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The decade in wheels

The decade in wheels
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First Published: Mon, Jan 31 2011. 10 56 PM IST

Ramping up: An M&M assembly line at Nashik. During the last year or two, M&M has gone on a diversification spree, to make practically everything on wheels—from two-wheelers to trucks.Photo by
Ramping up: An M&M assembly line at Nashik. During the last year or two, M&M has gone on a diversification spree, to make practically everything on wheels—from two-wheelers to trucks.Photo by
Updated: Mon, Jan 31 2011. 10 56 PM IST
A decade ago, at the dawn of the new millennium, you didn’t have to be a jyotishi (soothsayer) to figure out that the Indian automobile industry was poised to go through the roof. The India growth story had well and truly begun, income levels were rising rapidly, and a car was the first thing on consumers’ minds the minute they could afford one. That was to be expected in a country where motorization was (and still is) woefully low at around six cars per 1,000 people. Not surprisingly, cars sales zoomed north and have more than tripled from 700,000 units in 2000 to 2.3 million in 2010, to make India the fastest growing car market in the world after China. The number of brands has gone from 11 to 28 along with a fivefold jump in the number of models in the past 10 years.
Also See | Men Who Shaped The Auto industry (PDF)
However, it’s not been an easy ride. Intense competition has forced car companies to either reinvent themselves to stay in the race, or get left behind and even perish. But, despite the seismic changes in India’s rapidly evolving car market, the ranking at the top, even after a decade, is unchanged. Maruti, Hyundai and Tata still remain the “Big Three” auto makers, driving home the point that it’s hard to topple well-entrenched players.
Home truths
The start of the last decade was a watershed for home-grown car makers, with some of them just not strong enough to withstand the surge of global competition. Premier Automobiles Ltd had already faded into oblivion. The iconic Padmini was dead and, by the middle of the decade, parts of the historic Kurla factory in Mumbai had disappeared and given way to high-rise apartments. Premier’s erstwhile rival, Hindustan Motors Ltd, struggled too, but showed greater resilience thanks to its booming auto component business, which continues to prop up the loss-making car division.
Ramping up: An M&M assembly line at Nashik. During the last year or two, M&M has gone on a diversification spree, to make practically everything on wheels—from two-wheelers to trucks.Photo by Abhijit Bhatlekar/Mint
It was a tough time for Tata Motors as well. Quality problems caught up with its much-hyped Indica, and within two years of its launch, demand for it fell sharply. The hot-selling Sumo, too, was under attack from the superior Toyota Qualis, and flat sales in the early part of the decade didn’t help. During these difficult times, Tata Motors Ltd was open to an alliance with a global car maker. There were talks with Peugeot to jointly produce a car and it’s rumoured that the top Tata management secretly met General Motors Co.’ (GM) bosses to see if they had any interest in the Indica project. Would Tata Motors cease to be an independent passenger car maker? It didn’t quite come to that.
The turning point for Tata Motors was the Indica V2, launched in early 2001. The V2 was a do-or-die attempt to iron out all the bugs. It worked. Though quality still wasn’t up to international standards, it was hugely improved and crossed the threshold to be good enough for Indian customers. From then on, the Indica simply clicked and went on to become one of the best-selling cars of the decade. The reason for its success is that the Indica was conceived for the Indian market and not merely adapted for it like most international models. The Indigo, the saloon derivative launched in 2002, was a big hit too, and Tata hasn’t looked back since, going on to buy Jaguar-Land Rover to truly become a global player. So, if history is anything to go by, don’t write the Nano off just yet!
Another company that’s been completely transformed in the last decade is Mahindra and Mahindra Ltd (M&M). It’s hard to believe that M&M’s flagship in 2000 was the crude, cramped and basic Armada that was hopelessly outclassed by the Tata Sumo. The hugely improved Bolero was launched that year, but no one in M&M could have imagined that this hardy sport utility vehicle (SUV) would be its bestseller in 2010. But it was the Scorpio that changed the face of M&M completely. As the most exciting SUV the company had made in 50 years, it transformed M&M’s image from a firm that made crude yet reliable utility vehicles for rural India to a far more sophisticated and upmarket brand that urban India embraced. The roaring success of the Scorpio gave M&M the confidence to go onto bigger things and the company’s been on a roll ever since. There have been a few blips—the joint venture with Renault SA fell apart and the Xylo, M&M’s next big thing after the Scorpio, didn’t quite have the same impact. During the last year or two of the past decade, M&M has gone on a diversification spree, to make practically everything on wheels—from two-wheelers to trucks. Is M&M spreading itself too thin? That’s what the current decade will tell us.
Maruti miracle
Could anything stop Maruti’s complete domination of the car market? It wasn’t competition but the enemy within that threatened to put the brakes on India’s largest car maker as it rolled into the last decade. The stand-off between the Indian government and Suzuki Motor Corp.—Maruti’s two joint venture partners—finally got resolved in 2002, but the impasse meant that several years were lost as plans for new models and fresh investments were frozen. In 2000-01, the company made a loss of $60 million, the lowest point in Maruti’s 27-year-old history. But after the government divested its stake and stopped meddling, Suzuki climbed into the driver’s seat to make up for lost time. The second half of the decade saw a slew of new models from Maruti, but it was the Swift, launched in 2005, that changed the perception of the company. The contemporary car, with its cutting-edge styling, was a breath of fresh air in an ageing line-up. The Swift opened up the nascent premium hatchback class and five years on it’s still the benchmark. As the decade closed, Maruti’s market share may have dropped, but it’s still cranking out a record number of cars. This juggernaut remains a well-oiled machine and still quite the best auto company in the country.
Hits and misses
Of the newer companies, Hyundai’s success in India is unparalleled. The South Korean company has been around for a little more than a decade, but in this relatively short span of time, it’s won the hearts of Indian consumers with its small range of cars.
The same can’t be said for Fiat SpA, which, after a spurt of success with the Palio in 2001-02, has floundered for the better part of the decade, only to be rescued by an alliance with Tata.
Renault, too, is struggling after parting ways with M&M and its sole model in India, the Logan (now given to M&M), was a flop. Long-standing rivals Ford Motor Co. and GM have undergone a transformation too. While Ford has bounced back from the sidelines with the hugely successful Figo, GM India is half owned by the Chinese, and seems all the better for it.
Toyota got off to a slow start with only a handful of models, but closed the decade at an all-time high, with waiting lists stretching back to Japan for the Etios and the Fortuner.
For Honda, it’s been the reverse. For the better part of this decade, it was the most sought after brand, but the fizz has evaporated, thanks to steep price increases and stronger competition.
If there is one company that’s come this decade with a mission to conquer, it’s Volkswagen AG. The German giant hasn’t made a dent in the Indian market yet, but if there one firm to put your money on for the next decade, it’s this one.
Hormazd Sorabjee is the editor of Autocar India, the leading car magazine in the country.
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First Published: Mon, Jan 31 2011. 10 56 PM IST