India is a huge country, with plenty of iron ore and a large industrial base. Yet, the Indians don’t seem to be interested in building up an auto-export industry (as the Japanese and Koreans have done). Last time I checked, India seemed to be still buyilding 200,000 cars a year, mostly for their domestic market…and most of these are long-obsolete British designs from the 1950’s.
One would think that given abundant and cheap labor (and having the 9th largest industrial base in the world), that the indians would be interested in emulating Japan-build milluions of cheap cars for export to the West. Why hasn’t this happened? In fact, India doesn’t seem too aggressive in exports at all.
Will India eventually out-compete Korea and Japan in small automobiles?
Will we see Indian-made small cars in the US anytime soon?
ralph: Yet, the Indians don’t seem to be interested in building up an auto-export industry (as the Japanese and Koreans have done).
Interesting question! As far as I can tell, up till the last decade the Indian automotive industry has been “focusing on import substitution”, and only relatively recently have they liberalized industrial licensing and restrictions on foreign investment for the industry. They may well be interested in ultimately moving into export manufacture, but I don’t think they’re there yet.
This report, “India an Emerging Automobile Giant” (PDF) asserts that
But I don’t think you’ll see a significant Indian auto-export industry until they’ve expanded farther into their own domestic market; lots of room for growth right there at home.
I don’t think Indian auto companies per se can become big players. They are far behind in the technology. I have read that an Indian company, Maruti through a joint venture with Suzuki has been successful in exporting cars to Europe and South Asia.
From a blurb on their website, http://www.marutiudyog.com
Our total exports till July 2002 were over 253000 vehicles. Over 71% of these vehicles have been exported to Europe. The internationally popular Alto has carved a niche for itself in extremely competitive and technologically advanced European countries like Netherlands, UK, Finland, Sweden, Greece, Italy, Belgium, and in South America.
I don’t know what percent of the market they have though.
Recently, many international companies such as Honda, Hyundai, and Ford have set up shop in India with the eye on the burgeoning domestic market. It is very likely that in some years, they start looking to export the cars made in the Indian plants. That said, I have no clue on the logistics of exporting cars/components across the blue oceans and don’t know if it will be a substantially better option than plants operating within Europe and NA. But, I would look to them as the biggest exporters from India, not the home-grown companies.
(In fact, apart from the Maruti-Suzuki JV which has a large share of the market, I don’t think any other Indian companies have a voice in the market)
Mahindra, which license-builds Jeep CJ5s, and in the last 10 years has started building its own models, such as the Armada, and is also India’s largest supplier of tractors, has been exporting its 4x4s to Europe with moderate success for some time now.
The new small Rover is being built in India and imported to UK.
Indian scooters (license built Vespa PX150s) are already available in the US:
I’m just wondering if India has come to auto manufacturing too late? I guess the question is: can a manual-assembly auto plant (such as might exist in India) compete with a robotic-assembly plant in Japan? I don’t know what an Indian-built Suzuki sells for…but presumably it must be less than a Japan-built version.
One thing I also wonder about: if India decides that each Indian family ought to have a car-will they built an extensive highway system?
I don’t believe that India has an extensive hardtop city-to-city road system (like the Interstate system in the USA).
The largest single employer in India is its national railway. If they built an interstate highway system and the cars to ride them it could throw an awful lot of people out of work.
It wont take India and china very long to catch up. What they need is good engineering, but they are now on a fast pace to learn what they need to learn, to build cars that will sell in america.
By taking over the engineering for Ford, chrysler, and general motors, within 10 years, India and china will have all the engineering smarts they need to put out low cost cars in america. We will teach them engineering and how to make cars and car factories thru out outsourcing programs.
With all the money they are making from other outsoucing and from exporting goods to the United States, they will have plenty of investment capital, not to mention the amerian auto makers building plants in china and India, to put an end to american cars.
