Tough Indian market welcomes German auto groups

23rd September 2009, Comments 0 comments

At the Frankfurt motor show, German auto managers were warned that the fast-growing class of young Indian consumers and partners were tough customers that wanted the best for a good price.

Frankfurt -- India, home of the world's cheapest car, urged German auto and parts makers Tuesday to pitch their world-renowned wares to one of the toughest markets on earth.

Managers of brands such as Audi, BMW and Bosch were warned however that the fast-growing class of young Indian consumers and partners were tough customers that wanted the best for a good price.

With an average age of around 25, Indian consumers are more and more educated, wealthier, demanding and "not loyal," said Wilfried Aulbur, vice-president of the Indo-German chamber of commerce.

"It's a pretty difficult animal to handle," he concluded during a seminar on ways out of the automotive crisis at the Frankfurt motor show.

Aulbur, also managing director and chief executive of Mercedes-Benz India, said Indians had the "confidence to compete on a global scale" and told German business leaders to expect "very interesting discussions" on price and value.

India produces the world's cheapest car, the 2,055-dollar (1,400-euro) Tata Nano, and the country is now the 11th largest auto producer worldwide, said India's ambassador to Germany, Sudhir Vyas.

All major auto manufacturers have a presence in the country of nearly 1.2 billion people and car sales jumped by nearly a third in July, the sixth monthly rise running, owing in part to a cut in excise duties on automobiles.

Suzuki of Japan plans to build a new Indian plant in 2011 and Volkswagen opened one in late March while estimating the market at more than two million vehicles by 2014.

German and Indian cooperation has grown steadily since Mercedes and Tata first teamed up around 40 years ago, and the Nano is laden with parts from 12 German suppliers, seminar moderator Bernhard Steinruecke noted.

The Nano "is a car of Indian vision and German technology," he said, adding that without the German companies' research and development, "this car would not be possible."

Meanwhile, the Indian manufacturer Reva showed an electric car at the Frankfurt show that it plans to launch in 12 European countries next year.

The four-seater NXR has a range of 160 kilometres (100 miles), solar panels in the roof and can be recharged from an electric grid in eight hours.

It is expected to cost between 12,200-14,000 euros (18,000-20,700 dollars).

Ambuj Sharma, a secretary from India's Department of Heavy Industry, urged the German automotive sector "to join hands with India," which he said was now the auto components centre of Asia. The region is home to two of the world's fastest growing markets.

He invited small- and medium-sized enterprises "who are the strength of the German automotive industry to be a part of this growth story."

German suppliers were hammered by a global plunge in auto sales that followed the collapse of US investment bank Lehman Brothers one year ago.

Sharma said India was now "among the world's most attractive sources for not just the low-cost components but for high-value engineered parts and design."

And Ambassador Vyas attached "particular importance" to "capacity building and vocational training for the auto industry" from foreign investors.

He said Delhi had set a 2016 goal "to emerge as the destination of choice in the world for design and manufacture of automobiles and auto components," but acknowledged that was before the global collapse.

A recovery was underway, the Indian speakers emphasised, though Aulbur warned that "you have to be in it (the Indian market) for the long haul."

He also told German managers: "No 'one size fits all' for your customers and your business partners" on a sub-continent equal in size to the 27-member European Union.

William Ickes/AFP/Expatica

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