Think-tanks bet on Tata to win car-rollout race

Seen passing Maruti as India’s largest producer in 2-3 years

NEW DELHI: If projections by two independent think-tanks are any indication, the pecking order in the Indian car market is heading for a shake-up.

A caveat’s due straightaway: The hypothesis presumes success of Tata’s Rs 1 lakh car.

If Tata gets it right, it could eventually displace market leader Maruti Suzuki as the top car maker in India.
The projection emerges from data complied by two think-tanks — Global Insight and CSM Worldwide.

Sceptics, however, point out that projections based on Tata’s low-cost car’s success do not take into account a potentially changed car market scenario in 2010 and beyond, when many other manufacturers may also offer such products.

Let’s first take the Global Insight data, which projects that 53,490 units of the micro car (the Rs 1 lakh car) would be produced in the first year (2008), but this would be scaled up to 3,74,373 units in the second year itself.
By 2010, 5,22,342 units of the micro car would be made and sold by Tata Motors.

So, together with the existing Indica and Indigo family cars, Tata Motors would be making a total of 8,09,488 cars by 2010.

By that year, Maruti is projected to make only 7,10,971 units (this projection takes into account only vehicles that are classified as cars (not SUVs such as Gypsy and Grand Vitara in Maruti’s case).

Together with the assembly Maruti is slated to do for Nissan, its production by 2010 would go up to only 7,81,467 units, so that the supremacy of Tata Motors from 2010 onwards is in no doubt, according to Global Insight.

But Maruti does not agree with these projections. A company spokesperson told DNA Money: “You are very well aware that we have publicly announced doing a million units by 2010.

How come this analysis is not even considering the company’s public announcement and shows Maruti production at 7,81,467 units? What does one do with an analysis that chooses to ignore corporate messages?”
When contacted, Tata Motors declined to comment on these projections.

But industry experts point out that, as of now, Tata Motors is creating only  an installed capacity of 3,50,000 at Singur. Of this, only 1 lakh units would be available initially.

So, the Global Insight projection of beyond 5 lakh units by 2010 for the micro car would be valid only if the company begins production at other sites as well.

CSM Worldwide, another independent researcher, also appears to agree with what Maruti has to say about its production capacity in 2010.

According to CSM, Maruti would touch the million mark (all products, including the SUVs) by 2010 and breach the 1.1 million mark in 2012 but would remain almost flat next year.      Turn to Page 29

Think-tanks bet on Tata to win car-rollout race

On the other hand, Tata Motors would zoom past it to beyond 1.15 million units in 2013 (cars and what are known as LCVs in the US market).

Therefore, CSM is also projecting a scenario similar to Global Insight, even though projections by the two agencies vary widely and the overtaking by Tata Motors would happen only by 2013.

However, an analyst with a reputed research firm says it is very difficult for anyone to accurately predict the market scenario three-four years down the line.

“What product strategy Maruti Suzuki would have by 2010 and beyond is not clear still. It could very well become a low-cost car maker itself. Then, Renault has already said it would be making a $3,000 car for India……..all these possibilities need to be built into the data for it to give us a clear picture.”

As per CSM’s projections, Hyundai Motor India would remain below the 0.7 million unit mark till 2013, but the Renault Nissan combine would become the fourth largest car maker with a little over 0.4 million units by that year.

According to projections by the Society of Indian Automobile Manufacturers (SIAM), the domestic car market would be 2 million vehicles by the turn of the decade and 3 million by 2015.