Indian automakers are under growing pressure to scale up spends by 25-30% on R&D and new product launches. A change of habit is in
order in the face of fierce competition from global rivals looking to lure consumers with superior product innovations and cheaper, compact models in the Indian automobile market, among the last bastions of growth.
The total expenditure of the local car makers on R&D as a percentage of sales are low compared to global players such as Honda, Toyota or General Motors (GM).
With car sales in India, riding on strong economic growth and government incentives, poised to rise about 16% this year to 1.4 million vehicles, global companies such as Honda, GM, Ford, Volkswagen and Toyota have designed cars exclusively for the Indian market. At the recently-concluded Auto Expo in New Delhi, Toyota unveiled Etios, Volkswagen came out with Polo while GM launched Beat, all compact cars. Late last year, Ford rolled out small car, Figo.
Faced with a slump in many developed markets, auto majors are taking aim at the world’s fastest-growing car market after China. Even at the recent Detroit auto show, global automakers unveiled a number of hybrid gas-electric and battery-powered models. In contrast, launches of Indian companies have been few and far between. Except for Tata Motors’ Nano, few Indian models have managed to catch the world’s fancy.
And global majors did not cut investments to develop fuel-efficient cars, electric vehicles and alternate fuel technology even through the global crisis or when revenues fell, according to analysts tracking the sector. “Only those auto makers will be differentiated who spend on R&D and who address issues of the automotive industry which include climate change,” said Abdul Majeed, auto practice leader, PwC.
Revenues of Toyota dropped from $262 billion in 2007 to $209 billion in 2008, but the Japanese auto major maintained its R&D budget at $9 billion. Similarly, GM kept its R&D costs $8 billion despite revenues falling from $180 billion in 2007 to 149 billion in 2008.
Local auto companies have till date toyed with merely adapting or re-engineering products, their R&D budgets choked by falling margins and debts. “Auto companies need to spend significant amounts on R&D as customers interest cannot be sustained unless companies launch new products,” said IV Rao, managing executive officer of engineering at Maruti Suzuki.
Source : http://economictimes.indiatimes.com/news/news-by-industry/auto/automobiles/Indian-auto-cos-to-fast-track-RD/articleshow/5482299.cms
order in the face of fierce competition from global rivals looking to lure consumers with superior product innovations and cheaper, compact models in the Indian automobile market, among the last bastions of growth.
The total expenditure of the local car makers on R&D as a percentage of sales are low compared to global players such as Honda, Toyota or General Motors (GM).
With car sales in India, riding on strong economic growth and government incentives, poised to rise about 16% this year to 1.4 million vehicles, global companies such as Honda, GM, Ford, Volkswagen and Toyota have designed cars exclusively for the Indian market. At the recently-concluded Auto Expo in New Delhi, Toyota unveiled Etios, Volkswagen came out with Polo while GM launched Beat, all compact cars. Late last year, Ford rolled out small car, Figo.
Faced with a slump in many developed markets, auto majors are taking aim at the world’s fastest-growing car market after China. Even at the recent Detroit auto show, global automakers unveiled a number of hybrid gas-electric and battery-powered models. In contrast, launches of Indian companies have been few and far between. Except for Tata Motors’ Nano, few Indian models have managed to catch the world’s fancy.
And global majors did not cut investments to develop fuel-efficient cars, electric vehicles and alternate fuel technology even through the global crisis or when revenues fell, according to analysts tracking the sector. “Only those auto makers will be differentiated who spend on R&D and who address issues of the automotive industry which include climate change,” said Abdul Majeed, auto practice leader, PwC.
Revenues of Toyota dropped from $262 billion in 2007 to $209 billion in 2008, but the Japanese auto major maintained its R&D budget at $9 billion. Similarly, GM kept its R&D costs $8 billion despite revenues falling from $180 billion in 2007 to 149 billion in 2008.
Local auto companies have till date toyed with merely adapting or re-engineering products, their R&D budgets choked by falling margins and debts. “Auto companies need to spend significant amounts on R&D as customers interest cannot be sustained unless companies launch new products,” said IV Rao, managing executive officer of engineering at Maruti Suzuki.
Source : http://economictimes.indiatimes.com/news/news-by-industry/auto/automobiles/Indian-auto-cos-to-fast-track-RD/articleshow/5482299.cms
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