With Indian Railways having developed two automobile wagon rakes (trains), with a holding capacity of almost 550 cars each for transport of vehicles from sites closer to their manufacturing bases to their final destination, auto manufacturers say they look forward to increasingly using this form of transport for their products.
The global average of movement of vehicles using the railways is about 20 per cent. However, in India this figure is only two per cent. Apart from equipment, movement by road is still cheaper than what the railways charge.
However, Maruti Suzuki, India's leading car maker, say they have transported well over 200,000 cars using the railways and aim to increase the railway share to 20-30 per cent, from the present two per cent, in their vehicle movements.
Similarly, other players like Hyundai Motors, General Motors, Volkswagen, Tata Motors and Mahindra & Mahindra also appear to be keen on using the railways as mode of transporting their production.
To cash in on the booming demand, while also generating additional revenue, IR has proposed to set up 10-15 dedicated auto hubs that will serve as terminals and be built with the help of private parties under a public-private partnership programme. IR hopes to generate Rs 1,500 crore yearly from the planned auto hubs.
The Indian auto industry has welcomed the fresh initiative, stating that not only will such hubs create jobs but it will also mean cost-effective and faster modes of transport, thereby reducing the response time by at least a third.
Pawan Goenka, president (automotive), M&M said,"Today, it takes a lot of time to move vehicles from one end of the country to the other because of slow road transport. Movement through railways will reduce road congestion enormously. Siam (the manufacturers’ association) has been working with the railway ministry over the issue. We are going to use railways more often for time and cost considerations. It can get a fairly large portion of auto transport if the infrastructure is set up."
According to Goenka, transporting vehicles from his plant in Nashik to Kolkata can take 10 days, due to various checks, road blocks, heavy traffic and bad roads. Shipment through railway can take just two to three days. "This can bring tremendous savings for us", added Goenka.
Company officials at Maruti Suzuki, which has so far moved 80,000 A-stars till date for export, say the average cost of transporting a small car via road from their facility in Gurgaon to the Mundhra port in Gujarat costs about Rs 6,500, which is a discount of 25 per cent on what the railways charge.
However, with the cost of fuel slated to move north in the long run, experts state that transportation through rail will provide better savings, as costs in railways generally do not shoot up suddenly. Besides, the railways’ impetus to electrify most of their routes will bring down the cost of operation even further.
Meanwhile, car makers are also wishing the government were more active on the issue. P Balendran, vice president, General Motors India, said: "It has to be economically viable and should provide the required connectivity. We are not looking at using railways as the medium currently, but we may look at it later when we start exports."
Korean car brand Hyundai had signed a memorandum of understanding with the Tamil Nadu government, which included a dedicated rail line from the plant to Chennai port, that will aid the company in exporting 300,000 units. However, no progress has been achieved by the state government so far, despite the company bringing up the matter with the government at a recent meeting.