Foreign car makers are figuring out that not only is India Asia’s third largest automobile market, but in India vehicles can be produced at a much more inexpensive rate. And while most of India’s drivers tend to drive smaller, more compact cars because of its tight population and big cities, India and foreign car manufacturers setting up their main export hubs in India realize that the greater part of the Western world love sport utility vehicles and compact cars with sass and flair.

Both the French car manufacturer, Renault, and the Asian car manufacturer, Toyota, have already launched hubs for foreign export in India. What is so interesting is at the time when French’s Renault becomes the first Indian export base for SUVs, Toyota is hiring more workers in India and working hard to compete by producing a higher quantity of its compact car Etios and launching its other compact car Liva.

Because Renault’s SUV is smaller and reasonably priced, and Toyota’s cars are compact, they would be great vehicles for the Western world to secure low interest auto loans with easy-to-manage payments. They also allows purchasers to enjoy a vehicle that will surely retain its value better than some of the other more luxury SUVs or compact sports vehicles.

Both the SUVs and smaller compact vehicles will surely appeal to American preferences. While Americans are aware that SUVs tend to be gas guzzlers or worse for the environment, people with families tend to need more space. And for teenagers and the young alike, the visual appeal of the smaller compact cars will surely sell well for this niche market.

As Ashish Sinharoy, Vice President of Communications and Corporate Affairs for the French car manufacturer Renault of India has said, “For Renault, India is the focus market for the five cars that will be launched between May 2011 and December 2012.” The big question on everyone’s mind amongst car makers will be whether those other four cars will go against the status quo of India selling compacts. More than likely, Renault will compete with Toyota and other makers by launching a few compact cars.

And even though Toyota is focusing more on expanding its existing hub with approximately 1500 workers, the Japanese company is thinking about releasing a few SUVs to stay competitive with Renault and other foreign car manufacturers that will surely head for India to create their hubs in the future. Toyota also plans to up the production of its Etios by October just when the French’s SUV will hit the market hard.

But where is India in all of this? As the third largest car manufacturer, will India rise to its foreign competitors and produce domestic versions similar to the new SUVs and compact cars being released by foreign soil using their land to create money-making exporting hubs? Time will only tell.

2012 Renault Duster