In step with India’s rapid GDP expansion, car sales continue to boom with growth of 22-23% expected this fiscal as against 16% in 2005-06. This explosive sales trajectory has been spearheaded by compacts or small car models such as the Maruti Alto, Swift, Wagon R, Hyundai Santro, Tata Indica, among others. Thanks to this exuberance, India has become the second largest market for small cars outside Japan. Global auto majors, especially the late entrants that have set up belated shop in India, are therefore acutely aware where the Indian market’s real volumes lie that might give them the scale of operations to justify investments in local manufacture.
Many, accordingly, have fast-forwarded their plans for small cars to challenge the dominance of Maruti Udyog, which has an overall market share of over 50%, with its majority owner Suzuki Motor Corporation being one of the world’s few small car specialists. Honda, for example, has started work on its small car project, and plans a second automobile plant to sell over 150,000 compact cars by end-2010. Nissan, too, has unveiled plans for a 200,000-units-a-year plant that will crank out its all-new 1,000-cc small car. Not to be left behind, General Motors plans to build compacts in Pune.
Maruti is obviously aware of the gathering challenge to its dominance. The company is rapidly expanding capacity to remain ahead of rivals on volumes-hoping to produce a million cars by 2010 and retain its current market share, even as the overall market touches two million. By then, it will be making more cars in India than Suzuki does in Japan. Perhaps Maruti’s bigger worry is the possibility of Tata Motors taking away its entry-level monopoly with its proposed Rs 1 lakh wonder. Costs, though, have risen and analysts don’t think the car could be any cheaper than Rs 1.4 lakh, before tax. No less of a serious challenge to Maruti’s current market dominance may emerge in the shape of Daihatsu, the small-car subsidiary of Toyota, the Japanese car-maker that revolutionised the production line and continues to impress management gurus with its yen for both product and process innovation.
Many, accordingly, have fast-forwarded their plans for small cars to challenge the dominance of Maruti Udyog, which has an overall market share of over 50%, with its majority owner Suzuki Motor Corporation being one of the world’s few small car specialists. Honda, for example, has started work on its small car project, and plans a second automobile plant to sell over 150,000 compact cars by end-2010. Nissan, too, has unveiled plans for a 200,000-units-a-year plant that will crank out its all-new 1,000-cc small car. Not to be left behind, General Motors plans to build compacts in Pune.
Maruti is obviously aware of the gathering challenge to its dominance. The company is rapidly expanding capacity to remain ahead of rivals on volumes-hoping to produce a million cars by 2010 and retain its current market share, even as the overall market touches two million. By then, it will be making more cars in India than Suzuki does in Japan. Perhaps Maruti’s bigger worry is the possibility of Tata Motors taking away its entry-level monopoly with its proposed Rs 1 lakh wonder. Costs, though, have risen and analysts don’t think the car could be any cheaper than Rs 1.4 lakh, before tax. No less of a serious challenge to Maruti’s current market dominance may emerge in the shape of Daihatsu, the small-car subsidiary of Toyota, the Japanese car-maker that revolutionised the production line and continues to impress management gurus with its yen for both product and process innovation.
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