VW, Daimler target India

08 January 2010

NEW DELHI: Rising car ownership levels in India offer significant opportunities for automakers, with Volkswagen, BMW and Daimler all aiming to expand their presence in this market.

These three firms have unveiled new models at the Auto Expo 2010, a car show being held in New Delhi this week, and Volkswagen has also recently opened a new manufacturing plant in Pune.

Many Indians prefer smaller vehicles with features such as adapted suspension for bumpy roads, and Maruti Suzuki and Tata, two domestic companies, are already established as the nation's top automakers.

The domestic car market's current annual growth rate of 10%, along with the significant increases in personal wealth over recent years, has made India an attractive target for many Western car firms.

While it is estimated that just one in every thousand people owns a car in the rapidly-growing economy at present, industry specialists are optimistic about the progress being made.

Rajiv Kaul, chief organiser of Auto Expo, said: "Although the number of people who can afford (a car) as a percentage is small, in absolute numbers it's increasing quite rapidly."

Volkswagen is exhibiting a re-tooled version of its Polo marque at the Auto Expo, while BMW and Daimler are both aiming to attract high-end buyers with new models of their own.

Meanwhile, it is rumoured that VW is set to embark on a joint venture with Maruti Suzuki in order to develop a new vehicle specifically tailored for the Indian market.

Jayant Davar, president of India's Automotive Component Manufacturers Association, commented: "Volkswagen has done extremely well in China, being the first there.

"Here, I think, they lost the advantage of being a first mover but they are coming into India with large investments and there is definitely a sense of commitment."

Data sourced from Deutsche Welle; additional content by Warc staff