India seen rising as key small-car production base

[rickaren]

India seen rising as key small-car production base

Posted on Thursday, January 7th, 2010 at 12:13 PM EST.(Employee News)

As global automakers boost their presence in the thriving Indian market, they will turn the country into a stage for novel experiments in lowering production costs to levels not seen before, Reuters reported.

Indian customers’ sensitivity to pricing has meant the market has been dominated for nearly 30 years by Maruti Suzuki India Ltd., the news service said. The unit of Japan’s Suzuki Motor Corp has been able to build $5,000 cars such as the Maruti800 hatchback by using old, fully depreciated equipment provided by its parent in the 1980s, Reuters said.

Tata Motors took the low-cost theme to the next level with the release last year of the $2,000 Nano, which has achieved only modest success so far, the report said. Japanese automakers will expand parts procurement to Indian suppliers for goods such as sheet steel normally imported from Japan, Reuters said.

The need for big volumes to lower per-unit costs means that some, including General Motors and Nissan Motor, will use India as an export base for their tiny cars, joining market leaders Maruti Suzuki and Hyundai Motor, the report said. GM, which generated buzz at the Delhi show with an aggressive sticker price of 343,000 rupees ($7,111) for the Chevrolet Beat, is earmarking one-fifth of the car’s production for exports, the story said. (Reuters)