Indian auto industry to be driven by small, eco vehicles: Mahindra
By Rachel Kelly, Channel NewsAsia | Posted: 25 November 2009 2046 hrs

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SINGAPORE: The Indian auto giant Mahindra & Mahindra said small-sized and alternative-fuel vehicles will likely be the driving force of the automotive industry.

It also expects auto sales to rise when India's economy hits the critical mark of US$3,000 in GDP per capita, which currently stands at around US$2,600.

The India auto market appears to be trying to play catch-up with its Chinese counterpart.

In the last three years, the Chinese auto industry has grown a compounded 30 percent, making it the world's fastest growing market.

And Indian automakers hope to make up for lost time as they seek to capitalise on the rising affluence in the country.

Anand Mahindra, vice chairman, Mahindra & Mahindra, said: "If you look at the average growth rate, it would be a safe bet that the general passenger car industry would grow at a rate of 12 to 14 per cent.

"We are still not at that tipping point where China has reached clearly because their per capita GDP has outraced us over the last 10 years - but we will get there."

Other global automotive giants have caught on the industry's acceleration.

Earlier this week, for example, the Indian unit of Suzuki Motor Corp said it plans to raise manufacturing capacity by 300,000 cars a year to meet rising demand.

But Mahindra & Mahindra said to boost auto sales in the country, more needs to be done to improve its road infrastructure.

One thing seems clear and that is the future of the Indian auto industry will lie in small and eco-friendly vehicles which are seen to have good growth potential.

Mr Anand said: "If you ask me what technology is going to succeed in the near future, it is going to be the clean diesel with a light weight body because the biggest inefficiency is not the power train, it's the weight of the vehicle.

"A combination of a light weight body with a clean diesel engine is probably going to be the answer that I think will make the most sense both from a clean point of view and an economical point of view."

Mahindra & Mahindra is already working on something along these lines. It said it does have such a prototype in the works but declined to give details for competitive reasons. - CNA/vm