Detroit told China, India could reshape global auto industry

China and India could reshape the global auto industry and pose a significant competitive threat in coming years, executives from the world's top carmakers said at the Detroit auto show.

"They are a very credible threat and we discount anyone at our peril," John Mendel, vice-president in charge of sales at American Honda Motor, said.

While the globally competitive nature of the automotive industry requires mass economies of scale, the relatively young Chinese and Indian manufacturers are ramping up quickly, Mr Mendel noted.

And the Chinese automakers buying brands like Hummer and Volvo are gaining access to a valuable distribution network, critical technology and "instant credibility," he said.

India's Tata Motors will take its opening shot at the US market today, when it brings the Nano minicar to the Detroit science centre to show Motor City what the world's cheapest car looks like.

Build Your Dreams Motor brought its four-door electric e6 straight to the floor of the auto show where it vowed to become the first Chinese automaker to enter the US at the end of this year.

Meanwhile, both countries are becoming increasingly important markets in the global sales strategy of top automakers with China surpassing the US in total sales volume last year and Indian sales expected to double by 2016.

Toyota's chief of US automotive operations expressed scepticism that either BYD or Tata would make a significant mark here in the short term.

"It's not so easy to come walking into a market and develop a product and distribution network," Don Esmond said in an interview on the sidelines of the show.

"A lot of it is going to depend on who does the best job of listening to the customer and has the ability technically to deliver the product," he said.

"Whether it be Toyota, GM, Ford or Chrysler, we have more resources, more manufacturing capacities and more technical development available here so we should be able to deliver a better product."

Carlos Tavares, Nissan's executive vice president in charge of the Americas, disagreed.

"I think it's a mid-term prospective... not 10 years," he said, noting the success of Korean automakers Hyundai and Kia in breaking into the US market, overcoming quality concerns and becoming major players.

Affordability will be a key driver in the industry in the coming years and China and India will offer automakers an important testing ground for pushing the boundaries, Mr Tavares said.

Ford chief executive officer Alan Mulally said that while "China's going to be a force going forward" and India is not too far behind, the real competitive threat could come from unfair trade practices.

"We expect the auto world industry to continue to evolve," Mr Mulally told a conference hosted by Automotive News.

"There is no reason that if we get to global trade rules that we can't compete with the best of the world."

But the lack of flexibility inherent in a massive and decades-old company could give their younger and more innovative rivals a leg up, said Warren Harris, president of automotive engineering consulting firm Tata Technologies.

"Just the willingness to innovate in and around the value chain... this is where the Chinese and the Indian original equipment manufacturers are going to have an advantage," said Mr Harris, whose team helped develop Tata Motor's Nano and works with major automakers and suppliers.

"If you look at the American OEMS, they have the technical know-how and the distribution networks that would be the envy of the Chinese and Indians," he said.

"But if they're not going to match the Chinese and the Indians for innovation then that advantage is not going to be enough."