Value Chain Analysis Case Study

India: An Automobile Hub in the Making

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Abstract:
Forty years ago when Peter Drucker phrased the auto industry as the ‘industry of industries’, little did the carmakers know about outsourcing and technology sharing. Now, when most of the markets are brimming with competition from across the globe, carmakers had no option but to keep their costs low. In this context, Asia first emerged as a manufacturing hub with countries like India, South Korea and China becoming outsourcing destinations. The Indian context is particularly striking as the country opened its doors to foreign automakers only in 1992. After a little more than a decade, Indian automobile industry stood as a shining example of producing low-cost cars with international quality norms. From Daimler Chrysler to Ford to Hyundai, most of the global carmakers today see India as the global hub of car manufacturing and component outsourcing. Even indigenous carmakers like Tata Motors and Mahindra & Mahindra have made inroads into the global markets. Recently, Tata Motors reached an agreement with MG Rover of Britain to supply 100,000 of its 'Tata Indica' to Europe.

Pedagogical Objectives:

• To highlight Asia’s emergence as a manufacturing hub in the increasing competition and the pressure to keep the costs low
• To discuss the outsourcing in the Indian automobile Industry.

Keywords : Liberalisation; Foreign direct investment (FDI); Maruti Udyog Limited; Hyundai Motor India; Industry Analysis Case Study; Tata Motors; MG Rover; Auto ancillary industry; Original equipment manufacturers (OEMs); Export destinations; Product liability clause; Daimler Chrysler AG; Economic reforms; Outsourcing strategies; R&D gap; Delphi India