Automotive News - January 28, 2008 - (Page 42) 42 • JANUARY 28, 2008 The Russia, India, China panel Sanjay Rishi Title: Global automotive industry leader Company: IBM Global Business Services Main point: India’s auto industry faces hurdles in its effort to export autos. Quote: “India hopes to export 30 percent of its production, but the port capacity can clearly impede those ambitions.” Chris Lacey Title: Executive director, central and eastern Europe Company: General Motors Main point: Russia and eastern Europe are established, growing and becoming more developed. Quote: “Can we, as an industry, stop calling these markets emerging? They have emerged. They’re growth and they’re opportunity markets. And if we forget that or ignore that, it will be at our peril.” Jim Hudak Title: Vice president, sales and engineering, Asia-Pacific Company: Metaldyne Main point: Emerging automakers are seeking fast-moving suppliers that can adapt to new ways of doing business. Quote: “Generalizations don’t have any place in today’s global marketplace. There’s no ‘Asia Inc.’ Business is done differently in each country and with each customer.” Pawan Goenka Title: President (automotive sector) and member of the Group Management Board Company: Mahindra & Mahindra Main point: Although the tiny Tata Nano car won’t be exported to North America, the global auto industry cannot ignore it — or India’s budding exporters. Quote: “If they can make a $2,500 car, sooner or later, they can make (an American car) for $10,000.” Photos by Glenn Triest Panel: Adapt to ways in Russia, India, China James B. Treece jtreece@crain.com based auto supplier Asahi Tec Corp. DETROIT — Growing markets in India, Russia and China offer huge opportunities to automotive companies that can adapt to new ways of doing business and that choose their partners carefully. For instance, automakers can’t afford to copy Japanese carmakers, which grew overseas with their keiretsu or preferred suppliers. Automakers seeking to grow in major emerging markets “want to go much more quickly and will not wait for their local supply base to grow with them,” said Jim Hudak, Metaldyne’s vice president of sales and engineering in the Asia-Pacific region. Hudak was part of a panel on Russia, India and China at the Automotive News World Congress here last week. Metaldyne, of suburban Detroit, is a subsidiary of the Japan- No ‘Asia Inc.’ To become a global partner, Hudak said, suppliers must understand cultures and corporate strategies and how they differ from the way business is done in the United States — or in Japan. “Generalizations don’t have any place in today’s global marketplace,” he said. “There’s no ‘Asia Inc.’ Business is done differently in each country and with each customer.” In eastern Europe and Russia, finding the right dealer partners is a major challenge for General Motors, said Chris Lacey, GM’s executive director for central and eastern Europe. Lacey noted that 20 years ago, selling cars privately was illegal in many of the markets he now oversees — his territory includes Russia, Uzbekistan and Poland. In those countries, buy- ers previously had to go to a government agency to buy a vehicle. “You didn’t have a base of knowledgeable people running auto dealerships the way you did in western Europe or here in the States,” he said. GM has succeeded by picking its dealers carefully, Lacey said. GM sales in the region jumped from about 100,000 vehicles in 2001 to about 522,000 in 2007, he said. Russia is GM’s third-largest market in Europe behind Germany and Great Britain. Lacey predicted that in three years, Russia will be on top. “Can we, as an industry, stop calling these markets emerging? They have emerged,” he said. “They’re growth and they’re opportunity markets. And if we forget that or ignore that, it will be at our peril.” Forcing prices down In India, Tata Motors has shaken up the auto industry with the Nano, a $2,500 small car. Although the Nano likely will never be sold in the United States, global automakers dare not ignore the tiny car, said panelist Pawan Goenka. He is the president of the automotive unit of Mahindra & Mahindra Ltd., a Tata rival. The Nano could force prices down across the industry, Goenka said. “If they can make a $2,500 car” with four doors and four seats, then “sooner or later, they can make one of those cars for $10,000,” Goenka said, pointing to U.S. market cars on display in the auditorium. Although all panelists agreed that China will export significant numbers of vehicles before India and Russia do, Goenka said, India will follow. Renault, Hyundai and Ford plan exports from India, he said. “I think India will give a good ex- port challenge to China in volume,” Goenka said. India’s challenges But first, India needs to overcome several hurdles, said Sanjay Rishi, global automotive industry leader at IBM Global Business Services. For example, “There is a shortage of skilled labor and an acute shortage of middle management,” Rishi said. “India hopes to export 30 percent of its production, but the port capacity can clearly impede those ambitions,” he said. “India will need to double its port capacity in the next eight to 10 years,” Rishi said. “The investment that is going to develop enough ports is not proportionate to the need.”c Leslie J. Allen, Ryan Beene, Rick Kranz and Richard Truett contributed to this report
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