The world’s biggest car manufacturers have a problem with India. Toyota Motor Corp, Volkswagen AG (VW), General Motors Co and Renault-Nissan Group are the giants of the global industry, each selling about 10 million cars a year and together accounting for almost half of the passenger vehicles produced by major manufacturers worldwide.
However, in India, they are minnows, with a combined market share that is not much above 10 percent.
To make matters worse, the local leaders are unusually dominant. Maruti Suzuki India Ltd has about 47 percent of the domestic market and second-placed Hyundai Motor Co has 17 percent. That heavy concentration of power makes it extraordinarily difficult for more minor players to break through.
However, even so, no automaker with global ambitions can afford to ignore a market that is poised to become the world’s third-largest.
That helps explain why Volkswagen is so keen to strike a deal with Tata Motors Ltd.
The two are in talks about forming an alliance, Tata chief executive officer Guenter Butschek told Elisabeth Berhmann of Bloomberg News at the Geneva International Motor Show last week.
Butschek, a former Daimler AG executive who helped build the Mercedes-Benz brand in China, said the tie-up could create a shared car-manufacturing platform and give Volkswagen a better Indian foothold.
If you think you have heard that line before, it is because Volkswagen’s great rival Toyota last month inked a partnership agreement with Suzuki Motor Corp that would have many of the same features.
With half of the world’s 40 most-polluted cities and a heavy dependence on imported oil, India has ambitious plans to shift its nascent car fleet toward more fuel-efficient technologies.
Indian Minister of Power Piyush Goyal wants the country to move to 100 percent electric vehicles by 2030, a perhaps aspirational target that would in theory put India not far behind Norway.
That is a problem for local players, such as Maruti Suzuki and Tata Motors, which would struggle to afford the technology upgrade such a shift would require.
Despite Volkswagen’s diesel-emissions scandal and Toyota’s late development of fully electric cars, the two have the largest research and development budgets in the industry. Hence the desire for marriages: In return for access to deep pockets, Indian firms can dangle the carrot of better market penetration.
Managing these relationships will require some subtle diplomacy. Toyota only got its chance to sidle up to Suzuki after a previous alliance between Suzuki and Volkswagen fell apart amid recriminations from both sides.
Tata Motors, for its part, already has a joint production line with Fiat Chrysler Automobiles NV, and its Jaguar Land Rover division counts as a major competitor to VW, Audi and Porsche in the more profitable luxury and sports utility vehicle segments.
Toyota and Volkswagen will just have to put up with that. Chasing emerging-market growth has been a huge success story for the latter over the past two decades, turning China into Volkswagen’s biggest market.
However, growth there is set to slow and the industry faces fundamental longer-term constraints from the sheer shortage of road space.
India might be a tough market, but it cannot be in any serious automaker’s blind spot.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Gogoro Inc (睿能創意) yesterday launched its first electric bicycle, the Gogoro Eeyo 1, in Taiwan, after unveiling the bike in New York in late May and in France on Tuesday. The company said it would also introduce the series in other European countries such as Germany and the Netherlands. The “Eeyo project” is the fourth of Gogoro’s eight projects that concentrate on smart transportation, which includes Gogoro’s electric scooter, battery swap system and electric scooter sharing service, company founder and chief executive officer Horace Luke (陸學森) told a media briefing in Taipei. “There are various types of city commuters. We will not
BAD RAP: The exchange said Tatung had seriously breached shareholders’ rights and failed to give a satisfactory explanation of its board election dispute Tatung Co (大同) shares yesterday plunged by the maximum daily limit of 10 percent to NT$18.90, the lowest in three months, after the Taiwan Stock Exchange (TWSE) on Tuesday evening changed the company’s classification to a full-delivery stock effective tomorrow. The TWSE’s move follows the company’s failure to give a clear and satisfactory explanation of why it deprived dozens of shareholders of their voting rights during a board election at the annual shareholders’ meeting on Tuesday morning. Under the exchange’s regulations, investors are not allowed to engage in margin trading of a full-delivery stock, TWSE spokeswoman Rebecca Chen (陳麗卿) told
SIZE MATTERS: Medium-sized hotels that do not have the support of parent groups are more vulnerable and are forced to take action, a REPro Knight Frank researcher said About 50 hotels across Taiwan are seeking to exit the market as they succumb to the bleak business outlook amid international travel restrictions imposed to combat the COVID-19 pandemic. Yomi Hotel (優美飯店) on Minsheng E Road, Sec 1, in Taipei is seeking to transfer ownership with an asking price of NT$950 million (US$32.15 million) and a pledge for a lease contract that guarantees a 3 percent return. The budget hotel, with room rates that start from NT$1,400 per night, maintains normal operations, but has been struggling since March, when the government placed restrictions on inbound and outbound travel. Occupancy rates for hotels in
With the US dollar expected to weaken in the next 12 months due to near-zero interest rates, investors should consider purchasing US corporate bonds, Standard Chartered Bank Taiwan Ltd (渣打台灣銀行) said on Thursday. The bank said that the US Federal Reserve since last month has been buying bonds issued by US companies to curb default rates. The US dollar is forecast to be weaker against the pound, the euro and the yen, as well as the Canadian dollar, the Swedish krona and the Swiss franc, as the greenback lacks high investment returns after the Fed in March slashed the benchmark interest rate