New
Delhi: "With two private equity companies apparently
leading the race to buy Chrysler, the deal could effectively
become a battle between India and China," says
Bundeep Singh Rangar, chairman, IndusView, the India-focused
cross-border advisory firm. "Blackstone has deep
Indian connections, while Cerberus is firmly rooted
in the Far East. Whoever wins is likely to bring significant
investment to their respective markets," adds Rangar.
The Indian market has the potential to offer the maximum
value to the acquirer seeing the expected rise in domestic
demand since only eight out of every 1,000 people in
India own a car, compared with 16 in China and 500 in
developed markets, it is clear there is a lot of room
for growth.
The
country has already surpassed Korea to become the third
largest car market in Asia-Pacific after China and Japan.
"The
Chrysler sell-off is not just good news for Daimler
shareholders, but demonstrates that the automotive giants
are finally waking up to how business should be done
in a global age. The opportunities to save cost and
improve production processes from investing overseas
are huge -US manufacturers have tried to hold on to
a sinking ship for too long. In Chrysler''s case, the
wait cost them $1.5 billion" adds Rangar.
India is expected to move ahead of the UK and Canada
as a car-producing country by 2008. Its car production
capacity is expected to surpass 2 million units by 2008
from the current capacity of 1.4 million units. India
offers the benefit of low-cost manufacturing, world-class
production skills and availability of quality manpower.
In the past 18 months, some of world''s leading car manufacturers
such as Detroit-based General Motors Corp, South Korea''s
Hyundai Motor Co, Italy''s largest maker Fiat SpA as
well as Japan''s top car producers Honda Motor Co. and
Nissan Motor Co., have announced investments worth more
than $1.5 billion in India.
"The fact that 25 companies are circling Chrysler
with offers - serious or not - is an indicator of the
potential that''s been locked up in the brand for years.
All it will take is the application of modern manufacturing
strategies and Chrysler will be back up to full throttle,"
said Rangar
"This is
what the US automotive industry has been waiting for.
India is on track to become the world''s third-biggest
car manufacturer by 2030, and Ford has been active in
the region for over a decade. It''s unsurprising that
a group like Chrysler might want to improve its position
by harnessing Asian manufacturing power."
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