[Nithesh_M]

The ones who have left isn't what our focus should be on. The ones on the verge of leaving and the ones who are entering into partnerships with other manufacturers to bring down economic costs of development should tell you that the answer is obviously:
1. Our Government and their frequently changing policies/weird rules to blame.
2. Our high tax structure that some companies are not able to cope up with.

No corporations would tie up and share resources unless they are desperate and have their backs to the wall.

[Rahul Bhalgat]

Originally Posted by Nithesh_M

The ones who have left isn't what our focus should be on. The ones on the verge of leaving and the ones who are entering into partnerships with other manufacturers to bring down economic costs of development should tell you that the answer is obviously:
1. Our Government and their frequently changing policies/weird rules to blame.
2. Our high tax structure that some companies are not able to cope up with.

No corporations would tie up and share resources unless they are desperate and have their backs to the wall.

The Govt. and the tax factor is same for all the players. Are the companies, who could not read the market properly or did not have correct strategies in place to cater to the seen / unforeseen market needs, blaming the taxes or the Governments?

[Nithesh_M]

Look at what its led to. Koreans joining Maruti in selling unsafe cars with unstable body shell for 20 lakh rupees that isn't even the same product as its international spec model. Toyota selling Maruti cars with subpar quality. Ford merging with Mahindra because its futile spending more money in a market which has stupid 4m rules that don't exist elsewhere. Honda reducing production and letting workers go because they don't want to invest in unsafe cars like the Koreans nor do they want tie ups with local auto manufacturers to reduce costs. VW can't launch international Polo or Fabia because stupid 4m rule again and also resorting to dumbing down international platforms to make regular Joe affordable European cars somehow still barely affordable to us.
Do you not see a pattern here? Ford, Toyota, Honda, Nissan are going to stop pouring money here because as it stands its simply not feasible to make a ROI unless you're backed by Established sister company or Chinese money.

Let's face it. The tax breakdown as shown in previous page tells you who takes the large chunk out of every vehicle sold. And its the party that has no investment into said product in the first place.

[kiku007]

Whatever may be the reason, the looser is the consumer.

I know it’s easy to say that no one shed tears for GM’s exit. Fair enough. Having owned a Chevrolet Spark for five years in the past I genuinely think that car deserved to sell more when compared to the Marutis. I got it for around Rs. 3.XX Lakhs in 2011 with three years of free service. The car had no warranty claims ever if I remember correctly. A no nonsense, well built and spacious city runabout at that price. But the market didn’t want any of it. They’ll only buy a Maruti. By the time I sold it, GM’s dealers were dumping it and two of my closest service centres were gone.

Ford tried Maruti’s tricks with the Figo/Aspire and failed spectacularly. Go’s knows why they built a factory in Gujarat.

2020 is a watershed moment in the Indian automotive history. The American, European and Japanese car makers gave up or took a back seat and let the Chinese and Koreans take over. I wouldn’t call Maruti-Suzuki Japanese. The irony is that the Government can’t let this happen without interference. They have to throw tantrums on Chinese investments.

Forget China and keep an eye on Vietnam this decade for any meaningful comparisons.

[fhdowntheline]

I would say that the policies ( whatever be their merits) and the market is the same for everyone. , from Tata to Toyota and everyone in between.
Those who have sustained and thrived have understood it well and have made the efforts and adjustments which is not easy if you are carrying a brand ego bigger than your local reputation.
So the moral of the story is, be humble, hunker down , get down to detailed market study, invest in stakeholder relationships , and sell cars that people need.

[Nilesh5417]

The sub 4m length and sub 1.2/1.5 engine rule has been around for over a decade if am not wrong. It's a lame excuse that keeps getting used over and over again.
The manufacturers that are not doing well simply do not have the required commitment to our market. Saying India is a big market for us and not walking the talk is what has led to their current state.

[DonHyd]

I think all the reasons are valid to some extent. Government should be very clear about the future plan and set realistic goals for EV migration. Similarly the tax structure is unfair to some segments particularly CBUs. Without knowing volumes, it is not practical for global biggies to invest in local assembly.

Herd mentality is also a big factor which leads to proverbial chicken egg situation. Without huge volumes, it is impossible to open 1000s of dealerships throughout the country and without them huge volumes are impossible. For herd mentality, let us take swift vs figo. Figo is a decent looking car with competent mechanicals and a mouth watering price. And yet for the most part of its life, it sold in 3 digits. Swift on the other hand rarely drops below 15000 units per month. Even if we assume swift is a better car, how better is it? 20-30 times better? Imagine if only people bought 15000 figos and another 15000 aspires every month, why will Ford not be able to match maruti in service centre reach, etc? Why will Ford even think of leaving India?

Similar is the case with many good cars which deserved much higher sales.

Then there is this sub 4m rule which is responsible for sub compact sedans, suvs and even mpvs. We are lucky that there is no sub 4m rule for buses and trucks also.

Lastly 'we are superior' attitude of global gaints won't work here. India is a price sensitive, value conscious market.

[PGA]

I think it's 'None of Above'.

https://images.app.goo.gl/2Y3CMY5zL5Uc3aEe9

This is indicative of how big our market is
And how congested it has become is also visible after going through our monthly sales thread. The established companies such as Maruti and Hyundai have built considerable moats around them. For an outsider to establish one these have to misstep or the size of market has to increase, while it's not foreseeable as of now but I bet some of these companies will wait in the wings to pounce on the opportunity should it arise.

I do not deny that factors listed above do play some part but if Maruti and Hyundai can survive so can GM, Ford and VW.

