#India

About a year Editor-in Chief, Ed Niedermeyer, reported that GM and SAIC were discussions about co-operating in the Indian market. Then, in May, our overseas editor, Bertel Schmitt, reported how GM China was going to raid their Chinese line up and sell it in India. I dismissed the developments as the first step in GM being “China-centric”. But today Automotive World reports that Zhang Baolin, President of Chongqing Changan Automobile is having talks with Ford (their western partner in China) about extending their partnership from China to, you guessed it, India. “We have discuss with Ford to use their network to expand overseas, but have not yet come to an agreement yet,” said Zhang Baolin, via Bloomberg News. On the topics’ list are things like whose brand to use and what vehicles will be sold in India.

Despite government witch hunts ( recently cancelled, supposedly) and subsidized competitors, Toyota is holding its own. Just. But like Toyota said, they’re going on the offensive. They’ve upped the incentives (but are still below industry average) and launching new warranties to confirm their commitment to their products. But they’re also pushing into new markets to offset their reliance on the North American market (and also to make more money). Now one of those markets is India. The formula is very simple there. Cheap, reliable, safe, and cheap. And that’s what Toyota is trying to do. About time. Suzuki is eating everybody’s lunch in India.

China isn’t the only big economy coming to play (sorry to burst your bubble, Herr Schmitt). [ED:No bubble. India is 10-15 years behind China, but they will definitely be next. China and India added will be a monster.] Just across the border, India is rising up and quickly, too. Car makers are desperately scrambling to get a foothold in the Indian market. And like the Chinese market, everyone is enjoying record growth in India. Well, almost everybody.

So, how does the maker of the world’s cheapest mass-market car go about building India’s first home-grown upscale crossover? First, go buy several small European automakers…

Watching people “Snap” is very funny (when I was at school in the UK they were called “cuss matches”). I learnt some very funny insults. Some insults were so funny, I’ve been banned from reproducing them on TTAC (Ed – We’re a family website!). But nothing lifts the spirits more than watching 2 people going head-to-head, armed with the sharpest, finest “Yo mamma…” insults. But what happens when that element comes to the automotive world? Well…

Even though the luxury car market in India is very small, the players are taking it seriously. So seriously, they’re trying to bitch slap each other. The Hindustan Times reports that Mercedes-Benz and BMW are “trading verbal volleys at each other at every opportunity.” 2 Germans hurling insults at each other in the middle of India? Did someone put a load of magic mushrooms on my pizza? Pee in your curry? Gee, in Germany something like that would get you a “cut it out now!” phone call from the VDA, the “Verband der Automobilhersteller” (formerly “Verband Deutscher Autobomilhersteller”). But in India?

Speaking of India, it’s about time that GM gets its act together on the subcontinent. If you aren’t somebody in India you are missing the boat. If the augurs augur right, the subcontinent will be the fastest-growing car market in the world.

Popular wisdom was that foreign companies have to tread carefully in China, lest they’ll be robbed blind of their vaunted intellectual property and thrown by the wayside. Now it has come to the total opposite: GM has made a mess out of India. And they turn to their old Chinese buddies at SAIC to help them out. Not just financially. Technologically. “GM hopes to take advantage of Shanghai Automotive Industry’s expertise in making small, low-cost cars to raise its share” in India, reports The Nikkei [sub].

India’s population is right up there with neighboring China. Only a few hundred million less, nobody really knows. In car sales, India dwarfs against China. In 2009, Indians bought 1.43m units, compared to 13.6m units bought by the Chinese. Nevertheless, the market is growing, the potential is huge, and sales are at a record high. Monthly car sales in India surged to an all-time high in August, climbing 33 percent to 160,794 cars. That according to data issued by the Society of Indian Automobile Manufacturers (SIAM), and reported in The Nikkei [sub]. August sales outpaced July’s record of 158,674 cars.

DNA India reports that Tata is making a concerted effort to source parts for Jaguar and Land Rover from low cost countries like China, India (duh!) and Poland. DNA’s source for this claim said: “Earlier, Ford used to procure 17 percent from low-cost countries like Poland, China and India, whereas Tata Motors is planning to increase it to 35 percent.” Tata has buys more than just cheap parts. They outsourced low-end design and development work to lower-wage countries. But before you start the “If you thought JLR reliability was bad now…” don’t get too carried away.

When Volkswagen bought a 19.9 percent share in Suzuki, everybody in the know knew that a much bigger trade was going down. A trade of subcontinents. Suzuki owns nearly half of the market in India, where Volkswagen is a relative nobody. Suzuki is dabbling in China, where Volkswagen rules the roost.

Suzuki is to India what Volkswagen was to China. Earliest foreign entry into a huge an untapped car market. Like Volkswagen in China, Suzuki built a dominant position in India early on. Suzuki owns half of the Indian market. Unlike Volkswagen, two-thirds of Suzuki’s operating profit is estimated to come from India. Volkswagen lost their commanding share of China (and made it up with volume) when the market exploded, attracted competition, and overwhelmed VW’s capacities. A mistake Suzuki seeks to avoid.

Suzuki has a little bit of a problem keeping up with the demand in the frisky Indian market. If you can’t deliver, you lose market share. Suzuki’s share of the Indian market already slipped below their usual 50 percent. And guess who’s giving Suzuki headaches? Tata.

Suzuki is hustling to avoid needing more help from partner Volkswagen. For instance in India, a market VW covets. Suzuki used to own more than half on the Indian market. In the recent months, that share slipped a bit. Not because customers in India don’t like Suzuki. Suzuki can’t keep up with the demand. Customers have to wait for months to get delivery of popular car models such as the Swift hatchback and the Swift Dzire sedan, reports The Nikkei [sub]. Suzuki is finally doing something about it.