Indian Auto Industry Thread

[CITY_LOVER]

Hey guys,

I know this is going to sound a little stupid but I'll just have to ask this!! I am glad to see continuous increases in sales of vehicles (all types, especially private passenger cars) in India, but seriously, where will all these vehicles go??? Does India have enough roads, parking lots, etc. to handle so many vehicles?

Let's take Mumbai as a quick example. I am guessing that there are at least 10 lakh private cars in Mumbai and that city only has a few "thoroughfares" which people can use to get from one part of the city to another....and with so many cars, how will these few major roads handle it? Where will all these new car owners take their cars to? Shopping malls, temples, cousins' houses...? Is there enough parking to handle the movement of vehicles? Are office buildings equipped at all to handle parking the additional cars on the roads?

I am just seriously wondering about this. If I was living in India still and if I could afford a car, I doubt if I would consider owing a car..

Any thoughts on this? :-)

[Azhagan]

i too have the same doubt...in 10 years are so the number of cars in cities will be double in number..then its really going to be a problem..

now-a-days even for middle class car is easily affordable cos of rise in their earning capacity and the ease of bank loans..

[kronik]

Let me pull out a parallel from the Indian airline industry.

We know that the indian civil aviation sector is witnessing double digit growth and the airports are choking with such a massive increase in people and planes.

Now what the government could have done was to regulate the industry so that the airports in their present state can handle the traffic.
Instead, the Govt. is focussing on massive expansions of our current airports and constructing new ones.

Its the same with the car industry. I hear of multi-level car parks coming up in various cities, the new sky-scrapers being built have huge underground parking and the NHDP is changing the face of our highways.

The only thing missing is a strict enforcement of traffic rules, the Govt. at all levels needs to enforce rules and people must be taught that a thoroughfare in a city did not come with their dowry.

[Suraj]

Discouraging car sales because we don't have the roads is NOT the answer. The answer is to build more roads and expressways, widen existing ones, build better parking facilities, including underground and multilevel ones, and in general significantly improve the way roads systems are built - including the provision of recessed bus stops, dedicated turn lanes, acceleration and deceleration lanes, dedicated bike/rickshaw lanes, city bypasses for heavy vehicles etc. The same applies to all other aspects of infrastructure/economic development.

I understand the legitimate concerns about environmental pollution. But let me provide a counter argument: the auto industry constitutes >10% of the GDP in advanced nations. Several countries have used automobile production as a means of rapid economic rise - Germany, Japan and Korea being among them. At one time after WW2, the Wolfsburg plant of Volkswagen accounted for 30% of Germany's GDP! In India too, the industry now accounts for 5-6% of GDP. That's $40-50 billion (Rs . 1.74-2.18 lakh crore) and rising ~25% a year. It employees millions, from the steel worker in Bihar to the cute saleslady in Mumbai.

I see it as a very poor idea to throttle an industry that provides for so much economic development and sustains so many people merely because our cities have in general never known proper urban planning. By all means, enforce stringent vehicular pollution norms, but I disagree that this industry should receive anything but the fullest possible backing as a strategic economic sector, unless another option can provide the kind of economic development that the automobile sector can. That means sustained urban infrastructure development to stay ahead of the curve of vehicle ownership. I strongly back a sustained push for automobile production in India, domestic consumption as well as export.

[centralized pandemonium]

Maruti to hike prices from April 1
NDTV Correspondent

Tuesday, March 15, 2005 (New Delhi):

India's largest automobile manufacturer, Maruti Udyog, will raise the prices of all its models by two to three per cent from April 1.

This hike is being attributed to the rising steel prices following this year's budget proposals.

The proposed raise will be in addition to new pricing announced by the company for switching its cars to Euro III emission norms in 11 cities and to Euro II in other parts of the country, said sources.

http://www.ndtv.com/money/showbusine...rices&id=24215

[centralized pandemonium]

Auto cos to hike prices in April

http://www.ndtv.com/money/showbusine...April&id=24238

[Citi-Zen]

An interesting trend in the automart...top end SUV sales (above 13 lacs) have gone up 300% in one year from 2003 (1250 units) to 2004 (5237 units).

