Many foreign companies have taken the Indian automotive phenomenon by surprise. The unprecedented growth in the last five years has not been a smooth sail either. It was actually a roller coaster ride for the automobile companies – with factors like increase in interest rates, high fuel prices, inflation, and high input costs.

But the same period have also seen many foreign automotive companies like the BMW, Nissan, Honda, Toyota, Audi, Volkswagen, Volvo, General Motors, Ford and others that has made huge investment in the Indian car market. Though these companies have faced shattered many hurdles still they are steadfastly held on to their belief of gaining a niche in the Indian car market. The variation in Indian economy has been deliberately overlooked by them as a passing phase.

But is India the really happening place? Experts say yes. According to a report by HSBC, it is speculated that India will produce 32 million vehicles (combined output from Europe and US) by the year 2010.

If the foreign companies are able to get a steady market of few lakh units every year, that equals the market of many smaller countries, they are glad to stay here. The passenger car sales have almost doubled from 7 lakh cars a year in 2002 to 15 lakh units reported in 2007-08.

The domestic market is expected to record a 40 percent growth from 2005 to 2010. That is a breathtaking growth level, when the US and Europe are showing growth levels of 20 percentage. But the whole domestic car market will be able to absorb around 20 million vehicles. That leaves a huge margin of vehicles for exports.

The Indian small car giants Maruti Suzuki and Hyundai have rightly identified the growth levels and made elaborate arrangements. They are now manufacturing exclusively in India and exporting it to several countries. Maruti Suzuki plans to export 2 lakh cars annually and has its presence in 1200 towns and cities in the domestic market. Maruti’s sales volume was 4 lakh units in domestic market during 2004-05, which increased to 5 lakh in 2005-06, 6 lakh in 06-07 and 7 lakh in 2007-08. Exports too have seen a marginal increase, and now Maruti Suzuki plans to ship 2 lakh units of car from India to overseas markets.

The Hyundai Motors India is the second fastest growing passenger car company in India. The company has reported a total sale of 3 lakh units in 2007 which was an increase of 9.2 percent over the sales recorded in 2006. The domestic market share was 2 lakh units which is a jump by 7.6 percent.