India: demand and investment grow in the automotive sector

The automotive sector in India is experiencing a particularly fortunate market phase and is facing some important decisions to adequately address its development. In order to meet the increasing and unstoppable growth in demand, Indian entrepreneurs in the sector will have to make important decisions related to capacity building: the expansion of the middle class Indian is no secret, just as it is common knowledge that the Indian market is a market based on large numbers.

Considering these conditions, here are some predictions about the Indian market over the next ten years of development:

- Domestic demand will quadruple its demand

- Exports will increase seven times their current value

- Significant increase in jobs

- The sector will account for 3.6% of India's GDP

Therefore, the automotive sector in India faces an important phase of its growth: the steady increase in demand (sales compared to 2004-05 increased by 45%) is a major challenge and high appealing both for local producers and for players International.

The response that the automotive supply is showing is based on:

- Growth that aims to achieve strong economies of scale

- The attraction of talent useful for development consistent with world standards

- Strong capacity expansion-Renault and Nissan have recently built a 400,000-unit/year plant, and Suzuki has invested about €200 mln to increase its plant capacity from 1 to 1.7 mln units/year by 2013.

A future challenge, on the other hand, will concern human resources: if India aims to become an automotive manufacturing hub, it will be necessary to invest in engineer training and R&D development as strategic competitive factors.

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