacturing. I think that in the medium to long term, the growth looks positive.” In fact, global players who figured out India’s potential a little late now wish to enter the market through indirect means. In order to avoid delays, Renault has entered the market with M&M, and Nissan opted for a contract-manufacturing tie-up with Maruti. Simultaneously, M&M, Nissan and Renault have come together to open a manufacturing base in Chennai. Adding to this buzz is the fact that all the existing plants are operating at full capacity, and each one of them is planning to increase capacity via greenfield or brownfield expansions. After Mercedes Benz, BMW entered the manufacturing fray, and now VW is mulling over its plan to set up a base in the country. The additional advantage about India is that it has a huge domestic market. According to several studies, most emerging nations, which have become manufacturing hubs, have ridden on the domestic sales wave.

There were exceptions like the East Asian tigers, but the recent trend is more towards grow locally, spread globally. Listen to some of the excited voices on what can happen in the Indian automobile market. Says Wilfried Aulbur, CEO & MD, Daimler Chrysler India, “I have been to India a number of times and had the opportunity to see things change. Now India has express highways and people want cars for travel, performance and style. We have undertaken initiatives to promote the Mercedes brand name in India on the international lines.” BMW’s Kronschnable is convinced about India’s prospects as a market for expensive cars. He simply points out to the fast-changing Gurgaon skyline that can be seen from his office window. Jigar of Parag Parikh observes, “Global auto companies are looking at India as a potential market per se. India certainly is like an oasis to those who are feeling deserted with low growth & rising costs.” And according to Audi, “India’s luxury car market has tripled over the last five years; the current growth rate is around 12% annually. Consumer demand in India mirrors our global philosophy.” Considering India’s phenomenal growth as a component manufacturer, with annual sales of over $10 billion, the country’s auto industry has no qualms in dreaming big. Despite government’s interest rate interventions, the total passenger vehicle industry grew by a staggering 14% (Apr-Nov 07). Moreover, a global leading research firm RNCOS predicts that during 2007-08 to 2011-12, car sales will increase by an average of 12% annually. Moreover, India has the locational advantage to build for export-oriented factories as one can serve markets in East Asia (and Japan) as well as Europe.

For Complete IIPM Article, Click on IIPM Article

Source :
IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

No comments: