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Impact of America’s Big Three fallout on India Car Industry

Smart business is all about making maximum profit in a difficult and troubled market situation. This is fully vindicated by the current America’s economic downturn that presents opportunities to the unlikely beneficiary, Indian car manufacturers. The view of the American economic scenario is far from depressing when viewed from the eyes of Indian car manufactures.

Even as the world's major economies are sliding into recession, it is amply clear that one of the worst-hit sectors will be the automobile industry. Perhaps no company has been as hard hit as the famed America’s ‘Big Three’ comprising General Motors, Ford, and Chrysler.

With losses running into several millions of dollars, these three, which ruled the roads for a good part of the last century, are likely to come face-to-face with the last thing they wanted to see at this stage - another unforeseen competitor in the form of Indian cars. How does one see this latest set of entrants into the American market? Is it an instance of Indian opportunism and the proverbial last nail in the coffin for these erstwhile giants?

From the Indian automobile manufacturers' point of view, this is the best time for an entry into the American car market. One would not be too off the margin in terming it a sort of business invasion, precisely because the American automobile scene presents the best reason for one – vulnerable and exploitable market conditions.

The case of the Indian Big Three

The iron could not be hotter - this is just the time American buyers are looking for cheaper alternatives. And who could strike better now than Indian automobiles, known for the affordability of their products more than for anything else.

As Indian automobile companies scramble for a slice the shrinking piece of pie that the American market is, taking the lead will be our own Big Three - Maruti Suzuki, Mahindra & Mahindra, and Tata Motors. But are these names ready to take on the American brands, no matter how weak they may seem now?

Made in India

Analysts point out that the newly resurgent Indian car industry, spearheaded by these three big names, can indeed make an impact on the American market. This is because Indian car manufactures are no longer the sluggish, outdated behemoths they used to be. Gone are the days when the Indian consumer had to choose from few car models of the Ambassador and the Fiat. India is now home to not only swanky foreign cars, but smart homegrown ones too.

With the Indian economy starting the process of liberalization and globalization in the early 90's, the Indian consumer has become more and more exposed to a bevy of foreign cars including American makes. This has brought about unforeseen responses from the Indian car manufacturers which is clearly reflected by the introduction of advanced technology in tune with the prevailing competition.

But the question remains will this rejuvenation of Indian technology coupled with legendary inexpensive Indian skilled labour is likely to give them the advantage in the American market.

Maruti Suzuki's Situation

Suzuki is a familiar player in the American market, although it cannot stake the claim of being as popular as Toyota and Honda are. In India, it is a household name. Even as it earned the distinction of becoming the first Indian car manufacturer to touch an export figure of half a million, the U.S. market accounted for virtually nothing. Seen from the Indian perspective, the Maruti-Suzuki combination may not be a great player there as of now, but there is every indication that it will refashion itself to suit the American consumer's taste. The presence of Suzuki in the U.S. is likely to offer it a great advantage when this collaboration seriously makes up its mind about the U.S. market.

Battle for SUVs

Another big player is likely to be India's leading SUV manufacturer, Mahindra. This company is one of the shining examples of Indian car manufacturers reinventing itself in the face of new competition in the last few years. From being a tractor manufacturer of unshakable repute in the rural Indian market, its slew of new products that has captured the imagination of the urbanite. The company believes its status as the leader in the Indian SUV market could well position it among the top sellers in the U.S. in the coming days. Its frontline SUV models, the Bolero and the Scorpio, are seen as Indian counterparts of the Jeep. With this and a long line of products in the pipeline, Mahindra hopes to make a dent on the SUV market, one of America's most preferred segments, and among the Big Three's top line of products.

Tata Weighs Options

Tata is the old giant in new clothes. One of India's oldest and most respected companies is still seen, even in India, as a manufacturer of cars that are smaller versions of their ponderous trucks. One is not sure how much truth there is in this perception, but we are told Tata is resorting to an innovative tactic. Instead of taking pains to pitch its products as those that can also suit American conditions, it is planning to introduce its new acquisitions, Jaguar and Land Rover, into the American market.

Whether this idea is going to work or not, given that these are luxury brands, something into which Americans are wary of investing at this point of time, remains to be seen. Moreover, the two brands it has acquired may be familiar in the U.S. but they are perceived by the average American in more or less the same manner in which Tata's products are in India - as being out of sync with the times. Yet, all these do not take away from the fact that Tata can make a difference in the American market. Being totally aware of these shortcomings, the company wants to bide its time before deciding to set up shop for its Indian products in the U.S. Its range of Indian products will surely enter American shores in an American version, albeit at a later date.

Endgame

So, what is the overall prospect for Indian car manufacturers in the U.S.? As we have seen, the need for cheap fuel-efficient cars is an imperative for the average American in the current situation. Indian car manufacturers are well-equipped to fill this need. Time can only tell whether they can actually deliver this. As of now, going by the indications, this is the ideal opportunity for Indian manufacturers. Going by the core competencies of the Indian ‘Big Three’ and their product range, one thing is also sure - the foray of Indian cars into the U.S. is more likely to impact the American’s Big Three than other leading players there, such as Japanese and Korean.

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