India Looms As Global Manufacturing Cradle For Small Cars


To many Americans, India is just another one of those countries with LOTS of people in the general vicinity of China where they sometimes get routed when they call customer support with questions about why the new HP they just bought won’t turn on.

And that’s a shame, really, because India has so much to offer. From excellent food to the funky movie scene, India has some pretty great stuff. And now we can add another bean to India’s basket — the country has been stealthily gaining a reputation with auto manufacturers as the place to build fuel-efficient, small cars for export to the rest of the world.

Already known for producing such cars as the Tata Nano — one of the world’s cheapest, smallest and most fuel-efficient cars — India has a head start in small car reputation from start-up car companies.

But now, with large companies such as Ford, Hyundai, Suzuki, Toyota, and GM claiming Indian manufacturing territory the game is changing. The focus of these manufacturers has shifted to developing small cars for a world that is increasingly concerned with climate change and environmental impact, and India has found itself in the sweet spot of being in the right place at the right time.

Ironically, India has a relatively small domestic car market itself — even though it has 1.1 billion people it only sold about 1.5 million cars last year — due to the lack of funds that most Indians live with. Yet, because of the ease of sourcing components in India versus other cheap labor countries in the area such as China, India is winning the game of wooing manufacturers.

Personally, I like that auto manufacturers are drastically shifting their focus to small cars as a viable transportation method. But what I don’t like is the wage disparity that creates a situation where the Indians who are manufacturing these cars for the world can’t afford them themselves. Ultimately what these companies are saying is that in order to make small cars affordable, profitable and competitive, they need to use cheap labor and ship them all around the world.

To me, the idea of shipping any major commodity all around the world just doesn’t make any sense. Don’t get me wrong, I know that from a business standpoint it makes lots of sense, but what I’m saying is that it’s not sustainable. I’d rather pay more to know that the product I’m buying was made locally (even just in my own country) and didn’t use the same amount of energy to get the thing to my doorstep as it did to make it.

That way I’m doing my part to keep my fellow citizens employed and ensure that they make a decent salary while simultaneously taking care of the environment.

Source: Reuters

Image Credit: Stuti ~ Flickr photostream. Used under a Creative Commons License.

Nick Chambers

Not your traditional car guy.