INDIAN AUTOMOBILE INDUSTRY

Automobile industry in India

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The second generation Tata Indica Vista. The Indica is the first passenger car indigenously developed in India.

Mahindra Scorpio, one of India's best selling indigenously developed SUV.

The Automobile industry in the Republic of India is theseventh largest in the world with an annual
production of over 11 million vehicles and exports of about 1.5 million.[1]In 2009, India emerged
as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand.[2]By 2050,
the country is expected to top the world in car volumes with approximately 611 million vehicles on
thenation's roads.[3] A major chunk of India's car manufacturing industry is based in and around the city
ofChennai and hence it is known as "Detroit of India".[4]Chennai accounts for 60 per cent of the
country's automotive exports.[5]

[edit]History

Following economic liberalization in India in 1991, the Indian automotive industry has demonstrated
sustained growth as a result of increased competitiveness and relaxed restrictions. Several Indian
automobile manufacturers such as Tata Motors, Maruti Suzuki and Mahindra and Mahindra, expanded
their domestic and international operations. India's robust economic growth led to the further
expansion of its domestic automobile market which attracted significant India-specific investment by
multinational automobile manufacturers.[6] In February 2009, monthly sales of passenger cars in India
exceeded 100,000 units.[7]

The first car ran on India's roads in 1897. Till the 1930s, cars were imported directly. Embryonic
automotive industry emerged in India in the 1940s. Following the independence, in 1947,
theGovernment of India and the private sector launched efforts to create an automotive component
manufacturing industry to supply to the automobile industry. However, the growth was relatively slow in
the 1950s and 1960s due to nationalisation and the license raj which hampered the Indian private
sector. After 1970, the automotive industry started to grow, but the growth was mainly driven by
tractors, commercial vehicles and scooters. Cars were still a major luxury. Japanese manufacturers
entered the Indian market ultimately leading to the establishment of Maruti Udyog. A number of foreign
firms initiated joint ventures with Indian companies.[8]

In the 1980s, a number of Japanese manufacturers launched joint-ventures for

building motorcyclesand light commercial-vehicles. It was at this time that the Indian government
chose Suzuki for its joint-venture to manufacture small cars. Following the economic liberalisation in
1991 and the gradual weakening of the license raj, a number of Indian and multi-national car
companies launched operations. Since then, automotive component and automobile manufacturing
growth has accelerated to meet domestic and export demands.[8]

[edit]Exports

Mahindra Scorpio Jeep in service with the Italy's CNSAS.

India has emerged as one of the world's largest manufacturers of small cars. According to New York
Times, India's strong engineering base and expertise in the manufacturing of low-cost, fuel-efficient
cars has resulted in the expansion of manufacturing facilities of several automobile companies
like Hyundai Motors, Nissan,Toyota, Volkswagen and Suzuki.[9]

In 2008, Hyundai Motors alone exported 240,000 cars made in India. Nissan Motors plans to export
250,000 vehicles manufactured in its India plant by 2011.[10]Similarly, General Motors announced its
plans to export about 50,000 cars manufactured in India by 2011.[11]

In September 2009, Ford Motors announced its plans to setup a plant in India with an annual capacity
of 250,000 cars for US$500 million. The cars will be manufactured both for the Indian market and for
export.[12] The company said that the plant was a part of its plan to make India the hub for its global
production business.[13] Fiat Motors also announced that it would source more than US$1 billion worth
auto components from India.[14]

A Tata Safari on display in Poznan,Poland.

