Indian automobile industry geared for a massive £30 billion investment spread over the next 4 years

Automakers in India are planning an estimated at £30 billion investment to be spread over the next four years. Daimler, Maruti Suzuki and Mahindra will lead this massive investment in a bid to satisfy the ever growing demand in India, the fastest, second growing economy globally after China.


Global automakers experiencing a lull in their growth in existing markets are planning to invest in burgeoning economies, such as India’s, with increased demand as investment spending and the government’s social programmes increase incomes and more people are able to invest in automobiles both in the small cities and the rural areas.


Subsequently, these automakers’ investment is expected to oversee the expansion of capacities by component suppliers as well like Amtek Auto and Bharat Forge in the country. The director general of the automobile industry’s lobby group, Society of Indian Automobile Manufacturers, Mr. Vishnu Mathur, said that the Indian automobile industry is geared for investments of Rs 80,000 crore in fresh capacity over the next four years, with the components industry also expected to invest $12 billion till the end of the Automotive Mission Plan.


The automobile industry’s Automotive Mission Plan is a 10 year blueprint courtesy of the Indian government, made in 2006, and is aimed at making the country an automobile hub, raising the industry’s GDP contribution to 10% from the existing 5%, and providing surplus employment opportunities for about 25 million people.


Recently, auto sales have been impressive with records set due to the rising incomes, banks lending money cheaply and the launching of new models by automakers, such as Volkswagen’s Polo and Fiat’s Linea. In 2009, car sales were up 25%, the fastest ever recorded in six years, to 19.5 lakh and motorcycle sales, domestic ones, rose by 26% to 94 lakh. On the other hand, domestic passenger car sales went up 40% in April 2010, in spite of increases in prices, and as a result, manufacturers such as Volkswagen and Renault have quickened their investments plans for growth.


In this investment, Daimler India Commercial Vehicles plans an investment of Rs 4,400 crore over a five year period in the manufacture of light, medium and heavy duty trucks at its plant in Oragadam while Tata Motors, the renowned Nano maker, plans an investment of around Rs 8,000 crore. Toyota will construct a second plant at its Bidali complex in Karnataka in an investment worth RS 3,200 crore for the manufacture of the Etios, with its two varieties, the sedan and the hatchback. Hero Honda, the biggest motorcycle maker and Ashok Leyland-Nissan are also planning new factories.


June 7, 2010.