Indian co to be in top 6 carmakers of the world by 2020: study

Indian co to be in top 6 carmakers of the world by 2020: study

New Delhi: At least one Indian company will be among the top six carmakers that would dominate the global auto industry by 2020, a study by global consultancy firm Deloitte said.

Releasing a study A New Era: Accelerating toward 2020—An Automotive Industry Transformed, the firm said the car industry would see a massive capacity building in low-cost locations like India and China as manufacturers shift base from developed regions.

“Maybe six original equipment manufacturers (OEMs) would dominate the market and control 90% of the structure by 2020, of which one may be from India and another one or two from China," Touche Tohmastu India senior director Kumar Kandaswami said.

He, however, did not name any specific company which could be in the global top six list and said it could be an entity following mergers or acquisitions in the future.

Homegrown automakers like Tata Motors and Mahindra & Mahindra have already made their global aspirations public.

Supplier networks would also follow the trend, he added.

“Cost is a big factor, as well as in the consolidation of the industry. Besides the emerging economies have huge pool of trained manpower," Kandaswami said.

In India, there would be more focus on low-cost cars, while, at the same time more and more middle class consumers would go for luxury segment four-wheelers.

“As a significant and growing market, it is interesting to see that India will be distinct in terms of some of the global themes on account of the demographic and customer profiles," he added.

According to the study, Indian consumers are becoming more conscious about alternative fuels and green technologies, although not everybody is as yet ready to pay for it.

India is likely to become a hub for small and compact cars due to various factors including growing domestic demand, low labour cost and sound supplier network.

According to Deloitte, the consumer trend in India would be guided by factors such as price, fuel economy and life-cycle of vehicles.

“The Indian economy is shifting towards low-cost cars and we could see some big jump in the so-called Nano segment. While, India would remain a huge entry-level car market, there would also be more demand for luxury segment cars from the middle class," Kandaswami said.

However, a distinct luxury segment would evolve only after the car ownership rate in India reaches 20-25 cars per thousand people, from 10-11 cars per thousand people now, the study said.

By 2020, green technologies would come to dominate the car industry worldwide, with 20% of the cars likely to be ‘green cars´ by that time, it added.

“Yet, although 41% of the Indian customers prefer alternate fuels, only 20% are willing to pay for it. This is mainly due to the cost factor,“ Kandaswami said.

According to Deloitte, India is not likely to see big-time alternative electric cars in the next decade because of high cost. The internal combustion engine would continue to rule, though spread of natural gas grid would increase penetration of CNG and LPG vehicles.

OEMs would also focus more on electronics and software, which would distinguish vehicles, while collaborating more and more on hardware technology and safety.

Internet showrooms and multi-branded outlets would gain more prominence in India during the next decade.

In manufacturing, OEMs would adopt new ways to train their manpower, specially at a time when the developed economies are witnessing a ‘greying´ phase with the low birth rates and rising age of average workers, he said.

“The rural market in India is also likely to witness increased penetrations by car makers, with many of them betting on tie-ups with institutions and taking up marketing drives," he added.