According to Bloomberg L.P., in 2009 India surpassed China as Asia's fourth largest exporter of cars.[2]

In recent years, India has emerged as a leading center for the manufacture of small cars. Hyundai, the
biggest exporter from the country, now ships more than 250,000 cars annually from India. Apart from
shipments to its parent Suzuki, Maruti Suzuki also manufactures small cars for Nissan, which sells
them in Europe. Nissan will also export small cars from its new Indian assembly line. Tata
Motorsexports its passenger vehicles to Asian and African markets, and is in preperation to launch
electric vehicles in Europe in 2010. The firm is also planning to launch an electric version of its low-
cost car Nano in Europe and the U.S. Mahindra & Mahindra is preparing to introduce its pickup trucks
and small SUV models in the U.S. market. Bajaj Auto is designing a low-cost car for theRenault Nissan
Automotive India, which will market the product worldwide. Renault Nissan may also join domestic
commercial vehicle manufacturer Ashok Leyland in another small car project.[15] While the possibilities
are impressive, there are challenges that could thwart future growth of the Indian automobile industry.
Since the demand for automobiles in recent years is directly linked to overall economic expansion and
rising personal incomes, industry growth will slow if the economy weakens.[15]

Passenger vehicles in India

See also: List of cars available in India

[edit]Domestic Indian automotive companies

 Tata Indigo Manza.

 Chinkara Motors[16]: Beachster, Hammer, Roadster 1.8S, Rockster, Jeepster, Sailster

 Hindustan Motors[17]: Ambassador

 ICML[18]: Rhino Rx

 Mahindra[19]: Major, Xylo, Scorpio, Bolero

 Premier Automobiles Limited[20]: Sigma, RiO

 San Motors[21]: Storm

 Tata Motors[22]: Nano, Indica, Indica Vista, Indigo, Indigo Manza, Indigo
CS, Sumo, Safari, Xenon,Aria

[edit]Foreign automotive companies in India

[edit]Vehicles manufactured or assembled in India

Manufactured only in Chennai, India, thei10 is one of Hyundai's best selling globally exported cars.
Maruti Swift. Maruti Suzuki, a subsidiary of Japan's Suzuki Motor, is the largest automobile manufacturer in
India.[23]

 BMW India[24]: 3 Series, 5 Series.

 Fiat India[25] (in collaboration with Tata Motors):Grande Punto, Linea, Palio Stile.

 Ford India[26]: Ford Figo, Ikon, Fiesta, Endeavour.

 General Motors India[27]

 Chevrolet (CSPIL)[28]: Spark, Beat, Aveo U-VA,Aveo, Optra, Cruze, Tavera.

 Honda Siel[29]: Jazz, City, Civic, Accord.

 Hyundai Motor India[30]: Santro, i10, i20, Accent,Verna Transform, Sonata

Transform.

 Mahindra Renault[31]: Logan

 Maruti Suzuki[32]: 800, Alto, WagonR, Estilo, A-star,Ritz, Swift, Swift

DZire, SX4, Omni, Versa, Eeco,Gypsy, Grand Vitara

 Mercedes-Benz India: C-Class, E-Class.

 Mitsubishi[33] (in collaboration with Hindustan Motors)[34]: Lancer, Lancer Cedia

 Nissan Motor India[35]: Micra.

 Toyota Kirloskar[36]: Corolla, Innova, Camry.

 Volkswagen India[37][38]: Polo, Jetta, Passat.

 Audi India: A4, A6, Q5.

 Škoda Auto India[39][40]: Fabia, Octavia, Laura,Superb.

[edit]Vehicles imported to India

 Audi[41]: A8, TT, R8, Q5, Q7.

