Tamil Nadu auto business goes the green way

Tamil Nadu can stake the claim of being miles ahead in the auto sector as its roots are strong and its stellar performance has rightfully earned it the tag of ‘Detroit of India’.

When it comes to the auto business, the foundation laid down by iconic business groups such as TVS, Murugappa, Rane, TAFE and Ashok Leyland in TN has drawn even MNCs like BMW, Daimler, Ford, Enfield, Hyundai, Renault, Nissan and Yamaha to set up their manufacturing units here. 

Nearly 50% of India’s auto exports are accounted by this state, owing to its cost-competitiveness. Great infrastructure, availability of manpower, disposable income and an encouraging business climate (dedicated industrial clusters or auto corridors) have all made the state a force to reckon. 

“The auto industry is cautiously upbeat,” is how Dr R Mahadevan, Group Technology Director, India Pistons, put it, while sharing insights on emerging sector-related trends. Though there is a market perception that the state is slipping to keep its crown intact, TN clearly still has an edge when it comes to auto sector. “It is worthwhile to note that MNCs have already got their Euro 6 platform ready. The presence of 10 leading auto MNCs in TN, has fully prepared the state to counter and meet challenges much ahead of time,” former Frost and Sullivan South Asia MD, VG Ramakrishnan, who has started Avanteum Advisors, a consulting start-up, told DTNext. Mahadevan disagrees to an extent by pointing out that in the past TN was an attractive destination. “The auto industry is  full of people from other states as local people prefer jobs that allow them in sit in comfortable office environments and go for foreign trips than engage in highly-skilled precision manufacturing activities. Also, stringent laws, contract labour will affect TN being at the forefront. Instead of looking at growth, auto companies have struggled to maintain stability due to the power situation. The unreliable nature led them to buy power through private players or exchange,” he laments, but lauds the im proved infrastructure facilities such as the Chennai port. He added that the Centre had embarked on a slew of measures to promote mobility. 

Last year, ‘FAME India - Faster Adoption and Manufacturing of Hybrid and Electric vehicles in India’ was launched as part of the National Electric Mobility Mission Plan. This move is to help save Rs 60,000 crore annually in the country’s oil import bill by 2020. Mahadevan says: the desired goal is to have 10% of the total vehicles with electric mobility. 

Besides subsidy announcement and part government funding, the FAME has put implementation on a fast-track mode. With industry voices taking for and against positions, it is the future of diesel that will dictate the course of clean energy. “Such discussions have benefited to focus on fuel efficiency,” he points out. 

Mass hybridization is the way forward, Ramakrishnan said. Presently, around 1,000 hybrid cars are being sold but he anticipates the demand to shoot up in five years’ time, leaving stakeholders going helter-skelter. “A progressive state like TN is not high on pollution when it comes to vehicle emissions,” he said, clearly referring to the pollution levels driving the country’s capital to try out the ‘odd-even’ number model of transportation! 

But given the increasing clamour or preference for sedans and SUVs (sports utility vehicles), Ramakrishnan feels that TN opting for mass hybridization could be the way forward, with a clear roadmap. With market indicating the shift to the sedan and the SUV segment, it is becoming imperative for players to look at these customers, as trends indicate interest for Rs 25 lakhplus range of vehicles. “Of the three million car sales, TN has around 8% share. Income levels have risen in the last three years or so and its per capita income is 50 to 60 per cent more the national average. With the Goods and Services Tax regime promising a downward dive as far as larger cars are concerned, it is time for the state to go on top gear.”