India becoming a graveyard for world's auto majors
If you leave out Hyundai, which has become a bigger car manufacturer than Ford and General Motors (by numbers, not value), the top four global makers of automobiles command barely 6 % of the Indian passenger vehicle market. Among them, General Motors (GM) left India four years ago. Ford’s announced exit now will make little difference since it has less than 2 % of the market. And the global No. 1 (Volkswagen), together with its Skoda subsidiary, has barely 1 %. Of the big four, Toyota has been the most successful, but has barely 3 % of the market. And recall that even Toyota, while complaining of high taxes, announced a halt last year to further investment in India before quickly retracting. Regardless, it has stopped the production of two three-box models, the Etios and Corolla Altis. Honda on its part has stopped the production of the Civic and Accord.
So why is India becoming a graveyard for the world’s auto majors?
One answer is that the Indian car market is no longer what it once promised to be, its global ranking expected to move from fourth to third — again, measured by vehicle numbers, not value. Instead, it has slipped to fifth (overtaken by Germany) because the market levelled off and then shrank for two years before recovering this financial year. This is part of the larger story about the loss of momentum in India’s consumer markets.
The second answer to the question, of why global car majors have suffered punctures, is price. India is a market for low-priced cars with low running costs. The global majors don’t have models that fit into that framework because most of the world goes for larger cars.
car markets are sticky. No one has been able to challenge Maruti’s early-bird ownership of India’s market. It’s the same in France, Germany, Italy, Japan, and South Korea. It’s a tough world and success has to be earned, in each market and each segment.