Japanese carmakers rev up investment in India to cut China reliance

TOYOTA, HONDA AND Suzuki are spending billions of dollars to build new cars and factories in India, a sign of the country’s growing importance as a manufacturing hub as Japanese automakers redraw global supply chains to reduce dependence on China.

- ADITI SHAH, MAKI SHIRAKI & DANIEL LEUSSINK

Toyota, the world’s largest carmaker, and Suzuki, the leader in the Indian market with almost a 40% share, have separately announced investments totalling $11 billion to beef up manufacturing and export capabilities in the world’s third-largest auto market. Honda said last week it will make India a production and export base for one of its planned electric cars.

India’s low costs and vast labour pool have long been an attraction for manufacturers.

Now, Japanese automakers are stepping up operations as they pivot away from China, both as a market and a manufacturing base, multiple industry executives said. Another benefit: India remains all but closed to Chinese EVs, so Japan’s carmakers — at least for now — won’t face bruising competition from BYD and others there.

A brutal price war among Chinese EV makers has made it difficult to turn a profit in China. Adding to the pain, Chinese carmakers are now expanding overseas and snatching market share from Japanese rivals in Southeast Asia. “India is a good choice as a replacement market for China,’ said Julie Boote, autos analyst at Pelham Smithers Associates in London, citing low profit margins in China.