The Indian automotive industry is going to look very different in the near future.
Chinese Automakers In India
Chinese automakers, love ’em or not, you can’t deny the disruption they would cause if they arrived in the Indian market. The ongoing situation of COVID-19 and the government blocking all FDI from China without prior approval does make the situation less predictable. But let’s rewind the clocks a bit, before all of this silent chaos ensued, and see what would happen if things went according to plan for these companies, and they set up in India. That would mean, we have Changan Automobiles, Great Wall Motors looking to come to India, for now.
Before we see how our market could change, let me introduce you to a parallel that I will be referring a lot to in this article, the smartphone industry. So here’s a little story of how that industry changed when Chinese companies started taking that industry seriously in India.
An Indigenous Price To Pay For Financial Benefit- The Smartphone Market’s Transformation
Let’s say you are on the lookout for a smartphone in our market. Chances are, you would be looking at brands like Redmi, Xiaomi, Poco (All owned by Xiaomi’s parent company), or Oppo, Realme, Vivo, iQOO, or OnePlus (All owned by BBK Electronics). I have listed 8 companies there, all owned by 2 parent companies. If you think about it, all of these companies have all entered the market only recently, but have settled very nicely in the budget market.
For those in the loop with tech, remember the Samsung J5? Back in 2015, Samsung asked around Rs. 12,000/- for it. Cut to today, the Galaxy M30 is also around the same price as what the company asked for the J5 back in the day. Have a search and see for yourself how much nicer the newer one looks. Even at it’s time, the Samsung J5 was too expensive for what it offered.
Samsung was overcharging due to lack of competition, and once Xiaomi entered the chat, Samsung had to do something to stay afloat. Suddenly, you are getting flagship quality screens and battery life for a tenth of the price. While scale might play a bit into this, I think it’s because of the Chinese companies that these other companies have woken up.
But of course, there are downsides. While we are at 2015, do you remember Micromax, Lava, Intex, i-Ball? All of these companies were based in India. Unfortunately, they simply could not keep up with the aggressively low prices of the other phones. Ultimately, when these Chinese companies offer such a landslide of a deal, the origin of that company takes a backseat. That’s what happened, and now all of us are benefitting from it.
The Parallel Scenario For The Car Industry
Enough of phones let’s talk of cars. The hype surrounding the launch of the Tata Harrier was real. Finally! Tata had managed to kindle up the momentum to challenge the premium vehicles. Even the reviews and the internet response was really great. The launch of the MG Hector was relatively much more silent, with less buzz and hype. Then, MG launched the car and disclosed the pricing. As we all know after that the Tata Harrier took a solid hit from that launch of the MG Hector. This led to Tata adding more features to the car, and closing the feature gap, only to widen the cost gap.
Sounds familiar? The Chinese companies are very good at one thing, that is providing lots for little. Right from mileage to cost, our market loves that. If more companies come to India from China, we will get body styles, technology that one can only see in high-end cars. This can cause a large disruption in the market, and the Indian companies will have to take drastic measures to stay in the game.
For us consumers, getting a car would be much more easy, as there would be so many options to choose from. The cut-throat competition would also mean aggressive pricing strategies, meaning more money in our pockets. Of course, I am not talking about the super budget segment, like the Maruti Alto, or even the Hyundai Santro. India sells some of the cheapest cars available in the world, so, you can’t get better than that. My focus is in the higher segments, like the sub-4-metre SUVs, crossovers, etc. I suspect this would be the case because of MG’s Hector, and Great Wall Motor’s lineup they showcased at the 2020 Auto Expo.
As mentioned before, this is not such a good thing for the current companies. SAIC, the parent company of MG already tested the waters in the Indian market with GM, with a 7% stake. With that, SAIC and the other state-owned companies seem to have learnt the market very well in India. This could play right into their hands.
An Enthusiast’s Point Of View
I normally steer away from opinions, as they are, well biased towards one person. But I feel my feeling is shared mutually among all enthusiasts. While Chinese cars are amazing value for money, they usually lack originality. Walk into a smartphone store today, yes, you have options, lots of it. But every new day, a new brand comes out, new model. All phones look the same, under different brand names. We could be seeing something like that, but with cars. I wouldn’t mind a car that looks like a Range Rover Evoque, but costs under Rs. 25 lakhs. But the lack of a story, or a history behind that vehicle makes it an entity, an object, not something to be excited about. Basically, the opposite of Ferrari.
I keep saying Chinese companies because the industry in that region works in the way described above. They are of course not the only companies which follow this methodology. It is the keen interest of said companies following the success of MG that makes me focus on companies from that region. Chinese companies also own a lot of the international brands we dream to own one day. Geely owns Volvo, BAIC owns a stake in Koenigsegg. Of course, we have MG and SAIC. Popular bike brand Benelli is owned by the Qianjiang Group. So, the Chinese have quite a presence in the auto industry.
Objectively speaking, the influx of these brands is great for our industry and even economy in a way. But the enthusiast in me is a tad worried if the excitement of cars would drown in a sea of feature-oriented competition. So, ultimately it remains a mixed bag. If everything goes according to plan, one thing is for sure, we are going to see some serious competition with these brands.