Contributors for automobile industry

It could arguably be the tipping point for India’s Auto Industry. The low manufacturing cost combined with a robust and growing vendor base for components, some observers believe India could emerge as a global automobile hub.

The biggest factor that is driving auto sales is India’s rapidly growing domestic market, encouraged by 9% plus GDP growth and rising incomes across its much touted 250 million strong middle class. Autopolis, a British consulting firm, predicts that the top six global auto companies will lose market share to companies like FAW and SAIC in China and India’s Tata Motors, to name a few.

A survey by the Economist expects 60% of the incremental demand of 2.8 million vehicles to come from Asia by 2020, with China and India topping the charts. John Paul MacDuffie, a professor of management at Wharton and an automobile industry expert, is not surprised at the explosion in the Indian auto market. He has seen the phenomenon occur in the other countries, too. “There was a sign that India is moving in this direction from the opening up of the economy, the welcoming of foreign investment and other things that were helping economic growth,” he says. “There seem to be some relatively predictable points in the rise of per capita income when different stages of what people describe as ‘motorization’ happened.”

Ancilliary industry in India has a strong manufacturing base and is on a increasing mode. Many of these companies have acquired facilities in developed markets and successfully grown their international business. For example, ancilliary maker Toyota Kirloskar is poised to hit annual revenues of $ 1 billion, driven largely by exports. Mercedez Benz also exports more components out of India than the revenues it generates from its domestic vehicle sales. We at Tata Motors are perceived as the leaders in the market are leading the Price – led assault. We are profitably selling ACE, a light commercial vehicle, for appx $2,920 and is 80% outsourced. The global players in the Indian market are also in overdrive. General Motors has targeted a market share of 10% by 2010, who are currently at 3%. Toyota wants a 10% share (currently at 4%) of this market. Others with plans to set up operations in India or expand include Volkswagen, BMW, DaimlerChrysler and Audi.