Japan's automakers eye the subcontinent

Posted by: Ian Rowley on February 14, 2006

imv_minivan.jpg
Not content with a growing foothold in North America, Japan’s automakers are also showing increased attention on the Indian subcontinent. Last Thursday, the Nihon Keizai Shimbun reported that Nissan is planning to spend around $1 billion to produce 600,000 cars a year by 2009 in the so-called BRICs coutries of Brazil, Russia, India and China. Nissan, which doesn’t confirm the story, is also reported to be considering using excess capacity at plants operated by its largest shareholder Renault of France, which has a 44% in the Japanese automaker and, in Carlos Ghosn, the same CEO. The Nikkei adds that development of a one liter, $10,000 car is underway. The following day Toyota CEO Katsuaki Watanabe told reporters in Nagoya that Toyota plans to building a plant in Pakistan to help meeting demand for its IMV project (see Toyota’s IMV minivan above), which makes vehicles for sale in 70 emerging markets. IMV sales are expected to rise to 700,000 this year from 460,000 in 2005 so the extra capacity is certainly needed. Pakistan will be the tenth emerging market country to produce cars as part of the IMV project.

Whatever they decide, Toyota will hope its plans for Pakistan go smoother than recent events at a joint venture in neighboring India. After 27 members of the Toyota Kirloskar Motor Employees Union were suspended following a ten-day strike in January, some employees reportedly went on hunger strike and on February 6 and are planning a march in March. Toyota admits there have been problems but says things are getting back to normal. Of course, it isn’t alone in having labor problems in India. Last July, a strike at Honda Motorcycles and Scooters India cost an estimated $57 million. Worse, disgruntled workers were involved in running battles with the police in New Delhi. Not that Honda has been put off—Honda Siel Cars, its manufacturing and distribution operation in India, said in December it plans to double annual production to 100,000 by 2010. The unions might be a pain, but South Asia is firmly on the radar of Japan’s auto giants.

Reader Comments

Prashanth

September 22, 2006 1:53 AM

Not just Japanese automakers, every automaker interested in increasing sales is looking at the Indian market with a keen eye. Toyota and Honda are selling Camrys, Corollas, Accords, Civics at huge markups to their American/Japanese prices and in fact have waiting lists.

As to labor issues, I guess this is true of any market and not limited to India. One aspect you might be interested in is the quality of the products these companies produce which are on par with the ones produced at the mother plant in Japan.

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