Register now for free access to - this week only.

Revving up! Indian automotive industry - a perspective


The year 2008 has been a defining year in some aspects for the Indian auto industry, with the unveiling of the world’s lowest cost car, the Nano, in January and the acquisition of the Jaguar and Land Rover brands in March - both events heralding India’s presence on the global stage. Domestically, we saw a lot of activity with new product launches, including many new offerings in the luxury segment and the announcement of Carnation entering the market as an independent multibrand automobile sales and service network. The industry has witnessed an influx of both global OEMs as well as Tier 1 component manufacturers, who are setting up their manufacturing bases in the country. This has fueled automobile production in the country, taking it to a level of 11.2 million units during FY09.Over the last five years, India has established itself as one of the favored global destinations for automobile manufacturing. Changing consumer spending pattern, a cost advantage that the country offers in terms of R&D, skilled labor, high-quality engineering and abundant software have reshaped the industry structure, making India a preferred destination for global players, even as demand slows in the Triad markets of US, Western Europe and Japan.
The last quarter of 2008 has been no less than a crisis for the industry, with slowing demand led by the depressed consumer sentiments and the impact of the global credit crisis. Clearly, the industry is facing an unprecedented combination of cyclical and structural issues. However, the Indian market has proven resilient and the first five months of 2009 have shown positive growth trends, particularly in passenger vehicles and two-wheelers, which should be sustainable as the economy recovers and the new government settles in.
The industry will likely see a lot of change globally in 2009 as vehicle manufacturers and component suppliers evaluate and implement strategies to restructure their businesses even as governments around the world consider more requests for bailouts. We have just witnessed General Motors and Chrysler emerging from bankrupcy as leaner organizations but with a radically new set of major shareholders. Some Tier 1 suppliers have also filed for bankruptcy, and some others are expected to follow in the months ahead. We anticipate a changing landscape with smaller US vehicle manufacturers, ”Europeanization” of the US auto industry and more global players emerging out of Asia in the years ahead.
Despite the recent slowdown, the prospects of growth for the Indian auto industry remain enormous, given that the country has a middle class larger than the population of the US and a much lower vehicle population as compared to other developed nations. With its proven low-cost product development and manufacturing capabilities, the country is all set to become an integral part of the global automotive chain as the demand shifts toward smaller, cheaper and environment-friendly fuelefficient vehicles. One clear distinction that differentiates India from the other major emerging markets, and positions the country in a unique situation globally, is that India has a strong set of indigenous automotive and component manufacturers. With the recent global developments, today more than ever before, there is a significant opportunity for the Indian auto industry. India is expected to emerge as the world’s seventh-largest automobile market by 2016 and third-largest by 2030, behind only the US and China.
In this report, we present an overview of the latest market developments and automotive statistics over the past few years. We hope this will provide you with relevant insights on the key trends, current capabilities and shifting dynamics within the industry and equip our readers to effectively harness the opportunities available. We would be glad to share with you our detailed experience in the automotive sector, in India and globally, to help you enhance the value of your current and future investments.
I would also like to take this opportunity to thank the large and dedicated team at Ernst & Young in India, Detroit and the UK across our Automotive practice and Global Automotive Centers that has worked together to complete this report, often juggling many other priorities.

Rakesh Batra

India Automotive Leader

To view the entire report, please click here.


ATTENTION COMMENTERS: Automotive News has monitored a significant increase in the number of personal attacks and abusive comments on our site. We encourage our readers to voice their opinions and argue their points. We expect disagreement. We do not expect our readers to turn on each other. We will be aggressively deleting all comments that personally attack another poster, or an article author, even if the comment is otherwise a well-argued observation. If we see repeated behavior, we will ban the commenter. Please help us maintain a civil level of discourse.

Email Newsletters
  • General newsletters
  • (Weekdays)
  • (Mondays)
  • (As needed)
  • Video newscasts
  • (Weekdays)
  • (Weekdays)
  • (Saturdays)
  • Special interest newsletters
  • (Thursdays)
  • (Tuesdays)
  • (Monthly)
  • (Monthly)
  • (Wednesdays)
  • (Bimonthly)
  • Special reports
  • (As needed)
  • (As needed)
  • Communication preferences
  • You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.