Monday, June 09, 2014
By Manoj Kumawat
Major car makers to invest Rs. 10,000 crore in Indian car market
Automobile makers in India have lined up more than Rs 10,000 crore of investment to develop new passenger vehicles and soup up existing ones despite a slowdown in sales, as they strive to meet changing customer demands in a market where products become outdated fast, according to industry executives. Companies such as Mahindra & Mahindra, Tata Motors, Maruti Suzuki as well as the local units of Hyundai Motor, Renault and Nissan Motor are working on all-new platforms to bring out new products.
Twenty-two all-new models and as many facelifts along with 12 new model-year updates and seven new power-train options have been lined up for the Indian customer in 2014 — the most elaborate product action plan by auto makers in recent years. And, this is happening just after the passenger vehicle market recorded its worst sales decline since 1976. Companies have deferred capacity expansion, and thousands have lost job with assembly lines running at their lowest utilisation levels, but auto makers aren't cutting down on product development. No longer can a product continue to have a good run for a decade, said Pawan Goenka, executive director and president of Automotive & Farm Equipment business at Mahindra.
Nowadays, new products do well for two-three years at best. The margin for error, he says, is very small. "Success rate has become lower because there are too many products getting launched and every product launched is a better value for money. Customers have been opting for better-value new products to older products. That is what is making industry competitive," he said. "The Indian market is not a place for the weak hearted anymore." According to industry experts, fiscal 2014 saw 35 product launches, including major facelifts, but only eight of them, or less than a quarter, can be considered as successful. Car sales fell for the second straight year in fiscal 2014, which ended in March.
Read complete story on Economic Times.