Auto companies in a rush| Murad Ali Baig

Auto companies in a rush| Murad Ali Baig
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First Published: Mon, Jul 16 2007. 06 03 PM IST

Auto expert, Murad Ali Baig
Auto expert, Murad Ali Baig
Updated: Mon, Jul 16 2007. 06 03 PM IST
New Delhi: It is not just the monsoons. Auto companies are flooding the Indian market at such a dizzy speed that buyers are thoroughly confused. Unlike the bad old days of ‘Licence Raj’ where the scenario was confined to being a two-car race, buyers today can choose between 40 different models that offer nearly 200 options in petrol and diesel engines and trim levels.
Auto expert, Murad Ali Baig
India has clearly become the flavour of the year among auto companies. Although China is a bigger and faster growing market, the 22% growth profile of the Indian car market in 2006-07 is impressive enough for foreign companies to prefer doing their business in India where language, food and living is relatively easier.
While Maruti, or rather Suzuki, still rules the roost with half the passenger car market, their command has been in the small car segment and their stable of seven cars and four utility vehicles has not given them a real bite in the growing market of bigger cars. Till the peppy new SX4 was launched recently to offer a car that was a little bigger than it’s Rs.C’ Segment (4 to 4.5 metre long) competitors and almost as big as the smallest car in the Rs.D’ Segment (4.5 to 4.75m).
India’s second largest company, Hyundai also has a successful small Santro. They have similarly added their spacious and powerful new Verna with a similar objective, hoping to gradually replace their ageing Accent.
Close behind them is Tata Motors who are firmly lodged in the Indian space with their well priced models based on a 1405 cc, which is predominantly diesel engine. They have now allied with the ailing Fiat Company in India to set up a new plant near them in Pune to first make the petrol Palio and later larger models from Fiat’s stable.
Mahindra and Mahindra, who dominate India’s utility vehicles segment, have been making vigorous efforts to get into passenger cars. Their Scorpio may be a spacious and comfortable vehicle but it is not a car. Which is where their recently launched Logan, a product of their new alliance with France’s biggest carmaker Renault, hopes to plug the gap.
Japan’s Honda has done well too with their Honda City and Accord as also their new Civic that is positioned in between these two models. But they have no footprint in the smaller hatchback segment that still commands over 75% of the Indian market. They will soon dip into their arsenal and offer either a smaller Rs.hatch’ version of the City or a completely new small car… or perhaps both,to be represented in all segments.
Their main global rival, and Japan’s largest automaker, Toyota commands the personal utility vehicles with their successful Innova though it has a tiny presence with the Corolla and imported Camry. They too are planning to set up a new plant to make a small car perhaps adapted from the stables of their subsidiary company Daihatsu which specializes in small cars.
Japan’s second largest car company Nissan has been a late starter and has only had a few imports like the XTrail SUV and the luxurious Tienna that competes with the Accord or Camry. As they have an alliance with Renault, the further link with Mahindras means that all three will be making small cars in a new plant in Tamil Nadu, to be sold under their various names.
Europe is the main technology base of smaller cars from GM and Ford although GM now sources most of its products from their newly acquired Daewoo plants in Korea from where we have their spacious Optra, the smaller Aveo and their new small Spark that evolved from the Daewoo Matiz.
The U-VA is a shortened hatchback version of the Aveo, positioned just above the Spark. Ford made India its base for a brand new Ikon platform and is doing the same for the slightly bigger Fiesta models that includes a semi sports Fusion. But we can expect a smaller and cheaper variant of a hatchback Fiesta to widen its footprint.
The Skoda Octavia has also been a success story among bigger cars despite the fact that few buyers associated it with its parent company Volkswagen. Now VW that owns Audi, is in the process of setting up a new plant in Maharashtra. Car sale estimates for the months of March-April in India give a more micro picture.
The Luxury car segment, dominated by German brands, is attracting attention since this segment is growing too. If India has a fast growing number of ‘dollar millionaires’, who were recently estimated at 100,000, there is ample scope for these models to thrive.
Mercedes Benz had been the first having sold over 2,000 cars last year. Now BMW has set up a plant and Audi is set to follow suit. Local assembly brings down costs of base models, in addition to selling fully imported top models. Among imports are exotic cars from Porsche, Lamborghini, Ferrari and others.
Despite the growth and opportunity, competition has been so fierce that car prices have not really risen much over the past five years. But with estimates pointing that India will have a domestic demand of roughly 1.5 million personal cars and utility vehicles in 2007-08, it is not surprising to find all auto majors wanting a chunk of that pie.
Murad Ali Baig is one of India’s foremost auto experts. Feedback to his column can be sent at livemint@livemint.com
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First Published: Mon, Jul 16 2007. 06 03 PM IST