News and Events

Auto Cos Lines up $30-b investment in 4 years

Maruti Suzuki & Mahindra & Mahindra are set to lead an estimated $30 billion investments by automakers in the next four years to meet the galloping demand in the world's second-fastest growing market after China.

Global auto companies facing a sedate growth in existing markets are investing to tap the growing demand in India as investment spending and government's social programmes raise incomes in smaller cities and rural areas too.

These investments by auto makers is set to trigger expansion to capacities by component suppliers too such as Amtek Auto and Bharat Forge.

"The Indian automobile industry is geared up to invest up to Rs. 80,000/- crore in fresh capacity in the next four years", Vishnu Mathur, Director General at the industry lobby group Society of Indian Automobile Manufacturers, told ET. " The components industry will also invest $12 billion up to the end of the Automotive Mission Plan.

The Automotive Mission Plan is a 10 year road map prepared by the Indian Government in 2006 to make India an automobile hub, raise the industry contribution to 10% of the gross domestic product from 5% and provide additional employment to 25 million people.

Car and motorcycle sales in India are setting records with rising incomes, cheap lending by banks and launch of new models such as Volkswagen's Polo and Fiat's Lines. Car sales rose 25% last year, the fastest in six years, to 19.5 lakh and domestic motorcycle sales climbed 26% to 94 lakh. Domestic passenger car sales gained 40% in April, despite price increases. The growth rate has hastened plans of many manufacturers such as Germany's Volkswagen and France's Renault.

Source: Economic Times