The boom is over in Detroit. But now India has its own motor city

The car industry in the region around Pune, Maharashtra, is growing apace as manufacturers see the potential for the Indian market to overtake China. By Richard Orange

The tiny Mahadev Temple is beginning to look out of place on its hill above the village of Chakan, 30km from the Indian city of Pune. Just a few years ago, its squat bulbous cupola looked down over an empty plateau of farm and grazing land. Now, more than 2,500 workers swarm over the 2.3sq km of land beneath it. By early next year, the steel and concrete hangars rising from the scrub will have become a Volkswagen plant able to churn out more than 110,000 cars a year.

To the other side is another sprawling 4sq km plot tipped to house a factory for the ultra-low-cost car planned by Indian motorcycle giant Bajaj and France's Renault. And just 10km away in Talegaon, General Motors is putting the finishing touches to a factory which will produce 120,000 cars a year. The Mahadev Temple is now the centrepiece of one of the world's most rapidly industrialising regions.

Dr Thomas Dalhem, who is in charge of setting up the plant for Volkswagen, says: "They speak about the Detroit of India, but I don't like it. If you think back to when the car industry in the US was booming, then you can compare it to Detroit."

The plants announced so far add up to investments of more than £2.5bn. Once they are up and running, this part of Maharashtra alone will be making 1.8 million cars a year – more than Britain.

And these are just the biggest international projects. Next door to Bajaj and Renault, Daimler has an assembly plant for Mercedes. Indian jeep maker Mahindra & Mahindra is planning a £500m plant in the village. The UK's JCB has built a heavy machinery factory in Talegaon.

"We were not ready for this kind of boom," says Chetan Patil, the marketing manager for the Maharashtra Industrial Development Corporation (MIDC). "We lost 1,900 acres of land in two years to these car makers."

The region will employ 25,000 people in car making in two years, he says. That still leaves it far from the 129,000 workers employed by the car industry in Detroit – the historic centre of US car manufacturing (down from 316,300 in 1999).

But it is catching up fast: Every one of the 112 plots MIDC has created here has already been bought and the corporation is now trying to buy 12,500 acres for further expansion. Patil says he is in discussions with four or five other major international companies seeking land for new factories.

In 1998, when Sandesh Tamhane, one of the Bajaj plant's senior managers, first arrived here, there was nothing. "When we came here in 1998, not a single plant was here," he remembers. "The condition of the road was horrible."

Bajaj's 800 staff now produce 1.3 million of its Pulsar, Avenger and Discover motorcycle brands every year. And 35 of the company's suppliers have set up factories in the area.

"This plant was basically created to change the culture at Bajaj Auto. In the 1980s, people weren't conscious about quality: whatever you produced, it used to get sold."

The Chakan plant today is a collection of scrupulously clean white buildings surrounded by lush gardens and fountains, highly automated and steeped in Japanese lean production techniques.

Every other month, Sueo Yamaguchi from the Japanese Institute of Plant Management visits the Bajaj site to assess its progress. "The way one used to work 20 years back and the way we work today has drastically changed," Tamhane says. "Maybe in five to 10 years we will be at par with anywhere abroad."

The acquisition of Jaguar and Land Rover by India's Tata Motors last month has raised the status of Indian car making. And in January, the launch of its £1,300 Tata Nano brought Indian engineers a new reputation for imaginative, frugal design.

The change is already apparent in the settlements nearby. Traditional Maharashtrian village houses are giving way to garishly painted concrete villas.

But Ganesh Yelwande, a local farmer, complains that he has gained little. "People don't like selling to the government, but people are under pressure. They were giving a very low rate for the land. The mediator is getting the benefit."

Even Yelwande admits, though, that new training institutes and schools have come to the region.

And Dalhem sees development every time he drives to work. "What will happen for sure – if you drive between Chakan and Pune you can see it – this will all be fully developed. Everywhere I see new signs saying, 'Here's your chance. Buy a new apartment here.' All of our staff will move here. Schools and supermarkets will come up."

The immediate draw of India for the international car makers is the potential size of its market. Both Volkswagen and GM expect India to overtake China as the world's fastest-growing car market. Sales of passenger cars increased 12.17 per cent to 1.5 million in the year to March 2008. Volkswagen expects India to overtake the UK as the sixth largest world car market by 2010.

Following the Nano, Volkswagen, Renault-Bajaj, GM, Honda and Toyota are all planning to launch small cars suited to Indian consumers' buying ability. Before the Nano, Maruti Suzuki's Maruti 800 had dominated the Indian market for cheap cars for over 20 years.

Pune is well located between the major metropolises of Delhi, Mumbai, Bangalore and Chennai (Madras). It also has around 500,000 students, giving it a vast pool of educated labour. Tamhane says the labour shortages that had started to happen in Chakan are now lessening as new engineering colleges open.

