India is becoming a small-car manufacturing hub for some of the world’s biggest auto makers. Annual passenger-car exports from India have jumped five-fold in the past five years. Industry analysts predict exports over the next three years will surge nearly 300% to more than half-a-million vehicles a year.
India’s domestic manufacturer, Tata, is obviously involved, but so are companies from the rest of the world.
India’s homegrown auto innovation — Tata Motor Ltd.’s $2,500 Nano minicar — has attracted global attention, but the export wave consists mainly of small cars built in local plants by Japanese and South Korean car makers, including Suzuki Motor Corp., Hyundai Motor Co. and Nissan Motor Co.
In late September India’s biggest car exporter, Hyundai, added a midnight shift at its southern India plant to boost production 40% and meet booming demand for its i10 minicar abroad. Both Hyundai at Suzuki unveiled subcompacts at the Paris auto show, targeting consumers in Europe, their main market for made-in-India exports.
What makes this possible?
"Right now India has everything – the local market, the quality and the companies," says Shohei Kimura, managing director of Nissan Motor India, who moved to India last month to start building Nissan’s capacity here to 200,000 units annually over the next three years.
So-called "Little Detroits" have sprouted outside Chennai and Pune, near Mumbai, where regulatory barriers have been lowered – along with tax rates and the cost of land and power for big factories.
No bailout required. Just the leadership to recognize the value of small cars ahead of the curve instead of after. And some reduced regulations and taxes to boot.