SUVs are scorching desi roads

[centralized pandemonium]

MUL board clears Rs. 3,272 cr. investment plans

http://www.hindu.com/2005/04/07/stor...0703301900.htm

[centralized pandemonium]

Hyundai launches Tucson

http://www.hindu.com/2005/04/07/stor...0703291900.htm

[centralized pandemonium]

Rolls-Royce returns to India with Rs 3 cr Phantom

Press Trust of India

New Delhi, April 8, 2005|21:57 IST

The luxurious wheels of Rolls Royce are all set to move on Indian roads with the company making a come back to the country after 50 years.

Part of the BMW group, Rolls-Royce will return to India with the 'Phantom' model, which will be priced upwards of Rs three crore.

"We are delighted to return to India today, a country with which Rolls-Royce has had a close relationship for much of the last century. As India enjoys a surge in economic growth, we are delighted to bring the Phantom to a country which has a deep appreciation of the unparalleled excellence which the Rolls-Royce name stands for," Rolls-Royce Motor Cars Regional Director (Asia Pacific) Colin Kelly said.

In fact, the Indian market has of late seen interest by many luxury carmakers. DamilerChrysler already has a plant in Indian for its Mercedes brand while it also sells the 'Maybach', which is priced a whopping Rs five crore. Audi is all set to come to the market and Bentley is already here.

Reflecting the bullishness of global auto biggies on the Indian market, BMW recently said it was contemplating setting up a manufacturing facility here.

Rolls-Royce said the 'Phantom,' unveiled in 2003, had rapidly established as the clear leader worldwide in the super-luxury car market. The model is built at Rolls-Royce Motor Cars' new head office and manufacturing plant in Goodwood, West Sussex, England.

http://www.hindustantimes.com/news/181_1312629,0002.htm

[Naga_Solidus]

Originally Posted by mainhoonna

Rolls-Royce returns to India with Rs 3 cr Phantom
The luxurious wheels of Rolls Royce are all set to move on Indian roads with the company making a come back to the country after 50 years.

Yay...

Originally Posted by mainhoonna

The Indian market has of late seen interest by many luxury carmakers. DamilerChrysler already has a plant in Indian for its Mercedes brand while it also sells the 'Maybach', which is priced a whopping Rs five crore. Audi is all set to come to the market and Bentley is already here.

but really, how many Phantoms does anyone think they will sell? The only possible customers are the Ambanis, the Godrej family, and the cricketers.

Originally Posted by mainhoonna

Reflecting the bullishness of global auto biggies on the Indian market, BMW recently said it was contemplating setting up a manufacturing facility here.

Good for them, but India REALLY NEEDS an INDIGENOUS premium car to compete with these Euro cars, that way we can compete on the international market and not get economically subjigated.

[kronik]

Indian workers walk beside Hyundai cars ready for shipment at a harbour in the southern Indian city of Madras March 10, 2005. Hyundai, which exported nearly 8,000 vehicles in the year 2002-03, has targeted shipment of 30,000 cars during the current fiscal. The company aimed at touching an export figure of 70,000 cars by 2005

[Citi-Zen]

Some pics of the newly launches Hyundai Tucson:







I think Hyunai have overpiced it at 14.3 lacs...thats bang in Honda CR-V territory which is 14.5 lacs, and Honda has way too much brand equity in India which a Hyundai just can't match.