10 years from now, you will be asking why there are no american cars being built anymore, and why we only see Japanese, korean, indian and chinese cars being offered for sale in this
country.
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http://www.mlive.com/business/state...07400238120.xml
Column: Reassessing where manufacturing fits into Michigan’s economy
Wednesday, July 2, 2003,By Rick Haglund
Young recently told securities analysts that GM is aggressively looking to buy parts from suppliers in lower-cost countries, such as China.
And GM, like other automakers, is farming out more of its highly skilled engineering work to tech centers in India and China.
Global engineering has helped GM cut engineering costs by 47 percent . "
Interesting topic! Allow me to present my thoughts as an insider (sorta). I’m an automotive engineer, and have worked in the components industry in India - albeit for a short while. I’ve also worked in Germany with a manufacturer, and am generally extremely interested in the car business.
IMO, it’s going to be atleast a decade or two before you see Indian cars flooding the globe, like it was with the Japanese 2 decades ago, if ever. The reason is that we just haven’t been making cars here for much time. We don’t know how to make cars for the world (read the West), and we won’t for some time for the reasons outlined further below.
Note: By ‘making cars’, I mean a totally indigenous effort on the part of an India manufacturer for the mass market. Cars have of course been produced here for decades, but they’ve always been those of European, American and Japanese (and recently S. Korean) manufacturers. And in almost all segments, it is still that way, and will continue to be so.
And this mainly because the average Indian car buyer is extremely cost conscious, often to a fault. There’ve been numerous examples of cars failing to sell because they were too expensive, notwithstanding that they were probably the best engineered available at the time. Issues like safety, comfort, handling, etc. were never anywhere near the top of the list of considerations while buying a car - the main purpose was to get the buyer from A to B as inexpensively as possible. That’s slowly changing, but Indian cars are still years behind what would be acceptable in more mature markets.
[Rover has been in deep shit for a long time now, and their importing an Indian car to sell in the UK seems to me as an act of desperation - they need a small car at minimal cost, and that’s what they’re getting. Still, the car that will end up on the streets of England will be modified, and quite different from it’s Indian sibling]
Until the attitude of the Indian car buyer changes, an Indian manufacturer is not going to stray much from the extreme-value-for-money principle while designing it’s next model. And until that changes, you won’t see too many Indian cars driving down your streets. Not in the near future.
Having said that, a growing amount of the tech that goes into tomorrows cars (mainly of the US and Europe) is being developed in India. And that will keep growing at a rapid pace, for all the reasons mentioned in this and the other threads on outsourcing currently running. Most major tier-1 suppliers have extensive set-ups already operating here, and are expanding these set-ups at a rapid pace.
Aside from the technology angle, a growing number of critical and non-critical components for the automotive industry all over the world will have made-in-india stamped on them. As an examply, the company I was working for was in just two years of operations the largest supplier to Piaggio Spa. for a number of engine components. Quality used to be an issue of concern in the components industry, but not anymore - now it’s how to expand fast enough to meet the demand!
And that’s where I think the large scale export from the Indian automotive industry will happen. Almost every American, European and Japanese manufacturer is in the process of building the infrastructure to manufacture components that satisfy their global quality standards. And it’s happening at such an incredible pace now.
ralph, highway systems of the kind you’re talking about are in the process of being constructed. Many large neighbouring cities here are connected by high speed expressways. Bombay to Poona (150 km) used to take 5 hours on the old highway- now it takes 2 and a half. Of course, having faster (Japanese, S. Korean and European) cars does help a lot too.
litost, Maruti currently enjoys a 40% share of the indian market. It used to be 80% about 5 years ago. Its market share is falling rapidly - all it’s products are sourced from Suzuki, and they’re all of late 1980s vintage. But, they’re cheap and easily serviced by almost every road-side mechanic all over the country. Hence they sell in the numbers they do.
I truly love to see someone so completely insensible to fact or reason.
