Chinese automakers cruise into India
August 23, 2010

Chinese firms are eagerly eying and assessing India’s  truck and small car market. As global automobile markets saturate, New Delhi increases its infrastructure investments  and consumer financing in India improves, foreign car companies are excited about launching products in India. The Indian truck market, grew 50 percent, to 0.2 million units, in April-July this year from the year-ago period, and expect to sell 0.8-1 million units in the year ending March 2011, compared with last year’s 0.53 million units. In the April-July period, medium and heavy vehicle sales have jumped 74 percent to 95,784 units and light commercial vehicle sales were up 33 percent to 0.1 million units.

Some of the Chinese truck makers that are considering launching in the Indian market are  Foton which has competitively priced models in the low- to mid-range, popularly called the Forland series. Foton plans to directly enter the Indian market by setting up a plant in Pune. Similarly, China-based FAW has a tie up with Ural India to market buses and manufacture dumpers, trucks and low-floor buses.

Recently SAIC, another Chinese auto major which picked a majority stake in General Motors India plans to launch its Wuling range of trucks in the country by 2011. The SAIC_GM combine also plans to launch three cars and two light trucks by end-2012 and it remains to be seen if a ‘people’s car’ will be part of this product line-up. GM already has offerings in the form of the Chevrolet Spark and Beat, but these are in the Rs 0.3-0.4 million price range. “An option in the Rs 0.2 million bracket will be a big attraction to customers with limited budgets,” sources said. In expanding India’s city transport systems China’s Zhuzhou Electric Locomotive Company Limited (ZELC), one of the country’s biggest locomotive makers and a subsidiary of China South Locomotive & Rolling (CSR) recently signed a contract to supply subway trains to India.

Constantly moving up the value chain, Chinese firms are increasingly looking for large markets within a near range of proximity to distribute their products to. The Chinese market recently became the world’s largest automobile market and is close to saturation.

Besides Chinese carmakers, Global carmakers are also increasingly viewing India as a small car-manufacturing hub. Toyota ADR, Nissan ADR, Ford and Volkswagen ADR are all releasing new models in India these days. Nonetheless, analysts expect the Indian automobile market to expand to be large enough to absorb the various models that enter the Indian market. The advent of foreign car companies will not adversely affect domestic manufacturers such as Ashok Leyland, Eicher, Volvo,  Mahindra and Tata Motors which already have a presence in these markets.

In fact, Tata Motors which holds 61 percent of the India’s truck market and produces the third most passenger vehicles. Over the last five years, has also grown their annual revenue by an average 25 percent. This year’s second quarter was particularly strong though showing a 64 percent increase. During the quarter, Tata sold 181,708 vehicles, up 48 percent from the year before. Its biggest business, medium and heavy-duty trucks, saw a 62.4 percent increase in sales year-on-year.


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