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This varied base is now being used as the launch-pad for getting into other markets.
The leading makers of two-wheeler companies (Hero-Honda, Bajaj and TVS) are all doubling capacity, adding another 6 million to their present total. The leading players in the domestic car market have their eyes firmly set on exports. Hyundai wants to treble its car exports from 100,000 to 300,000; Maruti is developing a new car for the export market (beginning with 100,000 car exports); and Tata Motors wants to double exports every two years. Ford too has decided that India will be a sourcing point for some markets. With Toyota now set to enter the small car segment, the finance minister may well have been right in spotting the opportunity to make the country a hub for small car manufacture. Export of a million cars five years from now looks a distinct possibility.
The unusual part of this story is that car companies make good money in India. General Motors, Ford and others may be struggling in the US, and some German car companies too have been troubled, but Maruti ahs just announced 39 per cent growth in quarterly profits, with improving margins. That explains why it accounts for 10 per cent of parent Suzuki’s turnover, but a handsome 25 per cent of its profits. Tata Motors has recovered well from a crisis five years ago and, having benefited from substantial re-engineering, now has a healthy bottom line.
Hyundai and most of the others (like Ford and Volvo) are privately held, so their financial numbers are not available, but Hyundai would not be targeting aggressive growth from an Indian production base if it was not a very good business; and Toyota announced the other day that it has wiped out the losses incurred in the early years of its India venture. Clearly, there are coast advantages involved in operating from India one of them being labour. And the rapidly growing domestic market for small cars, of a kind that few countries can boast of, provides the base for volume production of cars with an engine capacity of 1000- 1100 cc, which the American and European car companies don’t focus on, but which nevertheless has a substantial market in many countries. Sure, India’s infrastructure constraints must present difficulties, but they don’t seem to have affected the growth impulse of a potentially giant manufacturing sector.
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