Car industry in India – fastest growing sector in the world

The Car industry in India has seen a tremendous growth and seems to be the fastest growing sector in the world. This sector has responded with an exponential progress in the number of new models launched in the last few months. The craze for cars amongst people is growing day-by-day. Hence, all the car manufacturers are giving tough competition to each other by opting innovative and unique ideas to capture the market.

India is presently ranked 17th amongst auto car manufacturing countries in the world. Keeping in pace with the ever growing demand for cars, the production of cars has also been high, off late; thanks to a huge export potential and favorable Government policy. Multinational companies have been eyeing at India to set up their manufacturing facilities. According to auto experts and analysts, India is poised to become third largest auto car manufacturing hub in the world by 2020./p>

One of the factors that have characterized the impressive growth of Indian automobile market has been the dramatic and positive changes that have earmarked the Indian car landscape. From old Ambys to a range, color and design of Marutis, Opels, Tatas, Hyundais and Toyotas, the Indian car market is surely something to watch on.

The Indian car market basically thrives on volume, the fact that the market leader Maruti Udyog basically is a small car manufacturer is a testament to this fact. But, slowly the Indian car market is growing with cars such as the honda city, Toyota corolla; international products finding favor with the Indian consumer. Also, products such as the ford fiesta and the new Chevrolet Aveo that have been specifically developed for the Indian market show how important India is today on the world market.

Every car in India is today either custom made for the Indian market or is a niche car, which buyers from all over the world crave. Technologies such as CRDi, ABS, ESP, climate control, adaptive dampers, ride control and so on are making their presence felt in the market today. The average car buyer is now pampered with the latest launches from all over the world and is able to lay his hands on the state of the art cars at rather affordable prices.

In the multi utility vehicle segment, General Motor's Tavera is directly competing with Toyota Innova and Mahindra Scorpio. Tavera has been doing consistently well and has been delivering best in class mileage to its customers.

GM India is now foraying into the premium A-segment cars in India with the Chevrolet Captiva which is all set to hit the road later this year.

It's a long wait for key car models this festive season

A number of cars such as Maruti’s Dzire and Ritz, Honda’s City, Hyundai’s i20 and Toyota’s Fortuner SUV have been wiped off shelves in past 10 days and are not available for immediate delivery as demand frenzy during the ongoing festival season has led to stock out situation for car dealers.

Carmakers are now being forced to ramp up production to meet demand. For instance, Maruti has re-jigged its operations to produce more of its newer cars such as Ritz, Estilo, Swift and DZire, while Honda has hiked production of its flagship sedan City and General Motors is operating its factory on all seven days to meet the market demand for small car Spark, utility vehicle Tavera and Aveo sedan even though Sunday is weekly off for the company. The festive season has also put other cars such as Hyundai’s I10 and Toyota’s Innova besides Mahindra and Mahindra’s Xylo out of dealer stock.

Auto industry executives say that the dual-combination of the prevailing festival mood and the slew of new car launches in recent past has contributed to the high sales in the past two weeks. “The interest rates, which are at the lowest level since the past two years is also pushing up volumes,” said Shashank Srivastava chief general manager (marketing) at Maruti. Maruti is slated to end up with despatches of over 5,500 Ritz cars in September as against the monthly average of 4500-5000, it was delivering to dealers every month.

Besides sudden jump in demand there is also a supply lag for these cars. Companies usually ramp up production of new cars over a period depending on demand. Since there has been a sudden jump in demand during the festive period companies were not prepared to churn out the required number of these models.

Unlike older more established products such as Maruti’s Alto or Wagon R, where discounts and freebies up to 15% of the value of the car are given the newer models have much lower discounts. The demand rush during the auspicious Navratara and Dusshera festivals have resulted in the huge waiting period of up to three months on such cars — some of which are leaders in their respective segment.

“There has been much more sales than we had expected. Most of our cars like Tavera, Spark LPG, Aveo sedan have wiped off from the showrooms and are enjoy a waiting of four to six-weeks,” said General Motors vice-president (marketing & sales) Ankush Arora said.

Domestic car market is expected to scale new sales graph for the fiscal in September on the back of this huge demand. This would help the industry surpass the mark of 1.2 lakh cars that were sold in August in India.

Besides general demand, return of easy financing could also have helped spur demand. “We are anticipating a double digit growth in sales over the last year in September with market leaders like Maruti Suzuki and Hyundai their highest sales in the domestic market,” HDFC Bank auto loan head Ashok Khanna said. Earlier, most private sector financiers had tightened their auto loan portfolio which had also led to slow growth in demand.

GM invests $200 million in powertrain plant in Maharashtra, seeks to increase market share

General Motors (GM) Corp, which aims to increase its market share to 10 percent by 2010 in India, has announced that it will ramp up its manufacturing facilities by investing more than $200 million in a powertrain plant in Talegaon, Maharashtra.

The facility, expected to be complete by the first quarter of 2010, will have an annual production capacity of 160,000 units that can be expanded to 300,000 units, GM said in a statement.

GM's auto plant in Talegaon is set to be operational this week and around 140,000 vehicles are expected to roll out every year, taking GM's all-India annual capacity to 225,000 vehicles.

The company has a plant in Gujarat from where it makes the Chevrolet-badged Tavera, Optra, Aveo and Spark and a technical center, including a design studio, in Bangalore. It imports the popular sport utility vehicle (SUV) Captiva.

Karl Slym, president and managing director of GM India, said the company is working on the design of its new small car, which it plans to launch in 2009.

The company has plans to roll out the small car from its new plant at Talegaon, Slym said, adding that the small car will be sold in India and exported to other emerging markets.

"The Talegaon engine facility is an important component of GM's global strategy to establish a strong presence in this market. This is just one of a number of investments, totaling more than $1 billion that GM has made over the course of the last few years in emerging markets around the world such as China, Korea, Russia and India," Slym said.

"We cannot remain a global industry leader without a strong presence in the high-growth market of India. The new facility will enable us to continue expanding our product line-up in India," Slym said, adding that the launch of the small car will enable the company "to capture more opportunities in one of the fastest-growing vehicle markets in the world."

The small car will not compete with Tata Motors' Nano, which is being touted as the world's cheapest car with a price tag of $2500.

According to market data, India sold about 1.4 million four-wheelers last year compared to 5 million in China and over 10 million in the US. Annual passenger vehicle sales are forecast to rise to 2 million units by 2010 and Indian car sales are expected to more than quadruple to $145 billion by 2016, with small cars accounting for more than two-thirds of sales.

However, GM is not alone in this emerging small car market. Other automakers have also expressed interest in developing and marketing the small car in India.

With India's middle class population growing in number, several automakers including market leader Maruti Suzuki, South Korean Hyundai Motor Co. and India's Tata Motors have begun focusing on the low-cost small car segment.

In January, Tata Motors launched Nano, which is expected to give stiff competition to Maruti Suzuki's existing line-up of small cars like Maruti 800, Alto, Wagon R and Zen Estilo. Hyundai Motor India Ltd. also came out with its compact car called i10, and plans to launch an upgrade, the i20, later this year.

In May, the Renault-Nissan alliance also announced that it has partnered with Bajaj Motors for launching a low cost car that will rival Nano by 2010-11.

Also entering the small car market is Japan's Toyota and its rival Honda, which have set up their second manufacturing plants in Karnataka and Rajasthan respectively to launch their small cars by 2010 and 2009. US-based Ford Motor Co. and Germany's Volkswagen AG also have shown interest in making small cars in India.