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One car every 20 seconds: Tamil Nadu mantra to attract auto investments

Chennai has a total installed capacity of 1.46 mn cars, 218,000 heavy vehicles, and 4.82 mn two-wheelers, according state government data

Gireesh Babu  |  Chennai 

Representational image
Representational image

With the second Global Investors' Meet (GIM) scheduled on January 23 and 24, the Government of is expecting its strength in the and component industry to attract investments into the sector. The State claims that Chennai is the largest contributor to the in the country in terms of industrial output and is one among the top 10 global hubs, with an annual installed capacity of 1.46 million units for passenger cars.

The city has an installed capacity to produce one car every 20 seconds (three cars per minute) and one commercial vehicle every 90 seconds. The total installed capacity for cars is 1,460,000 of which production during 2017-18 was around 1,090,000 units, while for heavy vehicles the capacity is 218,000 units of which production in 2017-18 was 132,000. The installed capacity for two-wheelers is around 4,820,000, of which the production in 2017-18 was 3.18 million, according the State government data.

Of the total capacity, Hyundai Motor has 700,000 units, followed by Renault Nissan (480,000 units) and Ford Motors (200,000 units). BMW can make 14,000 cars a year and Mitsubishi, which has of late joined the Renault Nissan Alliance has a 12,000 unit capacity, it says. There are around 1,393 factories producing motor vehicles, trailers and semi-trailers in

Hyundai Motor India, part of Korean auto major Hyundai Motor, signed an MoU in November 2018 with the State government to further invest around Rs 7,000 crore to increase production capacity, new model launch and powertrain altogether. The investment will be to expand capacity to 800,000 units, including 50,000 Completely Knock Down units among others. The proposed investment also include development of electric vehicles.

The State's image as an auto hub took a hit in the recent years with reports suggesting that it was losing its strength with automobile companies like Hyundai's Kia Motors and others opting to set up facilities in Andhra Pradesh instead.

The State government had then said the decision was part of the Group's policy that two of its companies will not have units in the same location.

According to data for the past five years, automobile and auto component exports from declined from $6.4 billion in 2014-15 to $5.79 billion during 2015-16 and further down to $5.74 billion before growing 17 per cent, back to $6.76 billion in 2017-18.

The State government is expecting to bag more investments in various sectors including automobile industry, in the upcoming Global Investors Meet.

Tamil Nadu has the largest auto components industry base and accounts for 35 per cent of India's autocomponent production. Chennai's auto components sector is likely to grow by 20 per cent annually and exports are likely grow to by 30 per cent over the next five years. The high level of indegenisation achieved in vehicle industry, shows the capability of the industry to develop and manufacture components as per the requirement, it said.

At present, Tamil Nadu has over 100 major auto component makers with an investment of $553.85 million and the output is worth $1.2 billion with exports of $140 million. These units directly employ about 45,000 people. Chennai has over 350 tier-I to III suppliers apart from 4,000 SMEs under tier-IV segment. Auto component manufacturers such as Visteon, Delphi and others produce more than 25 per cent of their components in Chennai. Just-in-time inventory management by automobile makers boosted component units around their plants. The industry is also exploring opportunities to venture into non-auto sectors to reduce over-dependence on the vehicle market.

The availability of port logistics, testing and certification centres, skilled manpower and policy support are some of the strengths the State government is betting on. There are around eight research and development centres, including those of Mahindra and Mahindra, Renault and Nissan, Daimler, Hyundai, Ashok Leyland, Ford and Visteon, and a national automobile testing and R&D centre.

Government is also offering various infrastructure facilities like power, rail, road and port connectivity with various expansion plans also in the pipeline, apart from fiscal incentives among others.

First Published: Fri, January 04 2019. 17:02 IST