Call it the Narendra Modi effect. Within a fortnight of the Prime Minister’s successful visit to Japan , India and Japan are now moving closer in the automotive sphere.

This week will see JAMA (Japan Automobile Manufacturers Association) sign a memorandum of understanding with its Indian counterpart, SIAM (Society of Indian Automobile Manufacturers). Both entities, whose membership includes manufacturers of cars, two-wheelers and trucks, have already worked closely together for many years. The MoU, however, will mark an important step forward in forging a far more profound alliance.

“From SIAM’s point of view, it is an extension of a bonding that is already in place. With JAMA, there have been useful lessons learnt on issues like emissions, safety and market research which will only get better in the years to come,” a top official told Business Line.

Strong connect JAMA is also the first international automotive entity to get into a formal partnership with SIAM. The two have been meeting at least twice every year and the MoU could, perhaps, set the pace for something even more meaningful in the years to come.

Japan’s association with the Indian auto space started at least a decade before economic reforms kicked in during the 1990s. A clutch of Japanese automakers entered India in the early ‘80s of which the high profile entrant was Suzuki whose alliance with the Indian government spawned the formation of Maruti in 1983. This was the beginning of the small car movement which continues strongly to this day.

The other Japanese entities which came in during the ‘80s comprised a quartet of Toyota, Mitsubishi, Mazda and Nissan and their light commercial vehicle range. They were literally wiped out by Tatas whose 407 pickup taught them a valuable lesson in localisation and the need to keep costs in check. Today, the sole Japanese presence in the truck segment is Isuzu which is readying a new plant near Chennai for its utility-vehicles and pickups.

Toyota made a new business plan post-reforms to launch the Qualis which made up for its pickup debacle a decade earlier. Today, the company is keen on growing its India presence with its cars and the well established Innova. Nissan is part of the Renault global alliance with a plant in Chennai, while Mitsubishi confined its presence to an almost insignificant tie-up with Hindustan Motors.

Two-wheel trio The ‘80s also saw the Japanese two-wheeler brigade which gave Indian buyers the first taste of motorcycles after years of using the geared scooter. Honda, Yamaha and Suzuki forged alliances with Indian partners and, today, all three are still around. albeit after going their own ways. Kawasaki’s tie-up with Bajaj Auto continues and the company recently decided to manufacture its powerful bikes on a small scale at the Bajaj scooter plant near Pune.

The Indian two-wheeler market has grown rapidly since the ‘80s to emerge as the world’s largest. The biggest Japanese brand here is Honda which spent a large part of its stint in an alliance with the Hero group. It also had a partnership with the Pune-based Kinetic where the parting of ways led to Honda creating a 100 per cent arm for scooters. It is now gunning for the top slot in India, and is setting up a fourth plant (in Gujarat) which will see its output of bikes and scooters inch towards six million units annually by 2016.

Honda is the only auto brand which has tremendous equity in both two-wheelers and cars. Its other India arm, Honda Cars, has identified India as an important region in Asia-Pacific.

Likewise, Yamaha believes India has a lot to offer in its global business where emerging economies are the key growth drivers. Like Honda, it has been around since the ‘80s and after a roaring start, lost its way for many years thereafter.

Today, it is banking on India to act as an important sourcing point for supply of parts to its global operations. This business, now at ₹60 crore annually, will jump to ₹360 crore by end-2016.

Suzuki’s two-wheeler operations may not have the intensity of Honda but India is a critical market along with ASEAN. Ever since it parted ways with the TVS group over a decade ago and decided to go on its own, Suzuki has been ambling along. Perhaps, it will step up the gas on two-wheelers during the latter part of this decade.

Mutual benefit From the Japanese automakers’ point of view, the JAMA-SIAM agreement will only reinforce their bullish outlook towards India. In addition, as Toyota’s India MD, Naomi Ishii recently said, these companies want to be good corporate citizens which can share their global experiences with India.

Indian companies have benefited from Japanese practices like TPM, TQM and LEAN manufacturing which have helped them in their processes and emerge stronger.

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