Posted: December 1, 2011 |  AUTHOR: KEN FOX | CONTACT ME


One industry analyst claims “the Indian car market is the world’s toughest with players coming from all sides.” There is a plethora of new cars being launched in India. Many of the new cars are mini and sub-compacts, but others are SUVs and sedans. One of the largest car manufacturing centers in India is Chennai. Formerly called Madras, it is the capital city of the Indian state, Tamil Nadu. It is located in Southeast India on the coast off the Bay of Bengal (see map). It has a population of about 4.7 million people (est. 2011). One author claims Chennai is the “Detroit of India.” The growing auto cluster includes a radius 50-60 kilometers around Chennai. The Port of Chennai has grown with the increased number of foreign manufacturers setting up assembly and manufacturing plants in and around the area. The port operates 24 hours a day, has three docks and 24 berths. A railroad operates inside the port.

Endless new car announcements from a wide variety of auto makers headline Indian newspapers, websites and auto trade journals. The auto manufacturers in the Chennai area include: BMW, Daimler, Ford, Tata Motors, Mitsubishi, Ashok Leyland, Hyundai, and multiple joint ventures such as: Peugeot-Citroen, Renault-Nissan, Maruti-Suzuki, Scania (VW) -Larsen & Toubro (L&T) and Suzuki-Volkswagen. Other production facilities have been built or planned to be built to manufacture: tires (Michelin is setting up a new plant to start production in 2012) , buses (Volvo), auto parts and construction equipment (USA’s Caterpillar, Japan’s Komatsu and South Korea’s Doosan).

Available auto models are designed or adapted for the Indian market with unique brand names such as:
-Alto Xplore and Swift Dzire from Maruti-Suzuki
-Audi Q3, to be launched in 2012
-Brio from Honda (assembled in and imported from Thailand)
-BMW X3 SAV (Sport Activity Vehicle)
-Chevrolet Beat (subcompact)
-Fiat Bravo
-Fluence by Renault, a luxury sedan
-Ford Figo
-Hyundai Eon (launched October 13, 2011)
-Micra from Renault-Nissan, for domestic and export sales
-Nissan Pixo
-Skoda Fabia Combi (owned by VW)
-Tata Indica XL
-Toyota Etios Liva (assembled in Bangalore)

Four Tamil-Nadu based car companies together manufactured 5.7 million cars in the April to December 2010 (9 month) time period. Indian auto exports have grown sharply. Not bad for a once sleepy, fishing village until the British came and started manufacturing in 1840. The last 15 years has seen strong growth in Foreign Direct Investment (FDI) helped by flexible local government policies and an available and experienced workforce. Electronic equipment manufacturers such as Dell, Nokia and Samsung also operate plants in the Chennai area.

India is generating a center of excellence for small car and engine technology. Exemplified by the Nano from Tata Motors, other car companies have followed with higher priced, perceived higher quality and offering more features and accessories in their new micro or small car entries. The question is how sustainable are profits from these small cars? Indian manufacturers are finding ways to increase their exports, which is expected to grow. .

Ford India is planning to expand its exports to 50 countries by the end of 2011 or early 2012. It mainly ships the Figo but also the Fiesta. South Africa is Ford India’s biggest export market, but countries in the Middle East represent good growth. Ford India exported 16,747 Figo units from the January to September 2011 time period versus 4,573 units during the same time period last year.

Take the newly launched Hyundai Eon, which is positioned as an entry level car, with an 814 cc gasoline engine. The car was designed at Hyundai’s development center in Namyang, Korea in collaboration with its Hyderabad (India) based research and development center. It is available in India through Hyundai’s network of 332 dealerships and 709 service centers across the country.

India has a population of about 1.2 billion people (est. 2011) with one half (50%) of its population under age 25. India is projected to be the world’s most populous country by 2015, surpassing China. Foreign car companies are continuing to introduce new car models. Other car companies are planning to enter the Indian market, such as Malaysian car manufacturer Proton. Still others, such as Volkswagen’s Scania commercial vehicle division, which builds trucks and buses, are looking to expand production in India. With strong auto demand forecast through 2020, India is expected to become one of the top five vehicle producing countries in the world (it was #7 in 2010 versus #15 in 2000).

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