The auto industry just might be the catalyst for a success story India and China need. At a time when online forums are raging on about India’s possible 0.1 percent higher GDP growth in 2010 and economists and analysts are debating between calculating GDP at factor cost like India or at expenditure cost like China, the automobile is bridging the modern gap between the world’s fastest growing economies.
The consolidation began in small ways many years ago when Indian auto major began sourcing cheaper auto components from China. Then in 2009, the Chinese sitting on General Motor’s board, decided to bring cars to India’s highways. The news gave domestic Chinese companies the impetus to cruise into India too, paving the way for FAW, SAIC, Foton and Chery, China’s largest automakers to bring passenger cars and light trucks to India, through various joint ventures.
The latest development in the India-China auto market, moves away from low cost cars and involves driving India’s best brands into China. The Tata owned Jaguar Land Rover’s CEO Ralf Speth told Reuters that the company is in talks with potential Chinese partners to set up an assembly plant in the world’s largest auto market. Stoking globalization at its best, JLR said the company has contacted several Chinese automakers including Jiangling Motor Corp Ltd , which is 30-percent-owned by Ford Motor Co , and Great Wall Motor Co Ltd . Jaguar Land Rover sold about 30,000 cars in China last year.
Catering to the specific design sensibilities of the Chinese, JLR has exceeded expectations in the Middle Kingdom. Bruce Robertson, head of sales and service for JLR China, said the company had gone from having 37 dealers in the middle of 2010 to 60 by the end of 2010 and would have 100 by the end of this year.
Land Rover sales grew 103 percent year on year to 26,000 in 2010 and will reach 40,000 this year; Jaguar sales increased some 90 percent to 2,700 units and will hit 5,500 this year. If these predictions prove right, China will be the second largest global market for Land Rover and the third for Jaguar behind the UK and USA.
Robertson added that the current Jaguar specification “isn’t right for China” where customers want big cars with smaller engines. JLR has also moved an engineering team to Shanghai and established a government liaison office in Beijing.
JLR is one of the few high end auto makers that currently still doesn’t have a presence in the Chinese market. Volvo, one of Ford’s blue oval brands was the latest entrant in this segment when China’s Zhejiang Geely Holding Co. agreed to buy Volvo Cars from Ford for US$1.8 billion in March 2010.