With the US economy revival yet to take off and Europe remaining a concern as sales in several large markets, such as Germany, are expected to stall this year, auto makers are taking the fast road to China, India and South America. Sales here are buoyant as ever and auto majors are counting on these geographies to revive their investment plans. India is particularly emerging as the critical piece in the global auto industry’s new business model, much like in information technology and pharmaceuticals.

Volkswagen AG 20% stake buy in Suzuki Motors has a clear rationale of leveraging on Suzuki’s small car expertise and strong India footprint?two critical gaps in the German carmaker’s portfolio. Existing relationships between global and Indian car makers are deepening or being subject to a quick redo?Tata Motors-Fiat, Bajaj Auto-Nissan-Renault?to adapt to the realities of the Indian market.

Detroit majors General Motors and Ford are no exception. Having already marked a presence in the Chinese market, General Motors is counting on India as a major market to lead its revival. Struggling to reorient its business after bankruptcy, the company expects sales in India to nearly treble in the next three years to over two lakh units, possibly aided by an equal joint venture with Shanghai Automotive Investment Corporation for selling light commercial vehicles and cars.

But GM has stiff competition, not only from players like Maruti and Hyundai in India, but a major one from its own country cousin, Ford. After putting back the auto major on a strong wicket, for the first time over a decade, Ford has overtaken GM in monthly (February) sales in the US. It also staved off a government bailout, while rivals GM and Chrysler struggled. With the company firmly saddled in various key markets, Ford’s global head Alan Mullaly has now trained his eyes on India, a market he believes will grow rapidly and help Ford retain its strength in the coming years.

The war over sales figures is being fuelled with new launches and sprucing up old products. So, if GM gets aggressive with a new small car, the ‘Beat’, new variants of Spark and light commercial vehicles and mini cars from its Chinese JV with SAIC, Ford is playing the market right by pricing its compact car Figo at Rs 3.49 lakh. The company has launched the Figo as a ‘dynamite’ vehicle for Ford India. It will also bring in the Focus and the Mondeo, along with the New Fiesta hatchback, to India soon.

Karl Slym, GM India president, says, “While we expect to cross one lakh units in 2010, our target is to cross two lakh units in 2012, by which time we would have a wider and fuller range in our portfolio.” The company is backing its ambitious sales targets with some smart manoeuvres. The Beat was launched in January with an aggressive pricing of Rs 3.5 lakh, below competitors like Hyundai i10 and Maruti Ritz.

Similarly, Ford is gaga over its rising sales in India and the perceived outlook of the company in the Indian market. “We have received a tremendous response for the Figo so far. Our March sales created a record in the history of Ford India sales with a 203% jump over last year at 9,478 units sold. With Figo, we are all set to redefine the Ford brand in India,” says Nigel E Wark, executive director, marketing sales & service, Ford India.

Last year, Ford introduced only facelifted versions of its existing models in India, such as the Endeavour, Ikon and Fiesta. Speaking about competition from established brands like Maruti, Hyundai and Tata, who are strong on the pricing front, Ford’s global head Alan Mullaly had said, “We are absolutely going to be competitive on price, in addition to quality, fuel efficiency, safety and smart design… our plan is to get in one ‘dynamite’ vehicle at a time. Figo is one such product.” He said the compact car segment and less expensive sedans would be one of the key areas for the company in India. “Clearly, the B (compact) and C (entry-level sedans) size makes more sense for us to increase our presence here.”

The GM honchos speak the same language of numbers. “We expect to double our sales this year to over one lakh from 69,500 last year,” says Karl Slym. GM’s sales surged by a whopping 130% in first quarter of 2010 over the same period last year. “We have sold around 9,421 units in January, 11,111 in February and 11,324 units in March,” Slym adds.

As part of its initiative to switch over to alternative fuels, the company is expected to roll out the electric version of its small car, Electric Spark, by the end of 2010. GM has a partnership with Reva for rolling out electronic cars. “We have a potential of 5,000 cars a year to begin with, but it all depends on government support,” says Slym.

GM is now gearing for more play in the small car market, as it readies an engine plant at its second factory at Talegaon in Maharashtra. Apart from petrol engines, the new engine plant will produce a small, one-litre diesel engine that the company plans to put on the Beat.

“Clearly, we have come later to the small car market in India than competitors. But now we are going to start, to continuously accelerate, and introduce more vehicles. It’s a great market with great customers. You will see us accelerate our progress every year,” says Slym.

As far as investments lined up by GM, it has committed already more than $1 billion for the Indian markets. The Halol facility in Gujarat is projected to operate in three shifts to cater to production of light commercial vehicles (LCVs) and the automaker plans to hire new suppliers for it as well. The Halol facility has an installed annual capacity to roll out 85,000 units.

The company has proposed to separate its products from its joint venture partner in the SAIC and has chosen LCVs from that portfolio to be manufactured at Halol. “The production of LCVs is expected to commence by the end of 2011,” says Slym.Clearly, both Ford and GM are here to stay. As Wark puts it, “India is one of the fastest growing automobile markets in the world. It is the second-largest market in the Asia-Pacific region after China and one of the most important markets for us.”

Slym shares the same view. “The industry has shown great growth in the year. The main advantage in India is that penetration level of cars is still very low compared to countries in the West. We are committed to the Indian market. There are some concerns like the hardening interest rates and rising input costs, but I am hoping these are not continuous trends,” he feels.