24
Auto Monitor
INDIA-CHINA SPECIAL
1 - 15 July 2010
Contrary to perception, Chinese China leads EV charge, India may opt for niches industry is world class our existing engine, factory and product adaptation skills. Contrary to perception, the Chinese auto industry today, like Japan and Korea, has become world class. China currently sells over 10 million vehicles annually, which is more than Japan with a presence of all automotive majors like General Motors, Toyota, Volkswagen, Nissan, Peugeot, Fiat, Chrysler, and Ford, etc. In spite of our initial apprehension about dealing with a Chinese counterpart, our due diligence showed that the Chinese auto industry provided the advantages of high quality and low cost. China has become a global manufacturing hub thereby deriving huge advan-
score over their European and Japanese counterparts in their quick, flexible approach to adopt and implement new ideas. The Zotye Group has a very modern manufacturing plant and producing over 100,000 units per year and has an asset base of more than $2 billion. When we visited their Yongkong plant, spread over 1.2 million Rakesh Mehta square metres (300 acres), we found the production qualfter going through a major ity at par with any other global corporate restructuring automobi le ma nu fact u rer. phase in the last few years, Our experience with the Zotye Premier decided to re-enter the management team has been automobile market. Our key very encouraging from incepproject objective was to mitigate tion. We have found them to be the downside risk in the fiercely enthusiastic and flexible with a competitive auto market. practical, quick decision makWe have leveraged our ing approach, especially in knowledge and over 60 years resolving teething issues of experience in the auto related to production. Most of the Chinese auto business to develop our curThe initial pilot promanufacturers follow very rent strategy, which targets duction kits supplied by stringent Japanese style less competitive, niche marZotye for homologation kets to achieve profitability and testing matched our quality processes and due to a low break-even volexpectation. All the major production methods. Chinese systems and components ume, by using the globally score over their European accepted, and growing were e-mark certified, in trend of extensive outsourcand Japanese counterparts in compliance with European ing to complement in-house standards. By importtheir approach to new ideas manufacturing and asseming these components bly facilities. from Zotye, we were able Our market studies to achieve a significant revealed that the Indian reduction in investment SUV market offered a unique tages over other nations. Many costs, especially towards tooling and untapped niche opportuleading Indian auto companies and dies for various components. nity: there was no SUV that was like Mahindra, GM and Tata now Even after considering the shippriced under Rs 700,000, with a source kits and components from ping and custom duties, this fuel efficient diesel engine, ‘car’ China. outsourcing model has allowed like drivability and ideally suited During our project feasibility us to position the RIO, India’s for both city roads and off-road phase, we were pleasantly surfi rst compact diesel SUV, at a travel. We found a product that prised to fi nd that most of the lucrative price range of Rs 550,000would match these criteria with Chinese auto manufacturers folRs 605,000. the Shanghai-based Zotye Group low very stringent Japanese style (The author is Vice President – and tied-up with them to import quality processes and producMarketing, Premier) kits and components, to leverage tion methods. Moreover, Chinese
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Our Bureau New Delhi
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he Chinese auto industry’s ambition of becoming the world’s biggest developer and manufacturer of electric vehicles (EVs) got the requisite Government push, when in early 2009 it adopted a plan for global leadership in hybrid and allelectric vehicles within the next three years. By 2020, nine percent of the Chinese passenger fleet is expected to go electric. On current count, electric two-wheelers account for a staggering 77 percent of the total Chinese two-wheeler market. The Society of Manufacturers of Electric Vehicles (SMEV) estimates state that out of the 22 million two-wheelers sold in the country, 17 million are electric two-wheelers. The f lourishing domestic industry makes experts believe that the industry has enough on its plate not to venture out to the world. Yet, there is a strong presence of Chinese EVs in India. Chief Executive, Hero Electric, Sohinder Gill explained that Chinese EV presence in India is restricted to Indian traders importing those vehicles into India. ‘There is little doubt Chinese companies are getting interested in India. In fact a couple of them have set up shop in India, but with local partners. They are seemingly interested because they have seen in the past two or three years the way Chinese EVs (two-wheelers) have made a mark in India,’ he said. In India, the Government is taking proactive steps for the benefit of the industry. By the
end of this calendar year, the Central Government is expected to announce a national policy to promote electric vehicles. Seven ministries are currently undertaking a feasibility study to arrive at guidelines, which are likely to encourage research and development of EVs in India. Gill is of the opinion that it won’t be easy for companies to enter India, especially for EVs. ‘They’ll have to go through the technology or investment route,’ he said, explaining that integrators in China are small players and do not have the muscle power to go offshore yet. But how are Indian EV players reacting to the congenial atmosphere being created? In the four-wheeler EV space, Reva Electric Car (RECC) has been sole ranger for many years. Mahindra and Mahindra’s (M&M) recent 55 percent stake acquisition in RECC lays a fi rm foundation for an electric future. Unfortunately, many experts and analysts believe, the Indian industry would continue to play the wait and watch game for many years to come. In terms of batteries, motors, chargers and controllers, there still is a huge gap between the volumes Indian players can produce as against their Chinese counterparts. Moreover, India today is not even thinking about lithium-ion batteries, while China is taking a huge leap forward and investing billions on basic R&D and production of lithium-ion batteries. India, however, has the potential to build an industry on speciality, niche EVs targeting the needs of the leisure and entertainment businesses, besides practical applications.