Executives from the world's top carmakers said at the Detroit auto show that China and India could pose a significant competitive threat in coming years. "They are a very credible threat and we discount anyone at our peril," John Mendel, vice president in charge of sales at American Honda Motor, said on Jan. 12.
While the globally competitive nature of the automotive industry requires mass economies of scale, the relatively young Chinese and Indian manufacturers are ramping up quickly, Mendel noted. And the Chinese automakers buying brands like Hummer and Volvo are gaining access to a valuable distribution network, critical technology and "instant credibility," he said.
India's Tata Motors will take its opening shot at the U.S. market on Jan. 14, when it brings the Nano minicar to the Detroit science center to show Motor City what the world's cheapest car looks like.
Build Your Dreams Motor (BYD) brought its four-door electric e6 straight to the floor of the auto show where it vowed on Jan. 12 to become the first Chinese automaker to enter the United States at the end of this year.
Meanwhile, both countries are becoming increasingly important markets in the global sales strategy of top automakers with China surpassing the United States in total sales volume last year and Indian sales expected to double by 2016.
Toyota's chief of U.S. automotive operations expressed skepticism that either BYD or Tata would make a significant mark here in the short term. "It's not so easy to come walking into a market and develop a product and distribution network," Don Esmond said in an interview on the sidelines of the auto show. "A lot of it's going to depend on who does the best job of listening to the customer and has the ability technically to deliver the product," he said.
"Whether it be Toyota, GM, Ford or Chrysler, we have more resources, more manufacturing capacities and more technical development available here so we should be able to deliver a better product," Esmond said.
Carlos Tavares, Nissan's executive vice president in charge of the Americas, disagreed. "I think it's a mid-term prospective... not 10 years," he said, noting the success of Korean automakers Hyundai and Kia in breaking into the U.S. market, overcoming quality concerns and becoming major players.
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