Keeping in view the ever increasing demand for vehicles, auto makers in the country are planning massive investment to increase their existing capacity  The booming auto sector of the country is set to receive further fillip within the next 4-5 years as top auto companies operating in the country are looking forward to massive investment to undertake capacity expansion to satisfy the rising demand for vehicles in the country. After the global economic meltdown, which witnessed auto sales plummet significantly, the sector is now on a revival mode recording robust growth, so much so that many auto makers are finding it difficult to match the escalating demand. Soft auto loans provided by banks, coupled with a slew of new launches has fuelled the growth of the industry, and now global firms are eyeing India as an attractive investment destination to increase their foothold in this segment.Road ahead looks bright for auto component makers
With auto makers such as Mahindra and Mahindra (M&M), Daimler, Tata Motors, Hero Honda, Maruti Suzuki, Ashok Leyland etc planning for capacity expansion, the future of auto component manufacturers supplying equipment to these companies is also looking bright. According to an official of the Automotive Components Manufacturers’ Association (ACMA), who did not wish to be named, “Capacity expansion needs to be backed with robust supply of auto parts. With the aforementioned companies looking to increase production, local auto component manufacturers are likely to reap benefits as they too will get more orders, which will help them to boost their revenues. However, these auto component makers might also be required to undertake capacity expansion to supply components on time.” The official also added that the expansion plans will be aided by low manufacturing costs and availability of cheap labour in the country.
Investment plans
While Daimler is planning to invest Rs 4,400 crore in the next 4-5 years, Tata Motors is eyeing investment worth Rs 8,000 crore. With the Gurgaon plant of Honda Motorcycle and Scooter India (HMSI) running at full capacity, the company has announced plans to set up its new manufacturing plant at Tapukara in Rajasthan. At the initial phase, the plant will roll out 6 lakh units per annum. Manufacturing activities at the plant will begin by the latter half of 2011. M&M and its subsidiaries are looking forward to spend around Rs 5,000 crore in the next 3 years for capacity expansion.
Expansion drive to reduce waiting period
According to Asan Varyani, proprietor of Shivam Narrow Fabrics, a mid-sized manufacturer of car seat belts in Mumbai, “With capacity expansion, waiting period for vehicles will also come down. Expansion in capacity will help auto makers to serve their overseas clients as export orders are witnessing a gradual upswing.”
It is also believed that with the upcoming festive season, demand for vehicles will witness a significant rise as it is during this season that attractive discounts are provided, which consumers look to avail. Faltering to meet customer expectation during the season can have long-term repercussions on the brand image of the auto companies. Therefore, auto makers are leaving no stone unturned to retain their client base and make the same more robust.
Arup Choudhury |
