2010 – Year of Indian Auto sector growth!


Booming is a small word for the Indian auto sector today. The pace at which it is growing, it seems that it would soon surpass the IT / ITes sector as the most prominent sector of our economy. The Indian auto sector has grown by leaps and bounds over the past decade. But with new product launches, entering of newer players like Kia Motors, Ssang Yong and also strengthening of players like Volkswagen, BMW, Mercedes etc, 2010 has turned out to be a coming of age year for the Indian automotive industry.


So what special has happened in the auto sector of this country this year?

The biggest event of the year was obviously the arrival of Tata Nano on Road. It finally hit the roads this year and also went into commercial production at Sanand. After the initial euphoria died down, issues related to quality, manufacturing issues, financial troubles etc. brought down its sales to a dismal 500 units in November. Even Maruti and Honda had to recall their A–Star and City models respectively but neither of them had to face scrutiny like Nano.

But then as Nano was going down, Mercedes and BMW’s were selling in the country like hot cakes. The rise of the executive class was displayed when in two days more than 150 BMWs and Mercedes each were sold. When the number of Mercedes sales surpasses Nano for a month, then some serious changes are happening around.

Our very old Ambassador, the symbol of Indian cars went for strong investment in innovation and R & D due to falling sales and revenue. But for a car which is slowly but surely reaching its decline stage, is investing on innovation for such a product useful? I doubt it! Even Maruti 800 had to withdraw itself from 13 cities due to strict Bharat Stage IV emission norms. Now this did make many of us nostalgic.

There were also breakups like the Hero–Honda group as well as marriages like the Mahindra–sang Yong one. The Hero Honda breakup was like a shock to an entire population because it has really been the true “Desh Ki Dhadkan”. Mahindra’s acquisition after Tata’s acquisition of JLR and Land Rover shows Indian automotive industry’s true international reach today.

What prompted this strong development?

With the economy coming back to the old levels of around 9%, there were many new car launches this year which included Maruti Suzuki Eeco, Ford Figo, Volkswagen Polo and Vento, Tata Aria, and Nissan Micra to name a few. More and more people are keeping more than a car.

The launch of Bugatti Veyron at 16 crore, plans of Aston Martin and Spyker to enter India as well as setting up of a manufacturing facility by Harley Davidson in Haryana shows that the premium market for cars in India is developing FAST REALLY FAST!

With increasing focus on acquisitions, mergers and take overs, the Indian auto industry has shown that it too has the POWER to be regarded in the top league.

And above all on the other end of the spectrum with Nano’s launch as well as Kia and other players entering the market for small cars and setting up manufacturing facilities for the same, India looks set to become the leader in manufacturing small cars.

The road ahead looks even better !

  1. Altaf Rahman says

    @ Aseem,
    Though it is an interesting article and the auto industry needs appreciation for its growth, I beg to differ.

    Growth in economy of any country depend on growth in sectors like agriculture, steel, cement, power production etc. The growth of the economy is ‘reflected’ in industries like auto, retail, tourism. I being a ordinary man, am unable to differentiate the above two types of sectors. One contributes to the growth of economy and the other reflects.

    People may ask what is the relavence of it in the article.

    My point is I am unable to rejoice at the success of the auto sector success.
    Me being a old school of thougth expect that when the economy is growing, the effects of the enrichment of the country should percolate to the society in an organized manner.

    The growth in economy should boost infrastructure industry, which in turn must lead to roads, navigable canals, sea ports, airports. Parellelly this growth in infrastructure must pave for more vehicles to move on roads, more ships to ply the waters. Consequently the ports (both sea ports, airports) help the nation in moving more cargo and more people.

    I am sure this is what happened with China. The central planning team has put emphasis on massive funding of roads, canals, ports. The growth in auto sector came naturally.

    Compared to China, Indian planning is pathetic. When the economy grew, instead of building roads, they built automobile plants. (I am not saying there are no new roads, what I am saying is our roads far lag the requirement). This unorganized planning led to low growth of roads and more vehicles. The effects are evident in day today traffic cloggings in all cities, towns across the length and breadth of India.

    When people see traffic jams, they see only time lost for people and goods in reaching destination. I see the following :
    1. Engines running at jams causing unneccessary burning of fuels, a waste on economy. Imagine India requiring 2 million barrels of crude for our needs. If we had good roads we could have managed with 1.8 million barrels. Now imagine the daily saving of 200,000 barrels. It is equivalent of half of our local production.
    2. Environmental damage : If the vehicle is running at 50 or 60 kmph, the emissions are less per liter. When the engine is running at signals, the emissons are more per liter as more unburnt fuel goes into fumes causing more environmental damage.
    3. Health damage : Due to the inhaling of fumes people suffer healthwise. They lose on health, money to the doctors, time lost in going to hospitals.

    All the above could be avoided if we have sufficient roads for our existing vehicles.

    However what is happening is road construction is going on at snails pace while every auto company is expanding production, models and more companies are jumping in.

    When we hear that Rolls Royce, Bugatti, Mercedes, BMW entering India it reflects success of Indian economy. Many more may enter like Lamborgini etc.

    But sincerely there are no roads to comply with Bugatti, Lamborghini ultimate driving experiance. People only satisfy their ego in buying them.

    We have to pressure our rulers to see logic in first building proper roads before allowing auto industry to prosper and give auto loans.

    I know most people differ from my view but I thought of sincerely sharing a point of view.

    Just my two paisa :)

    1. Aseem Rastogi says

      You have mentioned the correct points here. But then if you see in our country the sector grows first and the infrastructure sadly comes later. Be it airports, telecom in everything the players set up shop first and then infrastructure comes up. Sad but true :(

    2. dev says

      i think you are right in somewhat in your opinion but we cant ignore the real progress of our nation and present situation of economic growth.in every state now days 4 land road all ready made in way of construction and also we are in list of top economy country so you should think about it.

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