The latest entrant to the growing Indian car market is the Chinese auto makers. These automakers from China are keeping themselves busy by sealing agreements with Indian car makers to form a joint venture in a bid to sell their competitively-priced brands in the Indian car market.
Chinese carmakers such as Chery Automobile, China FAW Group, Great Wall Motor Co and Zotye Auto are trying to find a place for themselves in their neighbouring country after setting up operations in Latin America, Eastern Europe, Africa and Russia.
As China develops price-competitive products, their products have a lot of opportunity in India. Besides, the Indian auto market is very price and value sensitive.
The erstwhile Premier Automobile Limited (PAL) now known as Premier Auto has partnered Chinese Zotye Auto to launch a compact Sports Utility Vehicle (SUV) in the Indian market. The base variant of the mini SUV is expected to be priced at Rs 5 lakh, the cost of a mid-size sedan in India. Other Chinese firms such as Chery, FAW and Great Wall have had discussions with potential Indian partners to come into the car market of the country.
One of the new entrants in the commercial vehicles segment in India, the Asia MotorWorks imports heavy truck kits from China, while Hindustan Motors has tied up with Shandong Shifeng to import knocked-down kits of mini trucks from the company. On the other hand, Bajaj Auto is buying parts and kits from China to retain competitiveness. However, the company continues to make the engines for these export models at its Indian plants.
Over the years, Chinese companies have built huge car making volumes that are expected to touch 12 million vehicles this year, more than those in the US and ten times India’s capacity. Moreover, China has now started to focus on quality instead of volume. There has been a lot of push from their government for them to develop indigenous vehicles and stand firmly on quality parameters.
As volumes start building up, economies of scale kick in. Manufacturers start investing in better dies, tooling, fixtures, gauges and other production equipment, giving components consistency, quality and accuracy.
An indirect subsidy from the government has helped Chinese auto firms price their products competitively. While almost every Chinese carmaker would like to enter the promising Indian market, they are likely to face copyright issues similar to the ones they faced in the developed world, especially the US and Europe.
Many western automakers have accused Chinese companies of copying their design. Apart from possible copyright issues, another inhibitor would be finding local partners as there aren’t enough established Indian OEMs that are without any tie-ups.
Like in India, car ownership in China is low, only 15-17 people per thousand own a car, presenting a significant growth opportunity in the Chinese automotive market. A two-decade headstart in reforms when compared to India and government support—by way of purchase tax trimming, car subsidy programme for rural areas and subsidy for vehicle scrap, among others—helped Chinese auto market grow.
Chinese automakers have grown by adopting practical and frugal strategies when deciding capital expenditure on their plants and many facilities have manual assembly lines, developed at a low cost, that deliver quality and productivity.
Chinese carmakers such as Chery Automobile, China FAW Group, Great Wall Motor Co and Zotye Auto are trying to find a place for themselves in their neighbouring country after setting up operations in Latin America, Eastern Europe, Africa and Russia.
As China develops price-competitive products, their products have a lot of opportunity in India. Besides, the Indian auto market is very price and value sensitive.
The erstwhile Premier Automobile Limited (PAL) now known as Premier Auto has partnered Chinese Zotye Auto to launch a compact Sports Utility Vehicle (SUV) in the Indian market. The base variant of the mini SUV is expected to be priced at Rs 5 lakh, the cost of a mid-size sedan in India. Other Chinese firms such as Chery, FAW and Great Wall have had discussions with potential Indian partners to come into the car market of the country.
One of the new entrants in the commercial vehicles segment in India, the Asia MotorWorks imports heavy truck kits from China, while Hindustan Motors has tied up with Shandong Shifeng to import knocked-down kits of mini trucks from the company. On the other hand, Bajaj Auto is buying parts and kits from China to retain competitiveness. However, the company continues to make the engines for these export models at its Indian plants.
Over the years, Chinese companies have built huge car making volumes that are expected to touch 12 million vehicles this year, more than those in the US and ten times India’s capacity. Moreover, China has now started to focus on quality instead of volume. There has been a lot of push from their government for them to develop indigenous vehicles and stand firmly on quality parameters.
As volumes start building up, economies of scale kick in. Manufacturers start investing in better dies, tooling, fixtures, gauges and other production equipment, giving components consistency, quality and accuracy.
An indirect subsidy from the government has helped Chinese auto firms price their products competitively. While almost every Chinese carmaker would like to enter the promising Indian market, they are likely to face copyright issues similar to the ones they faced in the developed world, especially the US and Europe.
Many western automakers have accused Chinese companies of copying their design. Apart from possible copyright issues, another inhibitor would be finding local partners as there aren’t enough established Indian OEMs that are without any tie-ups.
Like in India, car ownership in China is low, only 15-17 people per thousand own a car, presenting a significant growth opportunity in the Chinese automotive market. A two-decade headstart in reforms when compared to India and government support—by way of purchase tax trimming, car subsidy programme for rural areas and subsidy for vehicle scrap, among others—helped Chinese auto market grow.
Chinese automakers have grown by adopting practical and frugal strategies when deciding capital expenditure on their plants and many facilities have manual assembly lines, developed at a low cost, that deliver quality and productivity.
Good to know that China is giving importance to quality than quantity.
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Good post, thanks