[fhdowntheline]

Originally Posted by DonHyd

Imagine if only people bought 15000 figos and another 15000 aspires every month, why will Ford not be able to match maruti in service centre reach, etc? Why will Ford even think of leaving India?

Similar is the case with many good cars which deserved much higher sales.

I think the core issue is whether these auto giants think of India as a long term market, from their global CxO corner office. I have felt that has not been the case with some of them.Once you do that, then you need to literally “make for India” the way the Koreans have to a good extent.

[Hayek]

Why should a global auto major focus on India?

Market size and growth - We have been stuck at a c 3 mm per annum run rate of auto sales for 3-4 years now. And that has risen from 2.4 mm in 2011 - viz 4% pa growth (ignoring the zero sales during the lock down)

Premiumization - yes, the share of compact SUVs in total car sales has risen. And yes, value of car sales in terms of OTR prices has risen. But the net realisation by auto manufacturers, before GST and customs duties on imported components has not kept up with INR depreciation against the USD.

Consistency of Policy - You set up a CKD assembly line but suddenly find that you need to assemble not just cars but also engines and transmissions to be viable. You invest in Diesel engines because of an ever increasing price gap between petrol and diesel, and that gap collapses - and the biggest market by far says diesel cars must be scrapped in 10 years. You identify hybrids as a perfect interim solution for urban India - and taxes on hybrids sky rocket. Suddenly you find that your customers can’t get replacement tyres because some politician or bureaucrat decides that tyre imports should be banned.

Ability to tap global scale economies - unique products like the sub 4 m sedan / “SUV”, and competition from players selling death traps disguised as cars with blessings of the state implies that Indian products are meant only for India. Even the biggest scale player makes in Europe for Europe, and no longer exports from India.

Frankly, the fact that we still have 10 mass market brands with less than 4% market share playing in India suggests that manufacturers are still suffering from the triumph of hope over experience. Wondering which will be the next dominos to fall.

[AZT]

Originally Posted by Hayek

Why should a global auto major focus on India?

All your valid points aside, I think there is also a cartel of Maruti, Hyundai and our domestic manufacturers which lobby the govt heavily to make it tough for new entrants. It's sad the product line up we are stuck with compared to similar sized economies.

Only the Chinese and Tesla have deep enough pockets to invest here and I expect heavy resistance for both of them to set up shop here.

[deetjohn]

We have become the Harley Davidson equivalent of automobile markets.

Lobbying, protectionism, cost cutting, huge entry barrier due to high taxes, myopic, baffling & inconsistent regulations, quality and safety issues.... I see many parallels between both stories. So, the fate of the market too will be that like of Harley.

This rot will only worsen unless the government takes some very bold steps to benefit the customers and all the players in the long run.

The way things stand, I need to pay 3x the money to get something which is really worth 0.5x. How does this equation make any sense at all for the discerning customers??

What needs to change? How about rationalizing taxes and excise duty?? And aligning regulations to manufacture products here which can be exported too thereby giving volume for brands who doesn't want to dilute their product offerings?? Which means the govt has to come down heavily on safety and quality issues as well. And its no secret which all brands and models will suffer the most if that happens. That is the only way to save this market in the long run!

[Shreyans_Jain]

Originally Posted by deetjohn

What needs to change? How about rationalizing taxes and excise duty?? And aligning regulations to manufacture products here which can be exported too thereby giving volume for brands who doesn't want to dilute their product offerings?? Which means the govt has to come down heavily on safety and quality issues as well. And its no secret which all brands and models will suffer the most if that happens. That is the only way to save this market in the long run!

This right here. Truth has been spoken.

While it may not be possible or perhaps even desirable to reduce taxes given our already super congested and crumbling cities, our silly rules have to go. We have to align ourselves with the world.

[GTO]

Well, there is a saying in the auto industry = "There is no problem that a good car cannot solve". Of course, in recent times, I have tweaked that statement to say "There is no problem that a good crossover / SUV cannot solve" . Ask newbie Kia which was a nobody in India 2 years ago.

The examples are many:

- The best example is Nissan. Hopeless in every area and selling lesser cars than some used car dealers. I had even written a deathwatch article on them. Enter the well-priced & competent Magnite and they are back in business!

- Tata was a goner a couple of years back & some people suggested they leave the car business, instead focusing on CVs & Jaguar-Land Rover. Some really great products got them back in the game, even though the government environment, regulations, after-sales & reliability (or lack of) remains the same.

- GM left India after selling a wide array of mediocre cars. Sail Twins? Seriously! Cheap Chevrolet Enjoy?!! GM India was so confused that it is the only manufacturer in India to have sold Chinese + European + Japanese + Korean models at some time or the other. Looks like they took the "multi national" bit too seriously.

In summary, it's all about PRODUCT & equally, frequent updating + refreshing of the same. Even if you have a blockbuster car, you cannot just let it get old & outdated. Frequent updates, refreshes & next-generations are key to its success.

[libranof1987]

A little surprised that India being a rare RHD market in the world hasn't been mentioned as a reason.

Yes, India (along with developed nations such as the UK, Aus, NZ) has always been RHD but when was the last time there were two major developments relatively close to each other: diesel gate, which has had a global fallout in engine down-sizing + focus on petrol, and EVs becoming mainstream. But not only is India RHD, it is also very price sensitive.

Due to this, the cost of development specifically for the Indian market may not make financial sense for most manufacturers. All this only gets worse with India's taxation + Govt. policies along with our fascination for FE.