Wonder of Small Cars in India

Small is beautiful when it comes to Indian car market. Though Indian car market is not so developed compared to Japan and Brazil, but the small car segment is in craze now-a-days. Global auto companies such as Hyundai and Honda and the local ones like Tata and Maruti are on their way to launch Small car models on Indian roads. The launch of Tata’s Rs. 1 lakh car has revolutionized this market. It was the last four years, auto enthusiasts in India have been waiting for the launch of the ultra low cost Rs. 1 lakh car of Tata Motors.

Two third of India’s over one billion people earn less money then their urban counterparts. The small cars would definitely affordable for these potential buyers in India. The auto industry has committed and is currently in the process of investing over Rs 70,000 crore in India, 65% of which is directed towards small car production.

For being a small car hub, there are basically four main requirements:

1. India should be in top two production countries of small cars in the world.

2. Small cars should have a high share of the domestic market.

3. Exports of small cars should account for a major share of the global market.

4. Development and use of new technologies and manufacturing processes in India that would sustain this leadership over time.

There can be no question about meeting the first requirement. In spite of small no. of production, India is the third largest producer of small cars after Japan and Brazil. Small cars also account for over 71% of the domestic market.

India would continue to be a predominantly small car market. Given the current projections for the Nano, India could easily become the second largest market for small cars in the world and in time perhaps become the preferred location, thus fulfilling the second condition. Last year 192,745 passenger cars were exported from India.

Importantly, the percentage of small cars exported was higher than the percentage share in production. However, India does not account for a significant share of small car exports, thus currently not meeting the third requirement. This could change.

There have been many developments in the small car space in India. The global premiere of the Hyundai i.10 was in India. It is proposed to make India the primary manufacturing centre for the i.10. Prototypes of other models, both for the Indian and global markets, were showcased at Auto Expo.

Maruti-Suzuki plans to make India the hub for the manufacture and export of the A Star, while Nissan has announced its intention of making India an export base. Bajaj showcased a small car prototype. Fiat, Ford, GM, Honda, Skoda, and Volkswagen also made announcements on small car projects.

New technologies and patentable methods are used in development of the Tata’s nano. If able to make its place in global market then its export can give a respectable share in global market for India. Nano is also an environmentally-friendly and safe car. This nurturing and use of engineering capability in India is the key fourth prerequisite to sustaining the relative competitive position of India as an automotive hub. Clearly the Nano has revitalized the potential to make India a small car hub. Hence it can be said with good possibility that India will soon emerge as a small car hub in the world. Small is beautiful!

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