The growth of the Indian middle class along with the growth of the economy over the past few years has attracted global auto majors to the Indian market. India provides trained manpower at competitive costs making the country a favoured global manufacturing hub. The world's major car manufacturers continue to invest in India and now the supplier segment is also attracting private equity (PE) investments.
The government has claimed that the country has become the seventh largest vehicle producing nation in the world, six years ahead of the set target. According to Mr B S Meena, Secretary, Ministry of Heavy Industry, "When we were making the Auto Mission Plan (AMP) in 2006, we had projected India to become the seventh largest vehicle producing country in the world by 2016. We have already achieved this milestone good six years ahead of the set target."
According to a study by global consultancy firm Ernst & Young, the Indian market will clock the fastest compound annual growth rate between 2009 and 2020, more than double that of China and the triad of North America, Europe and Japan. India's CAGR between 2009 and 2020 is expected to be 14 per cent compared with China's 6 per cent, other emerging markets' 6 per cent (which includes BRIC nations) and the triad's four per cent.
India has emerged as one of the favourite investment destinations for automotive manufacturers in recent times.
- Maruti Suzuki India Ltd (MSIL) has announced an investment of US$ 411.45 million for setting up its third plant at Manesar in order to capitalise on the rapid growth of the Indian auto industry. This new production line–Maruti's sixth overall would have 250,000 units annual capacity.
- Volvo-Eicher Commercial Vehicles (VECV) has announced an investment of US$ 61.51 million for a new engine plant at its existing facility at Pithampur, Madhya Pradesh. With this, India will now become a global manufacturing hub for Volvo's new medium-duty engine platform, with the only other factory for the engine type being present in Japan.
- Toyota Kirloskar, which focused mainly in metros and urban areas, has drawn up plans to sell 40 per cent of its cars in the rural markets. By end of 2010, the company plans to have 150 dealers across the country and will invest US$ 698.46 million in a second plant in Bidadi.
- Toyoto also plans to invest US$ 107 million to make engines and gearboxes for Toyota's new small car, Etios that is expected to be launched by year-end.
- India Yamaha Motor Limited is also planning to tap the rural market, which currently accounts for around 15 per cent of its overall sale. The company has launched a new bike YBR 110 that will target the rural markets.
- Mercedes Benz has met its single largest order—of 150 cars worth US$ 14.7 million—from the small industrial town of Aurangabad, Maharashtra.
- The Renault-Nissan alliance and Bajaj Auto have signed a memorandum of understanding for developing a low-cost car. According to the MoU, the design, engineering, manufacturing and supply base expertise to create the product will be executed by Bajaj with the support of the Renault-Nissan alliance.
- Honda Siel Cars India (HSCI) has announced an investment of US$ 53.55 million for the expansion of its power train facility at Tapukara, Rajasthan. Scheduled to be completed by end-2010, the plant would become a low-cost production base for its new small car.
- Indo-Russian commercial vehicle joint venture (JV) Kamaz Vectra Motors plans to more than double its annual capacity to 12,000 units at its Hosur plant by 2012 to capture the fast-growing market in India.
- Ashok Leyland and Japanese car maker Nissan Motor Co Ltd have announced the launch of three light commercial vehicles (LCVs) from 2011 through 2013. The auto makers also confirmed to be in talks to create a small car for the Indian market within the US$ 2,000 - US$ 6,000 price range.
- British luxury brand Jaguar Land Rover (JLR) plans to increase presence in India and will tap parent Tata Motors for assistance in areas like logistics and service support.
- BMW, the luxury car maker, is planning to infuse US$ 15.76 million in its Indian operations. Andreas Schaaf, President, BMW India, said that the company had invested US$ 24.77 million till September 2010 and this would be increased to US$ 40.53 million by the end of 2012.
- Luxury carmaker Mercedes-Benz India will set up a new facility for building of city bus bodies at its Chakan plant in Pune. The new unit will become operational by mid-2011 and will have a capacity of 700 units a year.