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India Automobile Industry Ready to Rule Export Market
Feb 05, 2010

Indian automakers are likely to see good response for their products in the international market due to low cost advantage.
 
According to KPMG, Indian auto manufacturers are likely to soon join the bandwagon of established international automobile giants, such as Toyota, Hyundai, Volkswagen and Honda, as they are well positioned to significantly increase their market share in the coming five years (till 2014), as per the news published by Press Trust of India.
 
Automobile exports from India registered growth of 23.61% in 2008-09 to 1.53 Million Units. Separately, exports of passenger vehicles stood at 335.74 Thousand Units and that of commercial vehicles and two-wheelers at 42.67 Thousand and over one million Units respectively.
 
One of the key factors responsible for the growth of the Indian automobile industry is its low cost advantage. On the back of cheap labor and raw material cost, the cost of production becomes extremely less. This ultimately leads to low cost of end product, thereby luring people who are not in a position to own expensive luxury cars. Moreover, the cost competition, which is getting increasingly tough in the developed markets under the pressure of high input cost, will provide an additional edge to the Indian automobile industry in increasing its passenger car sales in overseas markets.
 
Besides this, India is rapidly emerging as a quality auto component manufacturing base, which is further supporting the country’s auto industry. There are several well-equipped small passenger car assembling plants, as a result of which India-manufactured small passenger cars are gaining good response in the overseas markets.
 
Exports of passenger cars from India are expected to chip in a CAGR of around 20% between 2009-10 and 2012-13, reaching 610 Thousand Units, up from 335.74 Thousand Units in 2008-09, predicts a market research pioneer RNCOS in its report “Indian Automobile Sector Analysis”.
 
According to a Research Analyst at RNCOS, “India is highly capable of surfacing as a pioneer of a new stream of emerging economy automobile innovators, but the way to this will not be easy. The country has to confront a number of challenges, one of them being to improve its quality and simultaneously build and retain automotive R&D skills. Indian automakers need to give attention to innovation rather than simply manufacturing. Suppliers also need to meet the international quality standards so as to make India a world leader in global automobile market.”
 
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