Once the pride of the British Raj mainly for its educational, medical and business institutions, Chennai, formerly known as Madras, is today fast becoming the Detroit of India. Here, Matrix takes a look at some of the city’s auto majors and their contributions to its development.
Chennai’s recent growth in the automobile sector has been phenomenal. More than $7 billion has been invested in the city’s automobile industry since 2006, making it the largest automobile hub in the country, leaving Pune and Delhi — the traditional automobile centres — far behind. To get an idea of the growth, Chennai accounts for 25 per cent of total sales of passenger cars in the country, 32 per cent of production and a 69 per cent of exports.
What makes Chennai attractive to auto manufacturers?
“It is the incentives offered by the Tamil Nadu government, coupled with an established auto ancillary hub, availability of skilled manpower and immediate access to a port that continues to attract investment to the region,” says Kapil Arora, Head of automotive practice at Ernst & Young.
While Chennai has had an ecosystem of component makers since the 1950s, thanks to the likes of Ashok Leyland and TVS Motors, the city’s booming auto sector is also home to several new entrepreneurs. With the growth of automobile giants Hyundai and Ford in Chennai, these ancillary industries have prospered and grown to several crores in sales.
Auto component manufacturers like Visteon, Delphi produce more than 25% of their components here. Also, the government recently set up one of the biggest R&D centres in the automotive sector, here. The story goes back to the days immediately after Independence, when entrepreneurs sowed the seeds for auto components.
The TVS, Amalgamations and Rane groups were among those who led the way in the development of a strong vendor base to support automobile manufacturers in India and abroad. This vendor base and Chennai’s seaport were major attractions when the auto sector was opened up for foreign investment in the state.
(Based on a Business world feature)
Detroit of India
This Indian port city, built around a former British fort, in many ways resembles Detroit circa 1910. The metropolis of about fi ve million people is booming as scores of international car makers and suppliers have set up shop. Ford Motor Co., Hyundai Motor Co., Nissan Motor Co., Renault SA, Daimler AG and BMW AG−all have converged here.
They are spending billions of dollars to make Chennai one of the world’s biggest hubs of small cars for export as well as for increasingly affl uent Indians. Soon, the city will turn out close to 1.5 million vehicles a year, more than any one U.S. state made last year.
Car-parts suppliers also are placing big bets on the city, formerly known as Madras. Tire company Michelin SA and window maker Saint-Gobain SA, both of France, are setting up some of their biggest factories globally in Chennai. Germany’s Daimler, meantime, is building a multimillion-dollar test track. All the investment has generated jobs for more than 200,000 people and accounts for 12% of the economic output of the state of Tamil Nadu. (The Wall Street Journal in July 2010)
Ford India
Ford Motor Company announced in May 2011 that it would invest an additional $72 million in India to expand capacity at its engine plant in Chennai. The expansion has become necessary following the brisk sales of Ford’s small car Figo in the Indian market. The engine plant feeds not just India but also select export markets.
Thanks to the new investment, capacity at the Chennai engine plant will go up from 250,000 to 330,000 units per year, an additional output of 80,000 diesel engines. A third production shift at the engine assembly plant will create more than 300 new direct jobs at the Chennai plant. The expansion is due to be completed by mid-2012. This latest tranche will bring Ford’s total investment in India to over $1 billion. Chennaibest.com
Hyundai India
Hyundai Motor India Limited (HMIL), a wholly owned subsidiary of Hyundai Motor Company (HMC), South Korea, is the largest passenger car exporter and the second largest car manufacturer in India. HMIL markets 7 models of passenger cars across segments.
Hyundai Motor’s state-of-the-art manufacturing plant near Chennai boasts of some of the most advanced production, quality and testing capabilities in the country. To cater to rising demand, HMIL commissioned its second plant in February 2008, which produces an additional 300,000 units per annum, raising HMIL’s total production capacity to 600,000 units per annum.
As HMC’s global export hub for compact cars, HMIL is the fi rst automotive company in India to achieve the export of 10 lakh cars in just over a decade. HMIL currently exports cars to more than 115 countries across EU, Africa, Middle East, Latin America and Asia Pacifi c. It has been the number one exporter of passenger cars of the country for the sixth year in a row. HMIL has a 327 strong dealer network and 690 strong service points across India, which will see further expansion in 2011.
Hyundai India website
Daimler India
The market for commercial vehicles in India is set to see new action as Daimler, the world’s biggest truck maker by sales, unveiled an all-new brand “BharatBenz” as it invested Rs 4,400 crore for a factory here, near Chennai.
Daimler joins other global biggies like Sweden’s Volvo, Germany’s Man and America’s Navistar, all of whom have already set foot in the Indian market. Daimler, the world’s largest manufacturer of medium- and heavy-duty trucks above 6 tons, unveiled its exclusive new brand of trucks for the Indian market. The brand BharatBenz will offer Indian customers an entire range of trucks from 6 to 49 tons across various applications.
