India’s automobile sector may become one of the global leaders by 2012. In fact, India’s automobile sector is the tenth largest in the world with an annual car production of approximately 2 million out of the world’s 73 million. India is the largest motorcycle manufacturer and the fifth largest commercial vehicle manufacturer. Currently, India dedicates 75 percent of its automobile industry to small cars, more than any other country in the world. India is expected to witness more than a dozen new compact car models in the auto market in the next few years.
All-time highs in fuel prices and inflation have not dulled demand for automobiles. The last quarter has seen a substantial growth in sales of passenger cars and commercial vehicles on a year-on-year basis. Over the past year, the automobile industry has achieved a turnover of $34 billion, and the auto component industry has reached a turnover of $10 billion. In addition, India’s tire industry has registered a turnover of almost $3 billion.
India has seen an increasing number of global players entering it’s market by way of joint ventures, collaborations, and wholly owned subsidiary. Earlier this year, South Korea’s top automaker Hyundai opened a second assembly plant in Sriperumbudur. Hyundai told Auto Beat ASIA that the company will maintain its focus on the compact car market, which accounts for more than 70 percent of new vehicle sales. Hyundai India sold 327,200 vehicles in 2007, up more than 9 percent compared to last year. They expect to sell about 530,000 vehicles in the current fiscal year which will account for 45 percent of India’s auto exports. Hyundai is planing to invest $1 billion in India by 2013 and will employ up to 4,235 people during these years.
Because India is the world’s fourth largest commercial vehicle market, Volkswagen will invest $870 million in the Pune site to build 240,000 vehicles per year in India by 2012. The plant will employ 2,500 people and have a capacity of 110,000 units per year. The mini-cars “Polo Compact” and “Up”, which have been selling very well in Europe and Latin America for many years, are also expected to be added to the production mix starting in 2009. In addition, Volkswagen reported in July 2008 that its small car will be specially- designed for India and will be launched in 2010.
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