Every year, Bajaj takes on 120 new employees, most with engineering diplomas, to top up its 850-strong workforce, paying as little as £150 a month. "We don't want to retain people," Tamhane explains. "We want them to leave after five to six years. Here we think enthusiasm is more valuable than experience."

The cost of building a factory here is also cheaper than it would be almost anywhere else in the world. Volkswagen is spending £470m setting up its new plant. Much of the machinery is still imported: Dalhem has three ships waiting at Mumbai loaded with equipment and he just received the first shipment of containers on site – treatment baths for the paint shop from Germany's Dürr.

But huge savings are made on manpower – workers on construction sites in India are paid about £1.30 a day. As a result, major car makers are considering using their India plants for export, both for finished cars and components.

GM has said it wants to make India an export hub for small and mid-sized cars destined to be sold in other emerging markets. Hyundai plans to make India the sole production centre for its new I20 model, even though it will not be sold domestically.

The Pune region is well-positioned for exporters – linked by the the six-lane Mumbai-Pune Expressway to the Jawaharlal Nehru Port, one of India's largest and most efficient.

PROMOTED VIDEO
Arts and Entertainment
Robert De Niro, Martin Scorsese and DiCaprio, at an awards show in 2010
filmsDe Niro, DiCaprio and Pitt to star
News
i100
News
In this photo illustration a school student eats a hamburger as part of his lunch which was brought from a fast food shop near his school, on October 5, 2005 in London, England. The British government has announced plans to remove junk food from school lunches. From September 2006, food that is high in fat, sugar or salt will be banned from meals and removed from vending machines in schools across England. The move comes in response to a campaign by celebrity TV chef Jamie Oliver to improve school meals.
science
Sport
England captain Wayne Rooney during training
FOOTBALLNew captain vows side will deliver against Norway for small crowd
Life and Style
Red or dead: An actor portrays Hungarian countess Elizabeth Báthory, rumoured to have bathed in blood to keep youthful
health
News
peopleJustin Bieber charged with assault and dangerous driving after crashing quad bike into a minivan
News
ebooksAn unforgettable anthology of contemporary reportage
News
peopleHis band Survivor was due to resume touring this month
News
people'It can last and it's terrifying'
Life and Style
fashionModel of the moment shoots for first time with catwalk veteran
Sport
Radamel Falcao poses with his United shirt
FOOTBALLRadamel Falcao's journey from teenage debutant in Colombia to Manchester United's star signing
Life and Style
fashionAngelina Jolie's wedding dressed revealed
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Front-Office Developer (C#, .NET, Java,Artificial Intelligence)

£30000 - £45000 per annum + benefits+bonus+package: Harrington Starr: Front-Of...

C++ Quant Developer

£700 per day: Harrington Starr: Quantitative Developer C++, Python, STL, R, PD...

Java/Calypso Developer

£700 per day: Harrington Starr: Java/Calypso Developer Java, Calypso, J2EE, J...

SQL Developer

£500 per day: Harrington Starr: SQL Developer SQL, C#, Stored Procedures, MDX...

Day In a Page

Chief inspector of GPs: ‘Most doctors don’t really know what bad practice can be like for patients’

Steve Field: ‘Most doctors don’t really know what bad practice can be like for patients’

The man charged with inspecting doctors explains why he may not be welcome in every surgery
Stolen youth: Younger blood can reverse many of the effects of ageing

Stolen youth

Younger blood can reverse many of the effects of ageing
Bob Willoughby: Hollywood's first behind the scenes photographer

Bob Willoughby: The reel deal

He was the photographer who brought documentary photojournalism to Hollywood, changing the way film stars would be portrayed for ever
Hollywood heavyweights produce world's most expensive corporate video - for Macau casino

Hollywood heavyweights produce world's most expensive corporate video - for Macau casino

Scorsese in the director's chair with De Niro, DiCaprio and Pitt to star
Angelina Jolie's wedding dress: made by Versace, designed by her children

Made by Versace, designed by her children

Angelina Jolie's wedding dressed revealed
Anyone for pulled chicken?

Pulling chicks

Pulled pork has gone from being a US barbecue secret to a regular on supermarket shelves. Now KFC is trying to tempt us with a chicken version
9 best steam generator irons

9 best steam generator irons

To get through your ironing as swiftly as possible, invest in one of these efficient gadgets
England v Norway: Wayne Rooney admits England must ‘put on a show’ to regain faith

Rooney admits England must ‘put on a show’ to regain faith

New captain vows side will deliver for small Wembley crowd
‘We knew he was something special:’ Radamel Falcao's journey from teenage debutant to Manchester United's star signing

‘We knew he was something special’

Radamel Falcao's journey from teenage debutant to Manchester United's star signing
'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York