[centralized pandemonium]

This IMO is a nice article. The title is f@#$%^g wrong. It is INDIA not the subcontinent. Bhai Tata 100 taka Hindustani hai.( Tata is 100% Indian). Not too pleased with the headlines. Unless of course the subcontinent means the whole of India .I think the western media has not realised this.Of course they don't realise a lot of things. But then 'subcontinent' in which onlee India is mentioned, thode logon ko "jhanjhat" hogi(some people might have troubles).I will keep political issues out of this forum. Whatever, returning to the original article.........
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Subcontinent turning into supercompetitor
The Economist
April 5, 2005 WORLDLEDE0405


A gleaming silver prototype of a sport-utility vehicle was one of the stars of the recent Geneva motor show. What made it particularly noteworthy was that, in two years, it will roll off the production line not in Wolfsburg, Stuttgart, Detroit or Tokyo, but Pune -- two hours by road from Mumbai, the commercial capital of India.

Five years ago it would have been inconceivable for a vehicle from India to turn heads at such an international gathering. Back then, the gamble by India's Tata group to enter the car business was widely predicted to drag down its flagship Telco business (now called Tata Motors).

Its first indigenous car, the little Indica, was hit by quality problems and won less than half of its expected share of India's growing domestic market. Telco reported huge losses in 1998-99.

But Ratan Tata, chairman of the 80-firm conglomerate that is India's largest private enterprise, stuck to his guns. Cars are a big part of his ambitious vision. Tata, the nephew of J.R.D. Tata, a leading industrialist in the days of British rule, succeeded his uncle in 1991 as chairman of the group's holding company, just as India started to liberalize its economy.

Tata was a sprawling empire in which 300 firms went their own ways. Tata took the group by the scruff of the neck, quit crowded markets, such as textiles and cement, and licked other firms into shape. But his bold move into cars was a turning point, as the group became aggressively expansionist.

In 2000, Tata spent $435 million to buy Tetley Tea, a British business with a global brand -- the first big foreign acquisition by an Indian company. The idea was to move downstream from just selling leaves from Tata's tea plantations. But other international acquisitions in trucks, telecoms and steel offer Tata an even bigger opportunity to make its mark outside India, as does its flourishing information technology business.

Already 22 percent of group sales are outside India. None of this could have come about if the move into cars had proved a disaster. Telco's losses were caused partly by a severe cyclical downturn in the truck market. Tata's response was to cut jobs by 40 percent and halve the number of suppliers to 600. This was not easy to do in India, with its rigid labor laws. After a three-year struggle, the Indica and its bigger version, the Indigo, began to overcome early problems and now account for around one-quarter of the markets for small and medium-sized vehicles.

Tata recalls that in 1995, when he decided to enter the passenger-car market, he could have taken the usual route with a joint venture. Toyota and Volkswagen had been talking to him. Instead, he pursued his dream of making Tata Motors the flagship of his $14 billion empire.

Today it is the biggest group business by sales and, only seven years after producing its first car, makes a net pretax profit margin of about 10 percent -- putting it in select company with the leading Japanese and South Korean carmakers and ahead of its main domestic rival. Today, the group's firms are in eight sectors. The average Tata holding in each firm is 25 percent, but in flagship businesses, such as Tata Motors, Tata Steel and Tata Consulting Services (TCS), it is 65 percent or more.

Last summer, Tata floated 14 percent of the shares of TCS, an IT business started by Tata engineers in 1968, long before such Bangalore outsourcing merchants as Infosys and Wipro Technologies had been heard of. The float valued the firm at $11 billion. It netted Tata more than $1 billion, propelling the group back atop Indian business.

Tata will retire in just under three years, when he reaches 70. Before he goes, he wants to launch a revolutionary "1 lakh car" -- one that sells for 100,000 rupees, or $2,000. Tata would make the body panels and sell kits to small firms that would create jobs assembling the cars in rural workshops. The idea is to have a "people's car" made by the people.

"When I see four or five members of a family cling to one little scooter, I become determined to provide a low-cost family car between the scooter and normal models," he said.


http://www.startribune.com/stories/535/5329471.html

[centralized pandemonium]

Personally I am not that pleased with the Tuscon. I don't wont American SUV type culture in India.

