Competition and easy financing have put India on wheels. The last 60 years have seen the Indian car industry get into gear reports CNBC-TV18.
From the mighty ambassador to a slew of swanky cars in all shapes, sizes and prices, the automobile industry has sure come a long way. The 60's belonged to Hindustan Motors and Premier Automobiles. The government's restrictive trade policy, high tariffs, restrictions on imports, manufacturing subject to licensing and limits on locations didn’t help the car industry evolve. Roads belonged to the ambassador and the Premier Padmini where only 46000 cars were manufactured.
The 70-80s were no better with only 4000 units being added in the decade. 80s is when fortunes changed not just for manufacturers but also consumers. After a long and agonizing search, state owned Maruti Udyog chose Japan’s Suzuki Motor Corporations and a JV partner and Maruti Suzuki was born in 1982.
“We were laughed at the idea of doing so and people thought we are mad,” says Krishnamurthy, chairman, Manufacturing Competitiveness.
Maruti became the market leader soon and total production went upto 2 lakh plus units. From 1990 to 2000, 100% FDI allowed the entry of international player.
Honda, GM, Toyota, Ford, Hyundai drove in competition became intense. Buying a car became easier with auto financing options. From here on, the auto industry stepped on the gas. For Honda the number of cars produced almost tripled to over 6 lakh units this decade.
"All other makers have come as and we source billions of dollars of components today from India" says Jagdish Khattar MD & CEO, Maruti Suzuki India
"Cost is lowest here that’s why all have come here" Keshub Mahindra, chairman, M&M
The biggest change has taken place in the last 2 years. Special excise benefits for small cars have helped position India as a manufacturing hub. This has also helped create a new market for "highly competitive vehicles".
Every major company from GM, Hyundai, ford, VW is betting big on small. International players are now even talking of tying up with Indian players to get a foothold in the market- Renault for instance has tied up with Mahindra for the Logan and bajaj for a small car.
Today Indian 4 car industry is the 11th largest car in the world with over 1.5 m cars being produced last year. But with 7 people per 1000 vehicles there is room for much more growth. Poor infrastructure is the biggest worry.
