Will Entry of Chinese Carmakers Provide the Impact India Tire Market Needs?

China’s entry into the India’s fast-growing automobile industry may have positive ramifications for India tire market

China has been one of the greatest success stories seen by the automobile industry over the past two decades. The country has seen stupendous growth, where, in 2008, the automobile production was just over 9 million units, to over 28 million in 2017. India, vigorously trying to boost its ‘Make in India’ program, is trying out the Chinese model of increasing FDI, curbing imports and boosting local production. Some differences exist, obviously, but the model seems similar. TechSci experts evaluate the various scenarios and the impact on various subsectors such as that of the India tire market.

The State of the Indian Automobile Industry

Out of the $278 million Chinese FDI that entered India in 2016-17, around 60% was directed towards the automotive sector. This is not an outlier, but part of an overall trend. India has slowly and quietly established itself as a manufacturing hub for automotive companies such as Hyundai, Nissan, Toyota, Volkswagen, Maruti Suzuki, etc. This data can also be borne out with data produced by TechSci Research which suggests that total vehicle production increased from 4.17 million units in 2012 to 4.49 million units by 2016. Subsectors that supplement the industry, such as the India tire market, are also generating revenue and employment due to the country’s strong automobile sector.

In spite of the positives, India ranks a dismal sixth in terms of passenger car production, behind China, Japan, Germany, US and South Korea. Closing the gap would require a huge push, which is what Chinese automakers are relying on.