India’s automotive industry is seen as one of the biggest emerging markets and it’s ready to reach maturity, but automakers still have two vastly different strategies to apply, burgeoned with associated costs and challenges.
The crowded big cities are filled with more affluent buyers, which have seen both aspirations and incomes grow steadily and the memory of a country that used to solely rely on two-wheeled motorbike transport is now fading into the sunset. They want at least compact cars with features such as automatic transmissions, great luggage space and other goodies. That’s in stark contrast to the no-frills minis that were used to tie the motorbike world to four-wheel cars. But go towards the rural countryside where economic growth is always weak and customers ask for cheap models that have simple maintenance and huge reliability. “Automakers have to be aware that India works at different levels and segments, and they have to keep up,” comments R.C. Bhargava, chairman of Maruti Suzuki, the country’s largest auto manufacturer.
IHS Automotive forecasts that compact vehicle production is being amended to fulfill the upcoming requirements –the segment could account for one in every four autos sold in the country by 2019, up from just 17 percent market share back in 2010. And the sales of mini cars, which include Tata’s well-known Nano model, are expected to drop to 12 percent of the overall light vehicle market in 2019, down from 24 percent in 2010. While automakers look to address the rising compact segment sales, they also need to remember that rural India still needs their bare-bones models, which usually cost roughly half the price of an upscale compact model.