[Citi-Zen]

Originally Posted by mainhoonna

Personally I am not that pleased with the Tuscon. I don't wont American SUV type culture in India.

Market economy, man, market economy...demand and supply, let the people decide what they want.

Get rid of the distortions that prevent a market economy to function freely, and I believe that this country's GDP will grow at 12%. Look at the sectors of the Indian economy that are doing well and the one common thread runnin thru them is that they are more or less market economy with minimum distortions from govt regulations...look at telecom, the best example of what a market economy can achieve.

I degress tho, I believe the SUV fever is here to stay...and its not coz its an "american thing", i actually think SUVs are the most sensible cars for India.

[centralized pandemonium]

Guys, I will try to post some links of phoren media from BR. They have a nice collection of phoren articles and stuff. The articles provide a new dimension to view our economic growth. Sridhar, Suraj and other regulars at BR, can you also post some articles from there you find intresting .
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Future Factories

The surprise is that India's manufacturing revolution is starting at the high end.

March 7 issue - At a factory in greater Noida, an industrial suburb of Delhi, workers step through a series of ''air showers" that blast the grime of one of the world's most polluted cities off their clothes. Then they pull on white coveralls, white hoods and plastic sandals before passing through an air lock into the ''clean room" of Moser Baer, the world's third largest manufacturer of optical media, including CDs, VCDs and DVDs. Inside, rows of machines silently inject, coat, harden, finish, flip and label the shining disks, as a few white-suited workers adjust dials. Clean, quiet, heavily automated and nearly depopulated, this is the look of a nascent manufacturing revolution in India.

to anyone familiar with the Subcontinent((see I told you that the west is confused, they think India means subconinent,baki deshon ka kya hua, ie what happened to other countries), this picture comes as a surprise. Not so long ago even Indian consumers believed that Indian-made products were shoddy. Before the country began to liberalize its economy in 1991, the so-called license Raj stifled competition with red tape and nurtured inefficient makers of second-rate products. Even by the late '90s, as India began to emerge as a global power in information-technology services, the country remained a laggard in manufacturing. But lately India's manufactured exports have risen, from about $37 billion in 2002 to about $54 billion in 2004, and they could reach $300 billion by 2015, analysts say, as multinationals invest more heavily in India as a manufacturing base. Something similar happened in China, of course. But in India the early players are interested in the talent pool of chemists, designers and engineers, not low-skilled labor. :d

Look at headlines from the past 12 months: Nokia and LG Electronics unveiled plans to begin handset production in India. Hyundai, which has already exported about 50,000 cars from India, said it plans to make India its export hub for auto components. Toyota opened a factory that will make manual transmissions for vans, SUVs and small trucks produced in Thailand, the Philippines, South Africa and Latin America. Last month, Siemens announced plans to invest more than $500 million by 2009 in new and expanded factories in India.

Even picky German engineers are coming to associate India with quality. Jurgen Schubert, who heads Siemens's operations in the country, says that for years the company's quality testers in Germany stamped his Indian-made products "inferior," no matter how good they were. So in the late '90s, Schubert stuck made in germany on a shipment of Indian parts, and they passed inspection. ''After I pointed that out to them," he says, ''we no longer had any problems."

Multinationals have helped raise standards by encouraging Indian suppliers to modernize. When the big players entered the local auto market after liberalization in 1991, they assembled vehicles in India but imported many of the components. Now most of them are building cars using 70 to 90 percent local parts and materials. ''If you come and look at our factories today, most of the work is done by brainpower, with computer-aided drafting, lots of automation," says B. N. Kalyani, chairman of Bharat Forge, India's largest auto-parts maker. "The IT boom essentially brought out the story that Indian engineering skills are good and Indian engineers can adapt to whatever the needs of the market are. That gives India an advantage over China in technical, skilled manufacturing."

