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Old 29th July 2010, 18:23   #1
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Default Indigenous and non-indigenous cars in the Indian car scene

Somebody asked me -- What can India do to attract more foreign car manufacturers?

A swirling maelstrom of thoughts welled up. And I was sure you buddies can add to this.

The momentum of India's vast and growing base of car buyers has attained critical mass. Naturally, it attracts car manufacturers from far and wide.

Why doesn't Japan attract car manufacturers ?

Because they cannot match
  • the quality-cost product of Nissan, Toyota, Honda, Suzuki, Daihatsu, Subaru, Isuzu and Mazda.
  • the stringent expectations posed by Japanese regulations.
  • Granted, luxury brands like Mercedes and BMW do sell in Japan. But the Japanese car buyer has no reason to buy low- or mid-range foreign cars -- there are far too many Japanese companies that make those cars better and cheaper.
On the flip-side,
  • imported cars usually have an unnecessarily far higher cost of ownership to sustain over years.
  • Cost of replacement parts are far higher,
  • Check up costs far higher.
  • Quality is poorer
  • Down-time far longer.
  • Fuel economy is usually unacceptably higher.
Japanese prefer to buy Japanese cars, even those who can afford to purchase premium imported cars.

Can India learn from all this?
India has no paucity of design and manufacturing brains, nor of ability to attract investment.

What do you feel?
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Old 29th July 2010, 18:36   #2
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Ram

Foreign cars did badly in Japan since the japanese authorities made it tough for imports, i.e asking for modifications for compliance etc. Main thing of course was that Japanse cars were more cost effective.

Coming back to India

The learning curve is much higher for an indigenous car. There are so many nuances, from basic durability, understanding customers etc. Take the Tata Indica and Scorpio - they have gone through major evolutions/ revisions and the manufacturers are learning. To ump the curve, they are fored to look for acquisitions hence Tata setting up a research based iin the UK and buying JLR. Mahindra have developed a team and also outsourced.

Additionally, everyone still recalls Tata's and Mahindras as good for 3 years then.....

If you look at China, the biggest sellers are VW and GM. Local brands are not there yet but it will take time.
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Old 29th July 2010, 18:42   #3
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I would say India is definitely attracting more and more manufacturers as we grow. We are still a growing economy and this means we will definitely see more players from outside entering the country (Ferrari being the latest with an entry plan in 2011)

The Indian car industry has still not matured enough to bring out top class products. It will take a few more years before we can see world - class cars coming out of Indian R&D houses. Untill this happens, we will see more and more international players entering the market.

One thing for sure in India is that there is no shortage of customers. Its all about getting the right product mix and service support. Maruti is the best example of getting this right and Fiat would be the best example of getting it wrong.

What the International manufacturers very often fail to notice is that we Indians are extremely cost conscious and we would put up a fight till the last paisa is accounted for.

What we should do to make more international players come in as well as develop our own industry is by reducing the hazzles for a player to start up a venture. I agree things are much more simpler these days but lot more needs to be done to encourage investors.

Also, skilled labour and infrastructure are the other two areas which we will have to concentrate in order to get more investors to come in.
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Old 30th July 2010, 12:19   #4
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Quote:
Originally Posted by Ram View Post
Somebody asked me -- What can India do to attract more foreign car manufacturers?
Well, why should we attract more foreign car manufacturers? Cant we just focus on ways to improve our own cars and brands?
(No, not in a nationalistic sense, I myself own a European brand). But why do we need foreign manufacturers anyway?
I would say the following reasons:
1. Foreign investment, job ops. - this is a larger issue, not just confined to cars, and not what we are discussing here.
2. Many well-off Indians like to own foreign brands - hell with those folks. these people should not be criterion.
3. More foreign manufacturers will force Indian manufacturers to improve quality, design, engineering...

Frankly 3 is the only reason, IMHO, why they should be welcome. After all, the Indian govt. doesn't do anything to improve the quality of cars, like the Japs did. But, looking at experience, have these foreign companies forced a rethink on their Indian counterparts?! In fact, it has been the other way. Think Fiat!
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Old 30th July 2010, 14:14   #5
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Originally Posted by 2cents View Post
But why do we need foreign manufacturers anyway?
One more point which I would like to add here is that we will require the foreign manufacturers technology know-how. Else we will spend a lot of unnecessary time re-inventing the wheel.
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Old 30th July 2010, 22:41   #6
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Ram, if someone has access to old Japan / Korean domestic market car sales data ... then they might answer the questions below.

There was a time in the '60s when Japanese cars were NOT the quality champs that they became in the '80s and thereafter continued to be. They were probably cost competitive with whatever was imported into Japan at that time.

I wonder what the buying pattern of the Japanese public was then ?

If I had to guess, they probably STILL bought Japanese cars. Why ?

We can only speculate on the reasons why that would be.

Similarly, right upto the '80s, when Korean OEMs weren't any great shakes as compared to foreign OEMs, the Koreans still bought Korean cars in spite of having a choice.

I would say that on a market maturity level, we are at that same stage in time as the 2 nations mentioned above.

But we in India don't buy Indian OEMs' cars in as significant a proportion.
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Old 2nd August 2010, 22:57   #7
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But we in India don't buy Indian OEMs' cars in as significant a proportion.
Maruti, TATA and M&M put together accounts for more than 65% of all cars sold in the country. And if you put in the HCV segment then the Indian OEM's account for 80+%!!
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Old 3rd August 2010, 02:46   #8
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Originally Posted by ajman28 View Post
Maruti, TATA and M&M put together accounts for more than 65% of all cars sold in the country. And if you put in the HCV segment then the Indian OEM's account for 80+%!!
Since when maruti has become indian?

What actually is this thread meant for?

Or you asking for how can we develop indigenus auto industry or how we can attract foreign automakers?

Can you clear that for me please.
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