Odd, that’s what I was hearing in the early 1980s, early 1990s, and still am hearing now.
In ten years… Never mind auto production, including ‘furrin’ auto production has continued to open capacity in the US in the past 20 years.
As to the question, it strikes me of dubious utility to India to join an already overcrowded field. There is already substantial over capacity in the auto field and margins are painfullly low. Why become an auto exporter then?
Seems to me the answer is more driven by irrational national prestige seeking than good economics. Crowded field with high barriers to entry, substantial exit costs - it’s not attractive. Perhaps a sub-segment, e.g. competing at super low end developing world aimed vehicles, that probably makes sense given it’s not what the big World auto makers are good at, but otherwise these kinds of goals - Why Isn’t India Like US - betray a lack of critical analysis of the situation.
Unfortunately, the Indian Government, with all due respect to gouda, has displayed a penchant for putting nationalism before rational economics, so perhaps one may see some prestige aimed development in this area. They’d be better served otherwise, however.
>> Bombay to Poona (150 km) used to take 5 hours on the old highway- now it takes 2 and a half
Wow. 150 km in 5 hrs is 30 km/h (less than 19 mph). And now 2.5 hrs? that’s 60 km/hr (37 mph).
I agree with almost all you’ve stated, and in fact would have agreed with the remaining portion too if you had said it 5 years ago. Now though, the Indian Government is in the process of getting out of the business of running businesses - it is admittedly a painfully slow process, but they’re getting there. They’ve just divested a significant portion of their stake in Maruti, and chances are that Suzuki will buy the remainder (at a now more expensive price) sooner rather than later.
Getting into a potentially loss making project on a scale as large as the OP implies purely as a prestige issue is kinda hard to imagine - even for the governments we’ve been living with!! And private enterprise would never even contemplate it. There are currently just two manufacturers exporting their indeginously developed products, but these sales cumulatively aren’t still a fraction of the sales made in a city like Bombay.
With quality improving, and Indian manufacturers now conforming to European safety and emission standards, more of these products will be exported in larger numbers to countries in central Asia and Africa - as you stated, ultra low end developing countries. But it will be a while, if ever, that Indian manufacturers will export their cars to compete in developed nations.
And yeah, we did travel that slow. Most of the country still does. It is changing though.
Thanks for the information but I was actually wondering what market share they have in Europe. The blurb on their website (which I quoted) claims that 71% of their exports (250000-odd thus far) go to technologically advanced countries in Europe.
Keep in mind, sailor, you do have to cross a small section of the Western Ghats (one of India’s half dozen mountain ranges) to get from Bombay to Pune… if you think 2 and a half hours by car was bad, you should try the train journey…
India suffers from government red tape. It is hard to start anything new without suffering through a mountain of paperwork.
They have a very educated population with a good worth ethic. They could do anything they wanted to if the business atmosphere was more conducive.
Sorry, no information about that - but based on my short stay in Europe a couple of years ago, I’d have to say they have a negligible share. I saw no Suzuki Altos in Germany, Holland, Belgium, England and Switzerland. I believe though that they sell the Alto in semi-respectable numbers in France. However, the car is badged a Suzuki, and I don’t know how many people know that it’s made in India.
And yeah, I shoulda mentioned that the road crosses a mountain range! It does tend to slow things down a little bit. Also, the actual expressway only starts once you’re outside the city limits. And on an average day, it takes about an hour just to get out of (or into) Bombay and about 30 minutes for Pune. So on the whole, 2 an a half hours don’t seem so bad. The train journey times have shrunk too - faster trains, fewer stops… what would take about 5 hours a few years ago (192 km on the track) now takes about 3 and a half. The trains too go across the mountain range - in the monsoon it makes for quite a beautiful sight.
Also correctly, red tape (added to a healthy dose of corruption at every level of governance) slows development down big time. Everybody wants a cut of your business here (I’m going through such a phase right now, and it’s irritating the hell out of me).