Innovation and new product launches are a major factor driving growth in sales of cars. Maruti has been able to beat the industry in terms of growth on the back of a wide range of models, new product launches and introduction of new variants to existing models. A wide distribution & service station network is a key to growth in India. Maruti has managed well on this front. Tata Motors’ 1 lakh car is expected to hit the markets soon. Rising prices of metals and consequent pressure on input costs remains an area of concern. But Indian auto makers have been able to pass on the rise, till date, to the end users. Ability to pass on such input cost hikes in the future remains critical to the industry’s survival. However, as interest rates are expected to have peaked in India, the automobile sector is expected to witness strong growth in the growth in the Indian automotive industry and improve its share in global markets too.

Growing demand for low-cost vehicles in developing countries like China and India are driving the sales of passenger cars. This offers immense opportunities for global players in these economies. Besides this, saturating markets in the developed countries and increasing preference for used cars are the major problems in developed automobile markets which force them to look into emerging economies. From the long-term perspective too, just cheap financing and price discounts will not drive the developed markets because they do not create demand. China and Russia are already experiencing a boom phase in their auto industry. The auto sales volume in Chinese market has exceeded 7 million units during the April 2007 to Nov 2007 period, recording an overall growth of more than 20% over the same period a year ago. It is expected that auto production and sales for the year 2007-08 will surpass 9 million units. This makes China the second largest auto market in the world. Under the premise that other big markets are shrinking and new markets are growing slowly, all the auto manufacturers in the world will naturally keep their eyes on the fast-growing Chinese market.
 
UPCOMING PROJECTS
GM plans to increase its ‘Spark’ mini car production in India to 30,000 - 35,000 units in 2008 from the current levels of 17,000 - 18,000 units. Honda has plans to set up a manufacturing unit in Rajasthan at a cost of around US$ 250m with a capacity to produce 60,000 cars in the initial phase.  BMW is chalking out expansion plans in India. The company is considering importing and launching more brands in India like the 3-series Convertible and Coupe and the new X6 hybrid concept. Volkswagen has revealed its plans for India, including a wide range of models, from small cars to super-luxurious cars. Volvo has tied up with Eicher Motors to market its trucks in India. Hero group of India has also tied up with global auto major Daimler to manufacture vehicles in India.