 Bentley[42]: Arnage, Azure, Brooklands, Continental GT, Continental
Flying Spur, Mulsanne.
 BMW[43]: 6 Series, 7 Series, X3, X5, X6, M3, M5, M6 and Z4.
 Chevrolet: Captiva.
 Fiat[25]: Nuova 500, Bravo.
 Honda[44][45]: Civic Hybrid, CR-V.
 Jaguar[46]: XF, XJ, XK.
 Lamborghini[47]: Gallardo, Murciélago.
 Land Rover[48]: Range Rover, Range Rover Sport, Discovery
4, Freelander 2.
 Maybach[49]: 57 and 62.
 Mercedes-Benz[50]: CL-Class, CLS-Class, S-Class, SL-Class, SLK-
Class, M-Class, Viano.
 Mitsubishi: Montero, Outlander.
 Nissan[51]: Teana, X-Trail, 370Z,
 Porsche[52][53]: 911, Boxter, Panamera, Cayman, Cayenne.
 Rolls Royce[54]: Ghost, Phantom, Phantom Coupé, Phantom Drophead
Coupé.
 Škoda[39]: Superb.
 Suzuki: Grand Vitara.
 Toyota[36]: Land Cruiser, Land Cruiser Prado, Fortuner*, Prius.
 Volkswagen[55]: Beetle, Touareg, Phaeton.
 Volvo[56]: S60, S80, XC90.

* Toyota Fortuner is imported from Toyota Motor Thailand Company Limited as CKD

[edit]Commercial Vehicle manufacturers in India

 [edit]Local Brands

 Ashok Leyland[57]
 Force[58]
 Mahindra Navistar[59]
 Premier[20]
 Tata[60]

[edit]Foreign Brands

 Volvo[61]
 Audi[62]
 BMW[63]
 Mercedes-Benz[64]

[edit]Electric car manufacturers in India

 Ajanta Group[65]
 Mahindra[66]
 Hero Electric[67]
 REVA
 Tara International[68]
 Tata[69]

The automotive Industry in India is now working in terms of the dynamics of an open
market. Many joint ventures have been set up in India with foreign collaboration, both
technical and financial with leading global manufacturers. Also a very large number of
joint ventures have been set up in the auto-components sector and the pace is expected to
pick up even further. The Government of India is keen to provide a suitable economic,
and business environment conducive to the success of the established and prospective
foreign partnership ventures. $5.7 billion is the investment envisaged in the new vehicles
projects SIAM – Society of Indian Automobile Manufacturers released a report earlier
today accounting the total sales made by auto manufacturers in the country during the
period April 2010 and August 2010. According to SIAM’s report, India manufacturer’s
manufactured 7,063,063 units during the period, up by 1,727,789 units when compared to
last year’s same period manufacturing figures.

Both passenger vehicles and commercial vehicles registered an increase of 33.88% and
44.75% respectively. In the passenger vehicle segment, multi purpose vehicles (MPV)
registered the highest increase, 50.68% (82,609 units) followed by 34.32% increase in
passenger cars (753,199 units) and 22.56% (125,618 units) rise in utility vehicles. Two
wheeler and three wheeler segments too registered a rise with 27.22% and 20.15%
respectively. Car sales vroomed to an all-time high of 33% in August on lower borrowing costs, launch of
new models and booming economy, said auto industry body SIAM on Thursday.

With festive season round the corner, the demand in the Asia’s third largest auto market is set to peak
further. But the country has to do a lot of catching up with China as car sales in the world’s most populous
country jumped to 59.3% in August.

Total car sales in the April-August period stood at 7.53 lakh, up 34% over the first five months of the fiscal
ended March 2010. Society of Indian Automobile Manufacturers (SIAM) had previously projected car sales
to rise 12% to 17.14 lakh vehicles in FY 2011.

Demand for automobiles is also led by growing disposable income as high economic growth has cheered
job market and brought back increments and bonuses for the employees.

"The industry will overshoot our estimates due to several factors such as easy financing and new car
models. Other economic factors are also likely to influence the growth," said Vishnu Mathur, director
general, SIAM.

However, he cautioned that the industry needs to look out for performance in the second half as September-
March period last fiscal had recorded strong sales and the large base could yet slow down growth rate for
the full year.

SIAM had projected 9-10% growth for sales of two wheeler sales in FY’11, 7-8% increase for three wheelers
and a much higher 17-18% growth for commercial vehicles. The actual growth rate for the respective
categories for the April-August period has been 2-3 times the annual forecast with sales of two wheelers
pegged at 27%, three wheelers at 20% and commercial vehicles, a category seen as a barometer of
country’s industrial activity, growing as high as 45%.

