In less than two decades, Chennai has emerged as the second most important hub for the automobile sector in India, competing with the Pune-Pimpri region in Maharashtra.
Recent investment announcements prove that the third wave of automobile investments in the country is shared by these two states.
At present, roughly 23 per cent of the cars produced in India comes from Chennai and 15 per cent of the trucks and two-wheelers are from Chennai and Hosur.
The National Capital Region (Delhi-Noida-Gurgaon) continues to be an important centre for the automotive industry, thanks to car market leader Maruti Suzuki and two-wheeler leader Hero Honda having their base there.
The auto industry witnessed its first round of investments in the post-Independence era when Nehruvian industrial policies identified Mumbai, Chennai and Kolkata as the three automotive centres.
Chennai-based historian and author S Muthiah recollects how Jawaharlal Nehru, country's first prime minister, wanted only one automotive company in each of these three port cities.
Premier Automobiles in Chennai, Hindustan Motors in Kolkata and Standard Motors in Chennai. Interestingly, two of these have ceased to exist and Hindustan Motors remains a fringe player in the 1.5 million-unit Indian car market.
Also, due to lower demand for trucks, only two manufacturers were allowed to operate in the country – Tata Motors in Mumbai and Ashok Leyland in Chennai.
The second wave started with the Japanese and American automotive giants in the mid 80s to the 90s. This was when Suzuki (with Maruti) and Ford Motor (with Mahindra & Mahindra) arrived in India. Successive governments in Tamil Nadu ensured that Chennai did not lag behind in attracting automotive investments.
Apart from Ford India, the city today has South Korea’s Hyundai Motor, Nissan-Renault, BMW and the Hero-Daimler’s truck project. Of course, traditional players from here like Ashok Leyland, India's second largest truck maker, and the third largest two-wheeler company TVS Motors continue to flourish.
Dilip Chenoy, director general of Society of Indian Automobile Manufacture (Siam), contends that the entry of luxury car maker BMW in Chennai marks the beginning of the third wave of automotive investments in the country.
“Chennai has a historical relevance in the automotive industry in India. Component hubs first came to Chennai and then Royal Enfield and Ashok Leyland then Ashok Motors were set up. These investments acted as a tremendous catalyst for automotive industry to flourish in the country,” he says.
He also believes that in more than one way, Chennai has certain inherent advantages that can propel it ahead of other centres like Mumbai.
“Some of the recent investment in the automotive sector came to Chennai only because Maharashtra was running out of land. To continue making strides in the automotive industry, Tamil Nadu must address the power and other infrastructure issues,” Chenoy opines.
The city has also emerged as a major centre of associated developments in the automotive space. The city is the southern centre for the automotive centre of excellence initiated by National Automotive Testing and R&D Infrastructure Project.
Of the Rs 30,000 crore fresh investments expected in the state in 2008-09, nearly 50 per cent would be in the automobile and auto parts industries.
