India emerging as small car manufacturing hub
ET reported that it's not all doom and gloom for India in this time of economic hardship. The credit crisis currently engulfing the world could even mean new opportunities for the automobile industry. Even as bankruptcy fears for US automobile major General Motors gather steam, Asian and European manufacturers are considering moving production of small cars to India.
In recent weeks, Hyundai, Toyota, Honda, Renault-Nissan and Volkswagen have all announced that their plans to ramp up production capacity to meet demand from not only Africa and Asia, but also a previously under explored high quality market like Europe.
With the increase in oil prices and rising concerns over climate change the world over, cheap, compact and fuel efficient cars are becoming popular, even in countries like America. Sport utility vehicle sales were down by over 40% last month over the same period last year in Europe and America.
Overall car makers seem to be looking to develop small car alternatives to their current gas guzzlers. And manufacturers facing the classic problem of attempting to make money from small cars may find it enticing to ramp up production in India, given lower costs here.
To an extent, the shift is already happening. Passenger car exports from India have increased by five times in the past 5 years. Exports over the next 3 years are expected to increase by 300%. According to reports, the country's second largest automaker Hyundai is aiming at an 8% rise in exports for the rest of the year with an increase in production targeted for next year.
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