Some of those tracking the sector have already revised their annual estimates. Manoj Mohta, head, Crisil
Research, said auto industry is performing better than expectations and his research unit has pushed up
sales forecast for the full fiscal to 16-18% from the earlier 12-14%.

"The automobile industry is witnessing buoyant growth, thanks to positive consumer sentiments along with
robust economic indicators. In FY 2010-11, we expect all automobile segments to register healthy growth
rates, even as the pace of growth moderates over the next few quarters due to a higher base," he said.

But analysts say higher growth may not make a case for a wider re-rating of the stocks in the sector as
brokerages had already factored in a higher growth rate than SIAM’s conservative projection. BSE Auto
index rose 0.19% on Thursday, compared with 0.7% in the 30-stock benchmark Sensex.

While country’s largest carmaker, Maruti Suzuki, sold 92,647 cars in August, up 32% over the year ago
period, Tata Motors’ sales grew 40% to 30,312 units. Other carmakers such as Ford India and Volkswagen,
who launched new products in the small car segment, reported multi-fold increase in sales. Market leader in
two-wheelers, Hero Honda, saw a jump of 2% to 4.13 lakh units.

The only blip in the auto growth story is exports. Overseas shipment of cars declined 7.21% in August due to
slowdown in international markets, especially Europe, as many countries withdrew incentive for buying new
fuel-efficient smaller cars. Domestic automakers, who have been struggling to keep up with local demand,
have also shifted focus and are using capacities meant for exports to make products for domestic market.
The largest car exporter, Hyundai saw overseas shipments decline 12% to 22,035 units, while Maruti’s
exports dipped 18.4% to 11,972 units in August.

The Indian automobile industry, which has been on a record breaking sales spree this fiscal, on Thursday
said an imminent increase in interest rates by banks following RBI's decision to hike key short-term lending
and borrowing rates, is unlikely to dampen demand.

The Reserve Bank of India raised its key short-term lending rate by 25 basis points and borrowing rate by 50
basis points with immediate effect, which is expected to spike cost of funds for the banks and eventually
makes loans expensive.

"We believe there is enough power in the economy and these rate hikes will not impact demand. Even in the
short term, as the festive season is round the corner, we expect demand to continue," Society of Indian
Automobile Manufacturers (SIAM) President Pawan Goenka told PTI.

He, however, said the auto industry was surprised by the central bank's move to hike borrowing rates
(reverse repo) rate by 50 basis points.

"For us the increase of 50 basis points (bps) on reverse repo was something unexpected as inflation had
started coming down. We were expecting in the region of 25 bps," Goenka said.

Expressing similar sentiments, Maruti Suzuki India Chief Financial Officer Ajay Seth said although interest
rate hikes always had some impact on the demand side but since the rate hike is not much, there could not
be any significant impact.

"What is more important for us is liquidity and the RBI has not touched the CRR, which is good although we
were not expecting a rate hike as inflation has started to come down," he added.

Hyundai Motor India Director (Marketing and Sales) Arvind Saxena, however, said the rate hikes could act
as a dampener to the festive season sales.

"The auto industry is looking forward to a good festive season but this interest rate hike may act as a
dampener. Frequently rising interest rates might slow down the market, specially in the festive season,"
Saxena said.

Domestic automobile sales have been on a record breaking spree this fiscal with the industry clocking
12,63,293 units in August, the highest ever achieved in a month, bettering the previous best of sales of
12,37,461 units in July this year.

Domestic passenger car sales, which stood at 1,60,794 units in August, were the best ever monthly sales,
bettering the previous best of 1,58,764 units in July this year. Total two-wheeler sales of 9,57,304 units in
August, also broke the previous record of 9,38,514 units set in July this year.

Domestic car sales zoom even as exports drop in Aug

Stable interest rates, positive sentiment drive growth.