The Asian Auto Boom: Contrasting India and China

The first time I was in China, I was shocked at the level of interest there in premium cars, often Western brands. Sure, there were the countless knock-offs of older Western models, cheaply produced in China (my favorite reminded me of the old sudden-acceleration Audi, if you can remember back that far). But in a country where car ownership was anything but a given even for the rising middle class, consumer awareness of Buick (which was looked upon much as Mercedes has been in the West), Volkswagen, and Volvo, among others, seemed quite high indeed. In fact, it felt to me that in many provinces, larger compacts and luxury brands -- vs. bare-bones econoboxes -- dominated the roads, if not new-car sales.

In India, the case is different, even if the subcontinent is undergoing its own automotive boom. Over on the Spend Matters affiliate site MetalMiner, Stuart Burns covered how the Indian auto market is shifting into high gear, -- and what makes it different from China.

According to Stuart, "The Indian auto market is heating up, set to increase by 16% to 1.4 million vehicles this year … The Maruti 800 and Alto models have been highly popular in the mini and compact segments for cars shorter than 13' 14" (4mtrs), which accounts for three-quarters of India's car market. [And] rival Honda recently unveiled a new compact car at the Delhi Auto Expo, a 5-seat model being developed especially for India and other emerging markets called the 2CV which it will build in India … Toyota is also bringing out a new compact model, the Etios, at a price of Indian Rupees 500,000 (US$ 10,823) which sounds like a lot in a market where buyers can access the Nano at $3000."

From a Spend Management vantage point, what separates the Indian automotive market from the Chinese is simple: The Indians are driving innovation through their need to bring products to market at the most aggressive price points possible, while the Chinese are attempting to get their hands on as much Western technology as possible. When it comes to home-grown brands, I suspect that in the longer term we'll see the Chinese producers look more like the Koreans, transitioning from products known only for low price to those known as the value leaders in their segment. In contrast, India promises to be the price leader as design, manufacturing, and related automotive areas go, hopefully exporting not just its vehicular handiwork, but also the procurement and supply chain philosophy of supplier engagement that is enabling it to bring products to market at price points which are redefining the entire automotive segment.

Jason Busch

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