Business - Car manufacturers mull cars with Made-in-India tag

Swaraj Baggonkar

Global car manufacturers are charting out plans to cement their position in the country by building an all-India car that is tailor-made to suit the preferences of the Indian buyer.

This move comes close on the heels of growth in developed auto markets such as the US and Europe dipping in the red. Companies such as General Motors, Maruti Suzuki (MSIL) and Volkswagen have either commenced work on the ‘Made-in-India’ car or are in the final stages of drafting the plan.

While MSIL and Volkswagen have announced their strategies, GM said that a project involving a car model built entirely out of India has a ‘strong possibility’ in the next few years.

GM India President and Managing Director Karl Slym said, “There is a strong likelihood that a car will be built entirely in India considering the strong presence we have here. Our Bangalore technical centre will play a pivotal role if that happens. However, the car will not be restricted just to the Indian market. It will be exported too.”

A Made-in-India car is the one, which will be developed almost entirely in the country, using the technical expertise and know-how of Indian engineers.

Although finer details are yet to be worked out, GM said it will not face any financial difficulties in carrying out the plan even as its parent company, the US-based General Motors Corporation, is close to bankruptcy.

As Maruti prepares to increase the headcount of engineers to 1,000 by 2010 to facilitate the India-built car, Korean auto major Hyundai has launched the i10, which was partially designed keeping the emerging markets such as India in focus. Hyundai launched the car in India first, before exporting it to foreign destinations.

Although the recently unveiled A-Star of MSIL owed its success to Indian engineers and designers, the car still had a lot of Japanese technology involved. Similarly, the Swift hatchback, which is also called the world car, was developed with the help of Indian engineers based in Japan.

Volkswagen, the German auto giant, will also build an ‘India car’ from scratch, the plans of which are in the developmental stage currently. The project will involve various levels of engineering such as design cues, architecture, manufacturing process and engine development among many other necessary aspects.

Analysts say that global auto companies are now focusing on developing new models for emerging markets like India with main focus on containing costs. The cost of development in India is considered to be the lowest in the world.

“Instead of reworking and fine-tuning their international models, mainly compact cars, companies are not shying away from investing into India for the development of new models. Besides, some of the Indian models such as Hyundai i10 and Suzuki AStar (Alto in overseas markets) are hot favourites in places like the Europe,” stated a Mumbai-based analyst.

Currently, seven out of every 10 cars sold in the country are compact cars ranging from Rs 2.50 lakh to Rs 4.5 lakh. Experts say that the contribution of small cars will stagnate over the next few years not considering the ultra-low cost cars from Tata Motors and Bajaj Renault and Nissan among others.