Wednesday, July 21, 2010

One Indian city building more cars than any state in the US? Wow!

July 21, 2010

A recent Wall Street Journal article talks about a new Detroit rising in India that will soon be building "close to 1.5 million vehicles a year, more than any one U.S. state made last year." Car makers and car parts suppliers account for "12% of the economic output of the state."

Guesses which city? I would have guessed Pune not Chennai! ( "New Detroit Rises in India" - subscription may be required). I remember meeting the CIO of KIA in 2003 and he mentioning that Chennai as one of their main regional production hubs in their global strategy. So I am not surprised by the statement that "Hyundai has invested $2 billion [in Chennai], and recently expanded to be able to produce 650,000 cars a year." On the other hand, the diversity of the manufacturers surprised me: Ford Motor Co., Hyundai Motor Co, Nissan Motor Co., Renault SA, Daimler AG, BMW AG, Michelin SA and Saint-Gobain SA.

I will be Chennai soon, after a couple of years. I am excited to see the changes! For somebody who went to school in this city a couple of decades back, the cosmopolitan environment will be a big surprise:
A sprawling amusement park across the street from the Hyundai factory, a French bakery, evangelical Korean churches and Japanese grocery stores have popped up in recent years.
On the other hand, I hope that they have learnt the lessons from Michigan. Depending on one industry for 12% of economic output leads to pain down the road and the time to diversify is now, when the going is good. When the cosmopolitan environment is being built and people see the potential, it is the time to woo at least couple of other industries which are not tightly linked to car manufacturing.

I am ooking forward to the visit. Did the numbers surprise you?

- Karthik

1 comment:

  1. Well, am not surprised by the rise of chennai as an auto and telecom manufacturing destination. The developments of real-estate and community along these manufacturing corridors are mind blowing if you havent visited in recent years.