Dr Dieter Zetsche, Chairman of the Board of Management of Daimler AG & Head of Mercedes-Benz Cars, Andreas Renschler, Head of Daimler Trucks and Daimler Buses; and Marc Llistosella, Managing Director and CEO of Daimler India Commercial Vehicles, unveiled the BharatBenz brand at the production location in Oragadam, near Chennai. “We are sending a clear message with our new truck brand: Daimler is at home in India. Our BharatBenz trucks are the right combination of Daimler’s DNA and India’s market know-how. These trucks will be developed and built in India, for India, and by specialist employees from India,” said Dr Zetsche. Times of India and Daimler India website
Renault India
Renault India’s manufacturing plant in Chennai for making engines will begin operations by April 2012. These engines are part of the company’s localisation process for their small new hatchback.
This car is scheduled to hit Indian markets in January, and is an India specifi c car, which will not be produced in another market.This car will compete in the same space as VW Polo and Maruti Swift. According to the company’s VP-Marketing and Sales, Len Curran, the engine facility will be launched and be operational by April. He added that the facility would have an installed capacity of more than 100,000 engines a year.The forthcoming hatchback from Renault is developed on the V-platform and will be available in both diesel and petrol variants. This car will be among three products that Renault plans to launch next year, marking the start of more serious manufacturing in India. www.indiandrives.com
Nissan India
Nissan Motor India began production of the Sunny sedan at the Oragadam plant in August 2011. This is Nissan’s second car to be completely made in India and the second car to roll out of the V-Platform. 85% of the vehicle is localised, out of which 40% is sourced from Chennai.
This promises a low price, a key factor if the Sunny has to succeed. Nissan is pitching the Sunny to young families. It offers plenty of rear seat comfort and an additional AC vent. indianautosblog.com
BMW India
The BMW Plant, Chennai, has increased its production capacity to 11,000 units per year, and the number of employees to over 650. Up to 1200 additional jobs will be created in the BMW India dealer and service network.
Dr Andreas Schaaf, President, BMW India, said,“Thefi rst-generation BMW X3 was the pioneer in its segment. We are confi dent that the second generation BMW X3 will inherit the position of its predecessor as the benchmark and will strengthen it further. The launch of the new BMW X3 is a signifi cant milestone in our growth strategy in India and will beyond doubt accelerate the luxurious and dynamic characteristic of the brand.” “With the new BMW X3, we make a clear statement. The new BMW X3 is elegant like a true
BMW and spacious like no other car in the segment. The enhanced agility, optimised driving comfort and innovative equipment options in the new BMW X3 are designed not just to drive but to live the road, feel every bend and master every terrain.” Dr Schaaf, added. indianautosblog.com
Company |
Description |
Ashok Leyland |
Ashok Leyland is a commercial vehicle manufacturing company based in Chennai, India. In 1948, Ashok Motors was set up in what was then Madras, for the assembly of Austin cars. The Company’s name changed soon with equity participation by British Leyland and Ashok Leyland commenced manufacture of commercial vehicles in 1955. Ashok Leyland has six manufacturing plants: a plant at Ennore near Chennai, two plants at Hosur (called Hosur I and Hosur II, along with a press shop), and the assembly plants at Alwar and Bhandara. |
BMW |
BMW is a manufacturer of sport sedans. BMW enjoys good brand recognition in India. It has set up a plant in Chennai, Tamil Nadu, to manufacture cars locally exclusively for the local market with no plans for export. It set up the plant to circumvent high import duties. The BMW plant capacity is 10,000 per annum. |
Caparo |
Caparo Forge has a plant in Sriperumbudur, Chennai. |
Daimler |
Daimler is establishing a plant in Oragadam, Chennai, to produce trucks to cater to the Indian market. The plant will have an initial production capacity of 36,000 vehicles a year. |
Ford |
Ford entered India in collaboration with Mahindra & Mahindra in 1995 with a plant in Tamil Nadu. The fi rst model was the Escort. In 2009, Ford invested $500 million to increase its capacity to 200,000 cars per annum. |
Hindustan Motors |
Hindustan Motors has a plant in Tiruvallur, Chennai. |
Hyundai |
Hyundai entered India in 1996 and in 1998 launched Santro. Santro’s original arch rival was the Maruti Zen. Now Hyundai has a good market share primarily because of its entry-level small cars Santro and i10. In addition to its plant in Sriperumbudur, it set up a second plant thereby raising its total capacity to 600,000 cars per annum. |
Mitsubishi |
Mitsubishi entered India in 1998 as a part of its global expansion programme. It has a manufacturing facility in Chennai with technical collaboration with Hindustan Motors. Mitsubishi’s plant in Chennai has a capacity of 6,000 cars per annum, which will increase to 24,000 cars per annum in a few years. |
Nissan |
Nissan entered India in 2005. It is currently setting up a full-scale manufacturing plant at Oragadam situated about 45 km from Chennai. The plant will have a capacity of 200,000 cars per annum. It plans to introduce new models in India in the coming months including its small car. |
Renault |
Renault entered India in 2007 as a Joint venture with Mahindra. It is setting up a full-scale manufacturing plant at Oragadam situated about 45 km from Chennai. The plant will have a capacity of 200,000 cars per annum. It plans to introduce many new models in India, particularly to attract small car buyers. |
Royal Enfi eld |
Royal Enfi eld is a motorcycle manufacturer based in UK. It has a plant in Chennai. |
TAFE Tractors |
TAFE Tractors has a plant in Sembium, Chennai |
More auto and auto component manufacturers in the Chennai region. |
• Bharat Forge |