'India to be car manufacturing hub'

Nissan’s move to shift its small car production to India points to the growing importance of India in small car manufacturing, which was initiated by the government by way of lower
manufacturing tax (excise duty) on them.

The rising scale of small car production in India also sweetens the deal in favour of the country as component makers have improved on quality and scale, making them a safe and a reliable bet.

Lower wages in the market, along with relatively high engineering skills, is another big advantage that attracts companies. Korean carmaker Hyundai was perhaps the first company to have realised the benefits as it shifted the production of its entire small car portfolio to India. These include models like i20, i10, Getz and the Santro, all of which make their way to Europe.




Maruti Suzuki is the other carmaker to be focusing on this, and has started the manufacture of export-intensive model like A-Star exclusively in India that is also retailed across Europe. In fact, Nissan buys the A-Star from Maruti and sells it in Europe, after badging it the Pixo.










Other companies catching on the trend include Toyota, Ford and General Motors, all of which have said they would manufacture small cars in Indian factories not only for the domestic market but also for overseas regions. Analysts said the presence of a large domestic market is among the first attractions for companies looking for a big manufacturing operation in India as it helps them go in for a big scale in terms of production volumes. Also, the fact that India is among the very few markets that is registering healthy growth—apart from China—is another reason that companies want their operations here to be strong.


“India will be a very important market for us in the coming years and emerge as a strategic production hub for Nissan globally,’’ Tokuyama said. Nissan looks to have a 6% market share over the next three years by when it plans to make five models locally and import four others.