Auto firms see India as small-car export factory

• Source: Gasgoo.com
• [08:43 September 07 2009]
• Comments

Global carmakers are lining up to make India, home of Tata Motors' Nano, the world's cheapest car, a base for their export operations as they try to cut costs and move to compact, fuel-efficient vehicles.

South Korea's Hyundai Motor, which already exports close to half of its Indian output, wants to make India its global hub for making and exporting small cars.

Toyota, the world's largest auto maker, is designing a compact car for the Indian market and plans to make the country its small car hub by 2012.

And Ford Motor is investing about $500 million to double capacity at its India plant, which will not only produce a compact car but become a strategic global production hub.

Japan's Suzuki Motor Corp has a strong foothold as majority owner of leading Indian carmaker Maruti Suzuki, which is spending more than $300 million on building a small-car research and development centre in the country.

The company exported 54,707 cars in the five months from April, the start of the 2009/10 fiscal year, more than double its shipments for the same period a year earlier.

"Apart from the obvious cost advantages, India has a good base of component suppliers who come with the experience of having supplied to global car companies," said Deepesh Rathore, auto analyst with IHS GlobalInsight.

"India is in a strong position at the moment to be an exporter."

Exports now, domestic later

India's domestic auto market is relatively small, especially considering a population of more than 1.1 billion, with about 1.5 million passenger vehicles being sold last year.

It is however a fast-growing market, even in a global auto downturn. For the first four months of 2009/10, domestic car sales rose nearly 10 percent from a year earlier.

(Reuters)