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India, China rising as car consuming nations: report

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The rise of China and India as car consuming countries and fall of major US automakers last year are candid reflections of the restructuring of the global auto industry, a Congressional report has said.

 

"GM's (General Motor) fall from being the undisputed largest car company in the world to No 2 status and the rise of China and India as car-consuming nations illustrate the restructuring that is taking place in the global motor vehicle industry," said the report prepared by the Congressional Research Service – an independent bipartisan research wing of the US Congress.

The 72-page report 'The US Motor Vehicle Industry: Confronting a New Dynamic in the Global Economy' takes note of the purchase of Jaguar and Land Rover by the Tatas last year and also the successful launching of its Nano brand – the cheapest car in the world – which according to the CRS report has the potential to storm the world as it gradually starts exporting outside India.

"The Indian subcontinent is entering a new, more robust investment stage for auto manufacturing," said the report, dated March 26.

The CRS quoted a recent report, according to which India's exports of automobiles have surged as global automakers turn the country into a production hub for compact cars. A host of companies such as Suzuki, Ford, and Toyota plan to spend millions of dollars in the coming years to build auto plants in India.

Noting that Ford Motor had announced that it will build a new model, the Figo, in India for the Indian, Asia-Pacific, and African market, the CRS said, "The company announced in September 2009 that it would invest $500 million to double its production capacity to 200,000 units a year," it said.

"Indian automaker Tata is a highly diversified Indian conglomerate with global dimensions. Tata owns two UK-based luxury carmakers, Jaguar and Land Rover, which it purchased from Ford Motor. Tata Motors launched the Nano in India in 2009, at $2,500, it is the world's cheapest car," it said.

"The Nano has already passed European safety crash testing and is set to go on sale in Nigeria in 2010, in Europe for about $8,000 in 2011, and in the US in 2012," it added.

Reva Electric Car is an entrepreneurial venture between Maini Group of India and AEV Llc of California, which are backed by US investors, including General Motors. Reva is selling a small electric car in 22 countries worldwide for about $6,000, the report said.

Looking forward, the report said European automakers forecast a flat market in 2010, with foreign markets, such as China and India offsetting much lower demand in Europe.