The Indian auto industry came of age and emerged as a global “strategic market” when recession drove auto giants into panic in the first world. India and China which were hailed as the “next great frontiers” for companies globally. And the small car long the backbone of the Indian market, proved big, keeping demand going in the domestic market while also helping spread across the globe. Companies like Ford, General Motors, Honda and Hyundai took a fresh perspective of India, to learn the now-crucial basics of “frugal engineering”, making fuel efficient small cars at low cost.
“As companies and consumers across the globe try to cut costs, emerging giants can take even greater advantage of their production models, based on cheaper local labour, lower costs and other such traits. In addition, they can fall back on their domestic markets, which are still growing,” KPMG says in its update on the industry while forecasting “growing importance” for companies dominating these markets.
“The scrappage incentive has certainly helped all those passenger car makers in India who export to Europe as it spurred demand for new cars, especially small, fuel-efficient compact cars,” Hyundai India MD HS Lheem said. The turmoil also warned companies against overexuberance. “It was a shock that called for some amount of introspection, and made companies realise the importance of rationalisation of investments and capacities,” says Mohit Arora, who tracks the Indian auto industry at JD Power’s Singapore office.
Agrees Maruti MD S Nakanishi. “The economic collapse told us, the corporates, that nothing is sacrosanct. If a big corporate like Lehman can collapse, then why not others? The collapse was a clear message against invincibility. It told us that in an ever dynamic world, there is only one way out, keep doing better than yesterday,’’ he said.
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