Cuneyt Oge, director-Atlantic region aerospace, automotive, industrial and transportation for PRTM, predicts Wal-Mart one day may sell a low-priced Indian car “next to tires and batteries.”
Oge, speaking at the Management Briefing Seminars here, says it’s possible the huge discount retailer could sell its own private-branded, Indian-built city cars, thanks to its large global footprint and excellent supply chain management capabilities.
“It’s not inconceivable,” Oge says. “You have the quality levels, you have the proliferation, you have the amount of supply. What prevents a preeminent supply chain expert like Wal-Mart from selling cars next to tires and batteries?
“And they have service centers, as well.”
Oge does admit he has “no idea if that’s meant to be,” but he says with the current state of retail deregulation in India, and the planned entrance of Wal-Mart there, “I wouldn’t be surprised.”
Speaking on a panel of Chinese and Indian industry experts, Oge says the movement of India into a top-tier auto-producing nation is “probably the final chapter of the globalization of the auto industry.”
Techniques and processes used to engineer and manufacture vehicles in India will be “mainstream in 10 years,” Oge predicts, comparing India’s potential global impact to the way Japanese manufacturing processes and systems overtook those of North American or European auto makers 20-30 years ago.
Vehicles will be sold “at price points we can’t even imagine yet,” he says of passenger cars built in India and China.
And the agreement between the governments of India and China to work on bridging their respective strengths in software and hardware production is “no small matter,” he says.
While Oge says Japan has a technology and image leadership, South Korea a “value leadership” and China a “scale leadership,” India is best seen as a center of basic transportation due to its strength in compact and subcompact vehicle production.
However, he says there is a movement by Indian buyers toward slightly larger, more refined vehicles, pointing out the newSwift is priced $5,000 more than the average car ($10,000) and selling well.
“It’s a fast-modernizing industry,” where consumers are becoming increasingly brand-conscious and quality-focused, Oge says.
India, he says, does have some advantages over China, which tends to get more headlines due to its explosive industrial growth of late.
The quality of Indian vehicles is above those produced in China, he points out, citing J.D. Power & Associates average initial quality scores of 190 problems per 100 vehicles, compared with 265 for Chinese auto makers. The U.S. average is 118.
He also says the proximity of India to Europe, as well as the East Coast of the U.S., can’t be ignored, as it is easier to ship vehicles and parts across the shorter distance of the Atlantic Ocean than the large Pacific.
Other factors include India’s large number of English-speaking engineering graduates, with an 8-1 average graduate ratio vs. the U.S.
The salary of an Indian engineer tops out at $10 an hour vs. $70 an hour in the U.S., he reminds.