News / Asia

Global Automakers Head to India to Tap into Growing Car Market

Selling inexpensive, compact cars to middle-class Indians helps make up for slumping sales in Western countries

Anjana Pasricha

Several global automakers are heading to India to sell compact cars, as the country turns into one of the world's fastest growing auto markets.  The country is also emerging as a manufacturing hub for small, compact cars.       

Twenty-four-year-old Gaurav Mehta wants to buy a car, but has decided to wait and take his pick from cheap, compact models being introduced to the Indian market this year by companies like Toyota, Honda, and General Motors.  Most of them will cost around $10,000.

"Well with so many cars coming in this price range now, I thought why not wait and look at the other models, also," Mehta said. 

He is among millions of middle-class Indians whom global automakers are eyeing as they target new markets to make up for slumping sales in Western countries.

As India shrugs off the global recession, car sales have been rising quickly.  January's figures were 33 percent higher, compared to the same month last year.

The 1.5 million cars sold in India in 2009 are still far behind China, the world's biggest car market.  But automakers say there is huge potential to be tapped in a country which has about 12 cars per 1,000 people and where a growing economy is propelling larger numbers into the middle class.

Yogendra Pratap, editor of the magazine Auto Bild, says the focus is on inexpensive, small cars which account for four out of every five cars sold in the country.

"All companies have realized that they need to have a good market share in India to survive recessions in the West, and that means that they need to have successful products in India. The other thing that these auto majors have learnt is that, in India, you need to be very cost competitive, because the Indian local manufacturers get out cars which are very cheap and sturdy so they need to design cars which are built keeping the Indian conditions in mind," Pratap said.

In a country where price matters, the compact cars designed for India cost around $8,000 to $10,000.

Society of Indian Automobile Manufacturers Director General Dilip Chenoy explains why small cars are the overwhelming favorites in India.    

"Small cars are within affordable reach and they give you intrinsically a better fuel efficiency and they cost less to maintain, so the overall total cost of ownership of a small car is such that it is very appealing to the Indian customer," Chenoy said.

Many of these compact cars are not only designed for India - they are also being manufactured in the country, to hold down prices in a market where margins are slim.

Auto analysts say domestic companies such as Tata Motors - which produces the world's smallest car, the Nano - have already demonstrated that India has the engineering skills and low-cost facilities to produce small cars. This has encouraged several global automakers to head to India.  

Yogendra Pratap says some global automakers are expanding existing production facilities and others are making an entry.

"Toyota's second car plant is coming up.  Hyundai already has a second car plant.  Nissan Renault is setting up a huge car plant, and Volkswagen has just set up a car plant.  So the infrastructure is already on the way, the ground has been laid ready for India becoming a global small car hub," Pratap said.

Many automakers also plan to export the small cars produced in India to other countries, as the world focus moves from gas guzzlers to more fuel-efficient vehicles.  This helps them achieve economies of scale and reduce costs.   

Dilip Chenoy says annual car sales in India are set to nearly double, to four million by 2016, while the turnover of the automobile industry is expected to rise to nearly $150 billion.  

"The ambition in India is to reach a kind of a market size of $145 billion by 2016. And, if we have one or two good years, like last year, and next year may turn out to be, we will be on track in achieving this ambition, and we could become a significant player in the automotive industry by 2016," Chenoy said.

But although car manufacturers are hoping to turn in profits in the growing market, many worry that more cars on Indian roads will only worsen congestion in towns and cities, where traffic already moves at a slow pace on crowded roads.

You May Like

Captured IS Militants Explain Why They Fought

Fighters from Turkey, Syria tell VOA Kurdish Service what drew them to extremism, jihad More

Security Experts Split on Kenyan Barrier Wall

Experts divided on whether initiative aiming to keep out al-Shabab militants is long-awaited solution or misguided effort More

Video Philippines Wants Tourists Spending Money at New Casinos

Officials say they hope to turn Manila into the next Macau, which has long been Asia’s gambling hub More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Liberia's Almost Last Ebola Patient Grateful but Still Grievingi
X
Benno Muchler
March 26, 2015 3:41 PM
Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Liberia's Almost Last Ebola Patient Grateful but Still Grieving

Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Cambodian Land Grabs Threaten Traditional Communities

Indigenous communities in Cambodia's Ratanakiri province say the government’s economic land concession policy is taking away their land and traditional way of life, making many fear that their identity will soon be lost. Local authorities, though, have denied this is the case. VOA's Say Mony went to investigate and filed this report, narrated by Colin Lovett.
Video

Video US, South Korea Conduct Joint Military Exercises

The Eighth U.S. Army Division and the Eighth Republic of Korea Mechanized Infantry Division put on a well orchestrated show of force for the media this week during their joint military training exercises in South Korea. VOA’s Seoul correspondent Brian Padden was there and reports the soldiers were well disciplined both in conducting a complex live fire exercise and in staying on message with the press.
Video

Video Space Program Status Disappoints 'Last Man on the Moon'

One of the films that drew big crowds last week at the annual South by Southwest festival in Austin, Texas, tells the story of the last human being to stand on the moon, U.S. astronaut Eugene Cernan. It has been 42 years since Cernan returned from the moon and he laments that no one else has gone there since. VOA’s Greg Flakus reports.
Video

Video Young Filmmakers Shine Spotlight on Giving Back

A group of student filmmakers from across the United States joined President Barack Obama at the White House this month for the second annual White House Student Film Festival. Fifteen short films were officially selected from more than 1,500 entries by students aged 6 through 18. The filmmakers and their families then joined the president and a group of celebrities for a screening of their films. VOA’s Julie Taboh reports.
Video

Video VOA Exclusive: Interview with Afghan President Ashraf Ghani

Afghan President Ashraf Ghani, during his first visit as president to Washington, gave a one-on-one interview with VOA Afghan Service reporter Said Suleiman Ashna, about his request for a change in U.S. troop levels, the threat from the Islamic State, and repairing relations with the United States and Pakistan. The interview was held at Blair House, late Sunday, in Pashto.
Video

Video California Science Center Tells Story of Dead Sea Scrolls

The ancient manuscripts were uncovered in the mid-20th century, and they are still yielding clues about life and religious beliefs in ancient Israel. As VOA's Mike O'Sullivan reports, an exhibit in Los Angeles shows how modern science is bringing the history of these ancient documents to life.
Video

Video Angelina Jolie Takes Another Bold Step

Hollywood actress and filmmaker Angelina Jolie has revealed she had her ovaries and fallopian tubes removed to lower her odds of getting cancer. Doctors say the huge publicity over her decision will help raise awareness about the importance of cancer screening. VOA’s George Putic has more

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More