That may be overstating the case. Few Western industrialists rank India ahead of —China in any manufacturing category. Yet few doubt that India is carving out a big role, as skilled manufacturing shifts to developing nations. If New Delhi makes the right moves, says McKinsey & Co. consulting, India could raise its manufactured exports to $300 billion by 2015, increasing its share of global manufactured exports from 0.8 percent to 3.5 percent, and leapfrogging other low-cost countries to become one of the top two exporters (along with China) of products like apparel, pharmaceuticals, specialty chemicals and auto components. India could also become a big supplier of consumer electronics, computer hardware, and domestic appliances. "It's India and China, as opposed to either India or China," says Shirish Sankhe, a McKinsey partner in Mumbai. "Countries that may lose out are those where they have smaller domestic markets or less talent, like Thailand, Mexico, some countries in Eastern Europe and so on."

The likely losers also includes the United States. In auto parts, for example, customers increasingly expect longer life and higher technology at less cost. ''The result is that American parts manufacturing has become extremely unprofitable," says K. N. Subramaniam, managing director of Gabriel India Ltd., the flagship of the Anand Group, which expects auto-parts exports to rise from $36.8 million in 2004 to $56.3 million this year. India's domestic sales look likely to cross the million-car threshold in 2005, achieving a scale that will justify heavy investment in technology and capacity, further increasing India's global competitiveness.

To match China's recent growth, India will have to eliminate some ill-considered policies, experts say. In order to encourage consumption in its domestic market, New Delhi needs to cut taxes on manufactured goods down to the Chinese level, which means a cut from as high as 30 percent to 15 percent. It also needs to slash import duties; improve roads, railways, ports, and the power grid; and develop the type of Special Economic Zones that have created clusters of booming industries in China.

Indian businesses are already finding creative ways to dodge these hurdles. To avoid crippling power outages, Moser Baer has built its own power plant. ''We generate about 80 megawatts of power every year," says Ratul Puri, Moser Baer's executive director. ''We don't even have a grid connection." Bharat Forge is located in the state of Maharashtra and ships out of nearby Mumbai, but also from Chennai (formerly Madras), Kochi (formerly Cochin) and Gujarat, in case of strikes and bottlenecks in Mumbai.

The Indian government is also becoming more responsive to industry. It has removed barriers to the internal transport of goods destined for export and simplified import-export procedures. At the urging of Moser Baer, the government constructed a container depot in Greater Noida that operates 24 hours a day and now ships 80 percent of the company's output. ''The government is listening," says Puri. ''Five years ago you couldn't even have that discussion with the government." And as China shows, in nations where government works for industry, factories grow quickly.


http://www.msnbc.msn.com/id/7037097/site/newsweek/

[Citi-Zen]

Originally Posted by mainhoonna

This IMO is a nice article. The title is f@#$%^g wrong. It is INDIA not the subcontinent. Bhai Tata 100 taka Hindustani hai.( Tata is 100% Indian). Not too pleased with the headlines. Unless of course the subcontinent means the whole of India . But then thode logon ko "jhanjhat" hogi(some people might have troubles). Whatever, returning to the original article.........

Hehehe...funny but true Mainhoona. Guess thats the cost one has to pay of being a big country/economy, smaller countries around it feel threatened. Btw, good find on that artcile, kinda proves the point I was making above about the market economy and competition.

[centralized pandemonium]

Kronik, do you know to what countries those cars are being exported.

[Citi-Zen]

Originally Posted by mainhoonna

Kronik, do you know to what countries those cars are being exported.

Mainhoonaa, Hyundai India is the global manufacturing hub for Hyundai Santro (the cars that u see in the pics). So any place that the car sells in the world, it is made in India. The countries I know it is exported to are EU, South Africa, Mexico, Brazil, and some other South American countries, South Korea. Hyundai India is right now working towards making India their global manufacturing base for Hyundai Getz too. The other manufacturer that uses India as its global manufacturing base is Suzuki for their hatchback Alto.

So anyplace in the world u see these 3 cars, they will be "Made in India".