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Global Automakers Foray Into Indian Market With Big-Bang Investments, Groundbreaking Products

The years 2017-2020 may turn out be exemplary in the annals of the automotive industry as nearly 7-8 automakers would have either entered or are firming up plans to enter the Indian market in the next 1-3 years

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The years 2017-2020 may turn out be exemplary in the annals of the automotive industry as nearly 7-8 automakers would have either entered or are firming up plans to enter the Indian market in the next 1-3 years. Most of them have confirmed either officially or unofficially that they will gain a toehold in a market which is tipped to be third-largest by the turn of the decade. Among them are South Korea’s Kia Motors, Toyota’s Daihatsu and Lexus (already entered) brands, PSA Group’s Peugeot Citreon, Beiqi Foton, SAIC, Changan Automotive, among others.

Kia Motors, a group company of South Korean auto giant Hyundai, has already announced that it will be investing $1.1 billion to build its first factory in India which will have an annual capacity of 300,000 units per annum. The company will commence production at Anantapur district in Andhra Pradesh in the second half of 2019. Though the product details remain sketchy, the company has confirmed that it will be bringing in a mini sedan and a compact SUV in the initial phase.

“We are delighted to announce that Kia’s newest manufacturing facility will be here in Andhra Pradesh,” said Han-Woo Park, president of Kia Motors. “It will enable us to sell cars in the world’s fifth largest market, while providing greater flexibility for our global business. Worldwide demand for Kia cars is growing and this is our latest step towards becoming a leading global car manufacturer.”

Toyota Motor Corp has just brought in its premium Lexus brand to India more than two decades after introducing the marquee in China. The company will offer two SUVs and a sedan as the first models to be sold at showrooms in New Delhi, Gurgaon, Mumbai and Bengaluru in the first phase.

“We see opportunities mapped to the remarkable growth the country is experiencing,” Akitoshi Takemura, Lexus India senior vice-president, said in the statement, adding, “This is just beginning. We look forward to bringing more exciting products to India in the future.”

French carmaker PSA Peugeot Group announced its re-entry to India through a joint venture with New Delhi-based CK Birla Group. As per the deal, Peugeot will make its products from the Indian automaker’s Chennai facility which currently makes some models of Mitsubishi and has an annual production capacity of 12,000 vehicles. The partnership will also build engines and transmissions under a separate manufacturing deal with AVTEC, another CK Birla company.

The manufacturing sites for both vehicle assembly and powertrains will be based in the state of Tamil Nadu. The initial manufacturing capacity will be set at about 100,000 vehicles per year and will be followed by incremental investment to support a progressive ramp-up of the long term project.

Commenting on the agreements, Carlos Tavares, chairman of the managing board of PSA Group, said, “Benefitting from the strong support of our Indian partner, the CK Birla Group, and a shared vision, this project is consistent with the strong execution of our ‘Push to Pass’ strategic plan and represents a major step in PSA Group’s worldwide profitable growth in key automotive markets.”

China’s largest automaker SAIC Motor Corp Ltd is believed to have signed a formal agreement to buy a General Motors Co factory in India even though the company denied it. It may now opt for a Greenfield facility if the Halol plant acquisition doesn’t go through.

“SAIC Motor Corp clarifies that it has not signed any formal agreement with GM for the Halol Plant. Few months back, SAIC signed a term sheet to evaluate the Halol Plant which has been conveyed in a filing to Shanghai Stock Exchange, SAIC being a listed company there. SAIC’s Halol Plant deal is subject to GM’s submission of all government approvals, settlement of labour and all other pending issues by GM. However, S‎AIC’s decision to enter into the Indian market remains unchanged and the company continues to evaluate various options to set up a car manufacturing plant in India as early as possible,” P. Balendran, chief India representative, SAIC Motor Corp, said in a statement.

These series of announcements is just the beginning of a new phase wherein many more global players are keen to participate in the growth of the Indian automotive market, which is expected to reach 8-10 million cars by 2025 from current 3 million in 2016.