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The recent crisis in Europe could have dampened the sentiments of global carmakers, but India, along with China, has more than made up for this sour mood.
Hence, even while growth rates here are projected to be lower at seven per cent this year and a section of industry continues to worry over ‘Government inaction', international players are not complaining. Quite unlike Europe, which is caught in a financial quagmire or a wobbly US, India is a haven in contrast.
Cost-efficiencies
The fact also remains that carmakers have got wise to imperatives such as cost-efficiencies over the years. As big markets like the US have virtually dried up overnight after the Lehman crisis, India beckoned strongly and this is when companies went in for aggressive strategies to grow their business in this part of the world.
If, today, Ford is targeting 70 per cent growth this decade from Asia-Pacific and Africa, General Motors is leaning towards China's SAIC Motor Corp to boost its India presence. The impetus began at the turn of this century with GM's acquisition of Daewoo, but SAIC is expected to take the growth story forward.
Peugeot, traditionally a European company, expects two-thirds of its business to come from other geographies by 2020, with India playing a key role. The same holds for its French counterpart, Renault, which is betting big here.
“Even during the 2008-09 crisis, we discovered that people in smaller Indian towns were buying cars as if nothing had happened, while their city counterparts had cut back spending. It was an eye-opener on where our strategy had completely gone wrong,” a top auto executive told Business Line .
More disposable income
Today, Audi, BMW, Mercedes, Toyota and Honda are all aggressively revving up their retail plans to focus more on Tier 2 and 3 towns. Companies have also figured out that India's other strength lies in its rapidly growing population of young buyers who have more disposable income and are open to buying new products.
However, concerns remain on such issues as the slow pace of infrastructure development as well as the absence of a clear-cut fuel pricing policy. Diesel, in particular, is a worry because there is no indication how the Government will tackle the subsidy challenge.
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