The global financial meltdown only underscored the importance of cost control and cost effectiveness for auto manufacturers
The metamorphosis of Pune city over recent decades from a verdant, easy-paced abode of choice for retirees to a bustling metropolis has been complete and today, although it is a major information technology hub, the automotive sector occupies pride of place as the prime mover behind the rapid development of Pune and surrounding areas.
Detroit of India
The proliferation of automobile manufacturing units and component suppliers that populate the landscape of outer Pune, particularly Pimpri-Chinchwad, Chakan and Talegaon areas have increasingly earned it the sobriquet of being the ‘Detroit of India’ and it continues to elicit interest and attract investments despite challenges from the newer auto hubs dotting outer Chennai and Gurgaon near Delhi.
The entry of the heavyweights of Indian automobile industry — Tata Motors and Bajaj Auto — in the 1960s resulted in and subsequently escalated the mushrooming of allied industries that catered to the outsourcing requirements of these principals. While the first original equipment manufacturer (OEM) was Mercedes-Benz in the 1990s through a joint venture with the Tatas and later on its own, others followed suit but only in trickles.
However, in this millennium, global heavyweights like General Motors, Fiat, Volkswagen and more recently India’s largest utility vehicle maker Mahindra & Mahindra (M&M) have committed large investments in this region and their entry seems to have opened the floodgates for auto investments here.
The global financial meltdown only underscored the importance of cost control and cost-effectiveness for auto manufacturers and further re-affirmed their decision to move to cheaper manufacturing locations available in India, particularly as quality was not going to be compromised.
Today, the Pune automobile landscape includes the ‘who’s who’ of Indian and increasingly international automobile majors.
Tata Motors is the largest followed by Bajaj Auto, Force Motors, Mahindra Two-Wheelers, Mercedes-Benz, GM, JCB construction equipment, Volkswagen, M&M, Premier Motors and Fiat.
The new projects include the Fiat-Tata joint venture at Ranjangaon with a proposed investment of Rs.4,000 crore, GM’s Rs.1,400-crore investment with a further Rs.900-crore expansion, Volkswagen’s project of Rs.3,800 crore, Mercedes’ Rs.250 crore investment and Mahindra & Mahindra planning a huge Rs.5,0000-crore investment by 2012. Bajaj Auto proposes Rs.300-crore investment in two-three wheelers and a further Rs.1,000-crore investment in the car plant.
Among large auto suppliers are Cummins Engines which set up shop in the 1960s with Kirloskar and later alone, Kirloskar Oil Engines and Bridgestone’s new Chakan plant for tyres with an investment of Rs.2,600 crore.
Commitment by MNCs
In the last 18 months, large multinational auto component suppliers like ZF Group of Germany have committed around Rs.50 crore, Prembo of Italy is setting up a Rs.100-crore disc brakes facility and Norma of Germany plans to invest euro 3 million (about Rs.18 crore).
In addition to the auto OEMs (original equipment manufacturers), Pune has a range of Tier-1, Tier-2 and infrastructure suppliers, including Bharat Forge, among the top forging companies in the world and Sandvik’s large cutting tools facility.