Companies

Brazil, Russia catch MNCs' fancy for new car projects

Murali Gopalan Mumbai | Updated on February 16, 2011




India could be among the fastest growing car markets in the world but could rapidly lose out to Brazil and Russia in the leadership stakes even while China continues its relentless run to the top.

If recent trends are any indication, multinationals are far more upbeat on the other three countries. “India will suffer if it continues to ignore the imperatives of infrastructure creation. By the end of the day, top-class roads, highways and flyovers will make all the difference,” a top auto industry official told Business Line.

Last week, PSA Peugeot Citroen and Renault declared their results for 2010 (within a day of each other) while reiterating their commitment to grow their international business. Naturally, India figured in this debate though it was crystal clear that Brazil, Russia and China were way ahead.

Peugeot's plans

For instance, Peugeot has big plans for China over the next five years where it has targeted three plants and a five per cent market share. Likewise, Latin America (where Brazil is a key component) and Russia have been identified as key growth drivers for the French carmaker to attain its 50 per cent share from markets beyond the geographies of Europe.

In the case of India, Peugeot finally made its long overdue announcement about re-entering the market which it had bid adieu in November 1997 just when it was beginning to put its house in order. It plans to produce a sedan here, which will also be part of the new product line-up for China and Europe too. However, all this pales in comparison to the bigger plans for China (where nearly a million cars and light commercial vehicles will be produced in 2015) along with Russia and Latin America.

Renault projections

The same goes for Renault whose projections for Brazil and Russia are far more bullish than India though China does not figure in its priority markets yet. This absence is made up by its global partner, Nissan, which also has big plans for the electric car market in China.

Likewise, in India, the plant is being commissioned jointly by the Renault-Nissan alliance which means bigger numbers are inevitable. Hence, at least 400,000 cars are expected to be produced within the next five years of which exports, at least in the case of Nissan, will account for a substantial share.

With all this, India will still be on the 11th position in 2013 for Renault while Brazil and Russia are expected to be in the 2nd and 4th slots respectively. “Things could well change by 2018 or so when there is a stronger road network in India but valuable time will have been lost in the interim. By then, these countries will be light years ahead,” sources said.

Fiat vision plan

Fiat is yet another case in point. For its vision plan for 2014, Brazil with a million vehicles and Russia, along with China (with nearly 300,000 units each), are its big growth markets while India is an embarrassing fourth with 130,000 cars and just one new model. The BRCs (Brazil, Russia and China) have a larger share of sport-utility vehicles as well as new models from the Chrysler stable, now in Fiat's custody.

Is there cause for concern as far as India is concerned? After all, the likes of Suzuki, Honda, Toyota, Hyundai etc have big plans for the country. The fact that it is a key global small car hub is indisputable. However, if it has to grow beyond this to larger cars, the only way out is to create better roads. “Nowhere has this been more evident that in Delhi where good roads have spurred demand for bigger cars,” sources said.

Published on February 16, 2011

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