A brief history of the Indian automobile industry

Monday 09 December 2013, 09:34 AM by

The Indian automobile market is one of the largest in the world, both in terms of sales volume and production. Talking about historical roots of the car market in India, the first time that a vehicle came on road was in 1897. Till 1930, India did not have any manufacturing facility and cars were imported directly from other countries. The landmark decade in the manufacturing process was that of 1940s, in which Indian companies like Hindustan Motors and Premier started to manufacture cars of other firms. During the same decade, Mahindra & Mahindra also started to produce utility vehicles.

A brief history of the Indian automobile industry | CarTrade.com
A brief history of the Indian automobile industry

Soon after independence 1947, Government of India tried to create an automotive component manufacturing industry in order to supplement the automobile fraternity. From 1960 to 1980s, the Indian market was dominated by Hindustan Motors, which gathered a large amount of share due to its Ambassador model. However, during 1950s till 1960s, the overall industry moved at a slow pace due to trade restrictions set on imports. Soon after this repressive phase, demand surged but to a smaller extent, which was mainly seen in the tractor and commercial vehicles segment.

It was in 1980s that the two firms, Hindustan Motors and Premier, were challenged by a new entrant, Maruti Udyog Limited. Soon after liberalisation period, car makers that were previously not allowed to invest in Indian market due to stringent policies arrived in the country. Post liberalisation, the alliance between Maruti and Suzuki was the first joint venture between an Indian company and foreign one. Slowly and steadily, the economic reforms brought in the led to the entry of major foreign companies like Hyundai and Honda, which expanded their bases to the country. From 2000 to 2010, almost every major car company expanded its presence to India by establishing manufacturing facilities across different parts of the country.

As the manufacturing process during early 2000 decade gained traction, exports of cars was quite slow in that period. Maruti Suzuki was among the first car brands that started shipping vehicles to major European markets. During the same decade, the Government of India introduced mandatory emission norms in order to reduce pollution arising out from vehicles. The updated guidelines were known as 'Bharat Stage' came into effect in major cities as these standards were based on stringent European norms. At present, Bharat Stage IV is implemented in 13 cities that include Delhi (NCR), Mumbai, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad, Pune, Surat, Kanpur, Lucknow, Solapur, and Agra while the rest of the nation is still under Bharat Stage III.

Over the years, the car market in India has evolved by leaps and bounds as almost all major companies are present in the country. India has now become a hub for auto makers to set up their plants for manufacturing vehicles intended for domestic and international markets. The three prominent regions in which the majority of Indian car industry is concentrated lies in south, west and north. In the southern region, Chennai is the hub for manufacturing vehicles while Mumbai and Pune belt comes in second place. For the north, the NCR holds a fair share as far as concentration of production facilities is concerned.

To list a few commendable feats of the Indian car industry, it emerged as the fourth largest exporter of passenger cars behind Japan, South Korea, and Thailand in 2009. While in 2010, India emulated its previous year's performance to become the third largest exporter of cars in Asia. The biggest reward came for the Indian car market in 2011 as it became the sixth largest country in the world in terms of production.