Automakers adapt in India

20 July 2012

NEW DELHI: Major global automakers are seeking to expand their portfolios, increase product localisation and become more competitive on price to drive up sales in India.

The Economic Times, the newspaper, reported that General Motors, Ford, Honda and Fiat collectively accumulated losses of Rs2,700 crore in India during the financial years from 2008 to 2011.

Within this, Fiat made an estimated loss of Rs1,127 crore from 2009 to 2011, and is now considering the roll out of various vehicles from small cars to Chrysler-branded SUVs and MPVs to try and reverse this trend.

"We will develop a broad range of cars. We are investing in the right products and segments that could be developed for India," Enrico Atanasio, its head of sales and marketing, said.

General Motors also sustained losses of Rs743 crore in the same period. It sells eight models in India, and intends to add offerings like an MPV, sedan and hatchback under the Chevrolet marque in the near future.

More specifically, the US multinational is attempting to double its share of the Indian market going forward, from the current level of 4.2%.

"We will have to price our products competitively as Indian consumers have a low tolerance [to high prices], which also means we need to localise heavily,” said Lowell Paddock, managing director of GM India. "Ultimately, we want to get towards profitability."

On its part, Honda Siel Cars India (HSCI), the domestic arm of the Japanese manufacturer Honda, recorded a loss of Rs445 crore from 2009 to 2011.

It takes 2.1% of the market at present, and hopes launches such as a small car and MPV, alongside a wider push on diesel vehicles, will positively impact this figure.

"India is definitely among the key markets for Honda, and Honda Siel has ambitious growth plans for it," J Sen, SVP, marketing, at HSCI, said. "Our product portfolio is increasingly being aligned to Indian needs and requirement, with high levels of localisation."

Ford saw particular success in India with its Figo hatchback, selling 170,000 units since 2010, and will build on this with the introduction of the fuel-efficient but competitively-priced EcoSport, an SUV, among other models.

While the organisation posted a loss of Rs384.14 crore rupees from 2009 to 2011, a large portion of this amount can be attributed to projects like the $1bn investment to construct a plant in Gujarat.

Nigel Wark, Ford's executive director, marketing and sales, said: "In the last five years, we have been investing without any expectations of profitability. We are reinvesting cash profits for products and capacity expansion."

Data sourced from Economic Times; additional content by Warc staff