TradeBriefs Editorial

From the Editor's Desk

First GM, now Ford - why India is becoming a graveyard for world's auto giants

India is a market for low-priced cars with low running costs, and global majors don't have the models to match Maruti and Hyundai's entry-level vehicles.

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 per cent 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 per cent of the market. And the global No. 1 (Volkswagen), together with its Skoda subsidiary, has barely 1 per cent. Of the big four, Toyota has been the most successful, but has barely 3 per cent 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.

Continued here

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