Start Your Engines: A Postcard from India’s Motown

If Bollywood had its own version of Pixar Studios and were to produce an Indian version of “Cars,” would the voice of Paul Newman be replaced by that of Indian film icon Amitabh Bachchan? And would the “Doc Hudson” character have to be redrawn as a Hindustan Motors “Ambassador”?

I found myself mulling these and other (admittedly frivolous) questions last week as I tooled around the Indian city of Chennai. This metropolis of 7 million, formerly known as Madras, may not be as familiar to non-Indians as the nation’s three other big urban centers, New Delhi, Mumbai and Kolkata. But it is a thriving commercial hub. Situated on India’s southeastern Coromandanel coast and first laid out in 1639 by officers of the British East India Company, Chennai was one of the subcontinent’s first centers of industry. Today the city hosts operations for a gaggle of Indian and Western software and electronics companies, including Wipro (WIT), Samsung, Cisco (CSCO), Siemens (SI) and Foxconn (HNHPF). As cradle of India’s Tamil language entertainment industry, Chennai’s influence in the Indian film business is second only that of Mumbai. And the Chennai area boasts so many automobile manufacturers and suppliers that it is sometimes called the “Detroit of South Asia” – or even “India’s Motown.” So maybe my musings about stars and cars aren’t completely, um, off track….

The surprising recent growth of India’s auto industry was a prominent discussion theme at the May 10 Fortune Global Forum dinner at the Taj Coromandel Hotel that was the occasion for my visit. Comments from Indian and Western business executives who joined that conversation suggest prospects for India’s Motown are a lot brighter than those of its U.S. namesake. BMW, Ford Motor (F) and Indian truckmaker Mahindra & Mahindra are all expanding facilities in Chennai. Hyundai (HYUD) is using its Chennai plant to ramp up exports to Europe, Russia and Latin America.

India’s auto market has just left the starting line, with sales of only 1.4 million in the year ended in March. But the race is revving up. Passenger car sales leapt 21% last year. Many analysts think the Indian auto market could double in size before the end of the decade.

India’s dominant automaker is Maruti Udyog, a unit of Japan’s Suzuki Motors, with a 50% share in the passenger car segment. But Hyundai and India’s Tata Motors are gaining fast. At the upper end of the market, Germany’s BMW, which sold about 260 cars in India last year, opened its first Indian assembly plant in March in an industrial park just outside Chennai. At the opposite extreme, Mahindra & Mahindra have joined with Renault (RNO) and Nissan (NSANY) to produce an Indian version of Renault’s low-cost Logan sedan. General Motors (GM), which hopes to claim 10% of the India’s car market by 2010, has launched production of the compact Chevy Spark. Tata will force everyone to pick up the pace if it makes good on a promise to produce a sturdy, high-quality compact for as little as $2500.

As I arrived in Chennai, it looked like the oldest entrant in the Great Indian Auto Rally, Hindustan Motors, might not make it out of the pits. The carmaker, flagship company of vaunted Indian industrial house, CK Birla Group, has been manufacturing Ambassadors in India since 1957. But earlier this year, HM was sideswiped by a bitter labor dispute that shut down its plant in West Bengal. The dispute forced the company to cancel plans for celebrating the Ambassador’s half-centenary. Press accounts suggested that the Amby was through.

I’ve long had a soft spot for the tough old Amby. The design for the first of these stolid sedans was based on the 1948 Morris Oxford and has been minimally improved for half a century. As “India’s First Car,” the Ambassador is a national icon. Hindustan Motors was sheltered from foreign competition during the early years of Indian independence and, over the years, benefited from generous government subsidies. In its prime in the 1970s, Ambys accounted for 7 in every 10 passenger cars on India’s teeth-shattering roads. Among their other virtues, Ambys are cheap (obtainable for $9,000 to $12,000), sturdy and relatively simple to repair. But young, upwardly mobile Indians I’ve asked about the Amby mostly disdain it as hopelessly passe . These days you can get an Amby with air-conditioning, two individual front seats rather than the single bench and in colors other than the basic elephant tusk white. Even so, according to reports in the Indian press, sales have dwindled to just 15,000 a year. There may be only about 600,000 Ambys left on Indian roads.

Before the Fortune dinner, I dropped by one of Chennai’s leading Ambassador dealers, Shree Sancheti Motors on Greams Road, for what I feared might be a last look. The lot seemed lively, almost crowded — though I was a little less encouraged to discover that the specific source of all the activity was the repair shop. The lone salesman seemed a bit startled to see me. But he greeted me warmly and, to my delight, informed me that the strike in West Bengal had been settled the previous day. “No problem, sir,” he assured me; he could have a new vehicle from the plant for ready for me to drive off the lot within a matter of days. No word yet on whether Hindustan Motors is rescheduling Amby’s 50th birthday party. But for a while at least, they won’t be administering its last rites.