Automaker’s Race to Conquer India’s Car Market Still on Track

India’s automotive market with an average of 20 percent annual increase seems a lucrative spot for global automakers. The race to hit this hot spot for car sales still continues. Being the second most populous country in the world, and a promising automotive industry economy, automakers like Renault, Hyundai and other automakers are trooping over to this country to seize success -- a success which lies in keeping tag prices low and squeezing margins.

"Not being in India would be a huge strategic mistake," said Carlos Tavares, Nissan Motor Co. Executive Vice President in a statement for The Associated Press on the sidelines of the Frankfurt auto show.

"It's an investment for the future." he added to his statement.

As March ended, India had total car sales of 1.1 million for the year. Compact hatchbacks accounted for three quarters of that volume. Although lesser than China’s car sales volume, it proves to be a fast growing market.

J.D. Power and Associates, predicts that if India will maintain this growth, by 2012, Indian car sales will be doubled to 2 million. For manufacturers with their Indian bases, car production is expected to rise dramatically to 3 million by that time.

"All the car makers know that India is one of the markets offering the best growth potential," said Pete Kelly, a director at J.D. Power and Associates' automotive forecasting unit.

India’s consumers demand for inexpensive and fuel-efficient vehicles, with a cabin for five or six passengers and an air-conditioning that will give comfort amidst the heat of the country.

Japanese automakers had already set foot on India’s auto market and expanded their sales and production in India. These companies are Toyota Motor Corp., Honda Motor Co., and Suzuki Motor Corp.,

With French automaker Renault SA of France, Nissan entered India this year. The two global car makers signed a passenger car venture with India’s local automaker Mahindra & Mahindra Ltd. The group plans to build a plant in Chennai city. Nissan will use the plant to export compact vehicles to the European market.

American based Chrysler LLC (maker of Dodge AC compressor) is not in good financial condition to join this Indian auto market venture together with the global automakers.

Last Tuesday, Carlos Ghosn, CEO of Renault announced that the construction of the plant will probably start by 2010.

Inspired by Tata Motor’s ambition of the RS 1 Lakh, or the cheapest car, Nissan and Renault is also considering the feasibility to manufacture a car with a tag price of lower than $3,000.

Hyundai’s step in venturing the Indian auto market is by way of the Santro. The Santro is designed with extra head room for turbaned passengers and give extra attention to the rear seats where most Indian passengers occupy said Thomas Rauh, Hyundai Motors spokesperson in his statement for The Associated Press.

"It's a dogfight down there," said Rauh.

"It would not help us to go downmarket." he added.