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Slowdown but auto hub is not sputtering, yet

Swetha Kannan | Updated on August 29, 2013 Published on August 29, 2013

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The two-wheeler manufacturing facility of TVS Motor Company in Hosur.- S.R.Raghunathan

Automakers in Chennai bet big on new launches, investments

Despite the slowdown in the automobile sector, investments have continued to flow into the auto hub of Chennai.

Though automobile majors have faced a slump in sales in the last year or so, they did repose faith in the Indian economy with new product launches. The future looks promising, say original equipment manufacturers.

In May 2012, the Tamil Nadu Government signed investment deals totalling Rs 8,350 crore with five auto companies — Daimler India Commercial Vehicles (DICV), Yamaha, Ashok Leyland-Nissan, Eicher Motors and Phillips Carbon Black. These are expected to create over 9,000 jobs.

Business Line scans some of the major investment commitments over the last one year or so.

Last year, DICV began rolling out the BharatBenz range of light and heavy duty trucks from its manufacturing plant in Oragadam, Chennai. It is still early days for the German truck maker, but the company is ready for the long haul. It has committed an investment of Rs 4,000 crore in Tamil Nadu. The Oragadam plant began exports to Sri Lanka recently. More export markets are on the anvil.

Most recently, Ashok Leyland-Nissan joint venture unveiled the Stile. Set to hit the roads before the festival season, Stile, a multi-purpose commercial vehicle designed for transportation, hotel shuttles and taxi services, will roll out from Nissan’s manufacturing plant at Oragadam. The 7-8 seater vehicle, set to be modelled on the Nissan Evalia (which is meant for personal use), promises features such as low-floor and a common rail diesel engine, tuned for low noise, vibration and harshness.

Stile follows the successful launch of light commercial vehicle Dost. Dost is being made in Hosur, Tamil Nadu. Meanwhile, Ashok Leyland and the Japanese auto company are setting up a dedicated manufacturing plant at Pillaipakkam, near Chennai, at a total investment of Rs 4,150 crore.

Apart from the commercial vehicle venture with Ashok Leyland, Nissan is also keen to make a mark in the passenger car segment. Recently, the company launched the compact car Datsun and sports utility vehicle, Terrano, made at Oragadam.

The Terrano is reportedly the redesigned Duster (from its alliance partner Renault). Renault literally hit the sweet spot with the compact SUV Duster, which is making waves in the Indian market. The Nissan-Renault combine plans to double production capacity at Oragadam to eight lakh units by 2016. The alliance has earmarked an investment of Rs 4,500 crore till 2016.

American car-maker Ford is also gung-ho about investments in Chennai. Ford, which has already invested $1 billion in India, is pumping in another $1 billion to set up an engine and assembly plant in Sanand, Gujarat. It has also invested $142 million in expanding the production line at its factory at Maraimalainagar, Chennai to make the compact SUV EcoSport, which has received a fairly good response in the Indian market.

The company also began exporting EcoSport from the Chennai port. It was allotted a dedicated car parking yard at the port premises, which can accommodate 500 cars at a time. Ford India already exports to 38 markets globally from the Chennai and Ennore ports.

In April, performance motorcycle maker Royal Enfield inaugurated its second plant at Oragadam. It already has a plant in Tiruvottriyur, Chennai. Last year, the company produced 1.13 lakh motorcycles. With the new facility, the combined production is expected to touch 1.75 lakh units this year. Next year, the target is 2.50 lakh units.

Japanese two-wheeler maker’s proposed Rs 1,500-crore plant in Chennai is expected to start operations in the middle of the next calendar year.

The plant, with an annual production capacity of 1.8 million units, will produce both scooters and motorcycles. Exports may also be considered from this plant.

Published on August 29, 2013
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