Auto companies are eager to invest in India. A parts plant serves Nissan and Honda.

By MARTIN FACKLER

ORAGADAM, India - On a dusty sunbaked field, in a ceremony presided over by a chanting Brahmin priest tossing water and rice, the Japanese carmaker Nissan Motor made a bold step into the Indian auto market.
The traditional Hindu ritual last month, attended by a half-dozen sweating Japanese and European executives, blessed the site where Nissan will build its first passenger vehicle factory in India, a sprawling $1.1 billion complex where rice paddies once stood. The plant, built jointly with its French partner Renault an hour outside the southern city of Chennai, will produce 400,000 cars a year when completed in two years.
Japan’s Big Three - Toyota, Honda and Nissan - led the world in factory automation and eco-friendly technology, but until now they have been cautious about venturing far from the roads they know: the mature markets of North America and developing markets closest to home, particularly China and Thailand. Now, in a radical shift, Japan’s staid Big Three are plowing into exotic terrain, from Saharan Africa to the former Soviet Union to the scorching plains of southern India.
They are determined not to repeat the mistakes of a decade ago, when they were late to the market in China, and where they have since trailed rivals like Volkswagen and General Motors. They have been particularly quick to expand in India, a nation of 1.
1 billion that is just beginning its automotive revolution, and that many call the world’s next megamarket after China.
The aggressive moves by traditionally cautious automakers are the latest signpost that the epicenter of the global auto industry is shifting increasingly to somewhere between Canton and Calcutta. The shift is also yet another sign of the waning centrality of the United States to the global economy.
The Japanese are not alone. Just in Chennai, Ford, BMW and Hyundai Motors of South Korea have all built factories, leading some locals to call the city the “Detroit of India.”
The large Japanese automakers also find themselves in the unaccustomed position of trying to catch their much smaller Japanese rival Suzuki, which became the largest car company in India by being one of the first to arrive, a quarter-century ago.
“These developing markets used to be an afterthought” for Japanese automakers, said Hirofumi Yokoi, an analyst in Tokyo for CSM Worldwide, the auto market research company. “Now they are the industry’s future.”
According to CSM, vehicle sales in developing regions are expected to rise by about 10 million units over the next six years, contributing 76 percent of the industry’s entire global growth.
In the last seven years, Nissan’s vehicle sales in all developing nations have nearly tripled to 1 million units, out of the company’s 3.7 million vehicle sales last year.
“It used to be that Honda relied on its U.S. business, maybe too heavily,” said Honda’s president in India, Masahiro Takedagawa. “Nowadays, we are trying to spread the sources of profits more globally, beyond just one market.”
To be sure, the United States will remain the world’s biggest and richest market for the foreseeable future, contributing some 70 percent of the profits at most Japanese automakers. But in recent months, the big Japanese automakers have announced a slew of new factories in the Middle East, South Asia and Latin America.
Breaking into far-flung emerging markets comes with its own hazards, especially when the Japanese carmakers’ strongest competitive edge is worldleading quality. This is especially true as they build factories in places where local parts suppliers are accustomed to lower standards - and where even electricity is unreliable.
In India, for instance, Nissan faces challenges like ensuring timely delivery of parts via half-finished roads clogged with trucks and bullock carts, and teaching its new workers and local suppliers exacting Japanese precepts like kaizen, or “constant improvement.”
“The hardest part will be teaching the mindset and culture of kaizen,” said Shouhei Kimura, a former factory manager who now heads Nissan’s operations in India.
Many here see enormous potential for the Japanese brands among Indians, many of whom became used to driving Nissans and Hondas while living abroad, and became accustomed to their quality and reliability.
“Expectations are getting higher here when it comes to cars,” said Sudhir Natarajan, who runs Nissan’s sole dealership in Chennai. “This is a chance for the Japanese.”