sortiwa
[ad_1]
At least half-a-dozen Chinese vehicle makers are expected to pump in about $5 billion over the next 3-5 years along with their vendor-partners to make inroads into the Indian market as their local market staggers. While MG Motor and BYD continue to invest in India, the likes of Great Wall Motors, Changan and Beiqi Foton are slated to commit investments in local manufacturing.
Big players like Geely and Chery scout for opportunities to include India in their global scheme.
MG Motor plans its second round of investment and BYD has decided to venture beyond buses to electric vans. Great Wall and Changan, which have studied the Indian market for the last 2-3 years, have set up liaison offices and are working towards local manufacturing.
A full-fledged local manufacturing facility would entail an investment of over a billion dollars.
Sinotruk – a China National Heavy-duty Truck Group (CNHTC) company owned by MAN Trucks with 25% equity — and Mumbai-based Tonly have been trying to create a space for themselves in the Half a dozen Chinese cos to invest about $5 b in India at a time when other firms are deferring investment commercial vehicle business gradually even as Beiqi Foton enters the electric bus market through a technical tie-up with North India-based PMI.
Foton has land acquired in Chakan, near Pune, and carried out numerous studies for its local play blueprint.
Weichai, which makes engine for gensets and other stationery applications out of Pune, plans to enter the automotive space as India migrates to higher horse-power engines.
Amit Kaushik, managing director at consultancy firm Urban Science, said low car petednetration and declining size of the home market offer a great opportunity to Chinese automakers in India.
“Chinese automakers have the capacity to challenge the dominance of market leaders on the back of economies of scale and they already have an edge with the electric vehicle technology that fits well into the Indian government’s vision to become a key global base for electrification,” he said.
Analysts believe that valuebased pricing of products, as MG Motor did, would help Chinese passenger carmakers to gain market share in India – much like what happened in case of smartphones. Despite a lot of reservation against buying a Chinese mobile, they gained 66% of the Indian smartphone market in the first quarter of 2019 following their value offering.
Gaurav Vangal, country lead for production forecasting at IHS Markit, said MG Motor has set a sound benchmark for other Chinese companies to make inroads in India by adopting a formula of “offering more value to customers at a lesser price”.
The Indian passenger car market has a revenue size of $38 billion, which recorded a compounded annual growth rate of 8.7% between 2008 and 2018 and the average return on equity has been 11-33%.
Moreover, the household penetration of cars is just 7% as against 30% in China and 46% in Thailand. Anything below 20% is seen as pre-motorisation stage by auto giants.
The total installed base for carmakers in India doubled in the last 10 years to reach 66 lakh units at end of 2018 and the average capacity utilisation of a carmaker is pegged at 60%. Capital expenditure by major listed companies in India has been Rs 3.5 lakh crore in the last 10 years and the average yearly run rate has been Rs 32,000 crore, according to Bloomberg data compiled by ETIG.
[ad_2]
Source link
