Automakers already struggling with intense competition in the US and many other regions of the world have long worried about their prospects after China and India begin building large numbers of ultra-cheap cars.
But Chinese carmakers have experienced numerous setbacks to their global ambitions and a new study of the Indian auto industry reveals more obstacles than many outsiders expected.
The study, released on Monday by IBM and the Transportation Research Institute of the University of Michigan, said that Indian automakers are plagued by a shortage of skilled workers, inferior product quality and deficient highway infrastructure, among other challenges.
Its authors, who interviewed 30 high-level executives and automotive experts in India, were confident that the industry will surmount the impediments to make India one of the world's top 10 vehicle-producing countries by 2015.
But they suggest that the Indian car market remains in a fairly primitive stage of development.
roads
"Roads are the big problem," said Allan Henderson, senior manufacturing consultant at IBM's Institute for Business Value. "The infrastructure needs to be improved more than you might think. There's a number of problems, but they're aware of them and they know what it takes to overcome them."
Sales of passenger cars in India have more than doubled since 2002, to 1.4 million from 675,116, said the Society of Indian Automobile Manufacturers, which represents 38 vehicle and engine makers in the country. Passenger car exports have nearly quadrupled in the same period but still were less than 200,000 in the last 12 months.
Growth could be limited, however, by too few engineers and skilled trades workers. Although India is known as a home of plentiful low-cost labor, many workers do not have the qualifications that automakers there desire.
Even if carmakers are able to increase production, the study found that many consumers do not want to buy them because roads are in poor shape and congested. Motorcycles and other two-wheelers are the most popular form of transportation, outselling four-wheeled vehicles by a four-to-one margin.
exports
Exporting is troublesome as well. Indian carmakers have difficulty understanding foreign consumers, developing a range of models, managing global supply chain logistics and incorporating advanced technology, the study said.
Additionally, Indian ports would need significant upgrades to handle high volumes of vehicles.
The problems that Indian automakers are facing will not halt the industry's growth, but they will take time and considerable resources to resolve, Henderson said.
Ultimately, he said, "it doesn't look like there's really anything that should stop the Indians from being major global players. They fully expect to be a powerhouse on the world stage."
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