Sriperumbudur and Maraimalainagar near Chennai are homes to the South Korean Hyundai and American Ford car makers. All the major global automobile makers are keen to manufacture their small cars out of India and export the same.

Hyundai, Maruti step up exports…

Maruti Suzuki, the Indo Japanese venture, was the first to realise the huge market potential the country offered. Starting from the 800cc it built up bigger models. While Hyundai has made a sensational take with the ramped up version of Santro in i10, Maruti's most promising car A Star is to be launched in November this year and will form a major component of its exports. Maruti hopes to export two lakh vehicles every year from this fiscal.

During the current yearl, Hyundai Motors India Ltd, the wholly-owned subsidiary of the Korean auto giant, Hyundai Motors, hopes to export over two lakh vehicles. It exported 126,748 vehicles in 2007 (the figure was 113,339 in 2006).
Following the success of Hyundai and Maruti Suzuki, the biggies from Europe are now thinking of adding the small car to their stables.

The promise of Nano…

India's own Tatas who led the small car revolution in India with Indica, have added several varieties. Tatas hope to write history with the world's cheapest car in the world with the one lakh rupee car Nano. Tatas also figure in the list of exporters of small cars but the numbers do not compare with Hyundai's or Maruti Suzuki's.

European car maker Skoda, owned by the Volkswagen group, American carmaker GM and Ford are mulling over plans to launch small cars in India.

For GM, while Astra and Corsa did not meet with great success, the Chevrolet and Spark have revitalized its market. As Chevrolet is an acquired brand for GM and Spark is actually Matiz of Daewoo Motors re-done, GM might like to launch a small car under its own mother brand.

Ford Motors failed with the Escort series because it ceased production of this model worldwide but tried to sell it in India. Its indigenously designed Ford Ikon revved up the domestic market as a sports cum passenger car in the mid segment; now the Fiesta, re-done essentially for the local market, is also faring well. Ikon has been a major export draw for the Ford. And now it sees a major market for small cars in terms of export potential and might launch the KA. But the picture is still hazy.

Japanese carmakers Toyota and Honda, which captured the higher segment with the Corolla/Camry and City/Accord brands, are also mulling the possibility of launching small cars in India for exports. They would bring in world class brands as the Indian customer is now as fastitidious as his counterpart in Europe or U.S.

Why India for the world small car hub?
India offers vast tracts of land in several states to set up factories, excellent infrastructure facilities for export in terms of ports in western and southern India, fine tax breaks on export earnings and, the most important of all, cheap labour for both plant level and marketing. But wages too are rising now as India's economy grows.

Little wonder that both Hyundai and Maruti Suzuki, are expanding their capacities. Hyundai is coming up with a second plant at its Chennai facility in Sripereumbudur with an investment of $528 million, $ 263 million for a second engine and transmission plant which will take total investments to $911 million including outlays for R and D.

Maruti is revamping its second facility in Manesar in Haryana. The Gurgaon facility now rolls out 670,000 cars, much in excess of its capacity of 500,000 cars. Manesar was commissioned to ease the pressure on Gurgaon. It now produces 170,000 cars but will expand to 300,000 cars as facilities get augmented with adequate logistics support.

Shift in preferences…

With the unprecedented surge in crude oil prices, there is a gradual shift in consumer preferences for the small car over the medium at the first instance, then as a second car for the family and thirdly for reasons of convenience of parking. And these are among the factors why automakers have recognized the India as the small car hub.

Government of India has also helped the automobile makers. The latest measure is the 5 per cent cash incentive on exports that will help automakers reduce freight costs while making bulk exports. Automakers can make use of this facility under a special Focused Market Schemes for exporting vehicles to 83 listed countries in Middle East, South Asia, Europe and Latin America.

India could also become a hub for the medium segment cars. But government has to provide better infrastructure facilities and logistics support such as better roads, highways and port management facilities. With these in place, India will be a major player in the auto business in the world.