All About: The Detroit of India: Chennai

Chennai is entering a dynamic and creative realm, owing to the additional moolah pouring into the market. Sadashiv Nayak, joint chief executive officer, Future Value Retail, says, “I fully expect Chennai to become an integral part of mainstream consumer behaviour in India  over the next few years.”

1. The topic that has drawn everybody’s attention towards Chennai is how it has suffered a major setback due to the moving out of big spenders like Ford. Bhavesh Thakor, publisher, Haymarket SAC (India) (which produces Autocar India) shares that other auto majors like Renault, Daimler-Benz (for production of premium buses) and Ashok Leyland continue to dominate the Chennai landscape, and there are other major players like MRF and Royal Enfield thriving in the same market.

V Sunil, executive creative director, Wieden+Kennedy concurs. He says, “Thinking that your marketing division cannot be in Chennai even when the manufacturing site is located there, is an old-fashioned Bombay-way of looking at life. Nike runs its marketing activities from Portland in Oregon, even when it’s a six-hour drive from New York. Something similar could be followed in Chennai if only people change their mindsets.”

2. Shashank Srivastava, chief marketing officer, Maruti Suzuki India, provides a perspective. He says, “The largest market in terms of size is in North India, about 35% of the total pie. Then comes the Western market with about 30% share in the automotive market and then the Southern market. It’s because of the sheer volume of the largest market that the marketing division is usually in Delhi or  Mumbai.”

At the same time, he adds, “Chennai offers itself as a decent production hub because it’s closer to the port and not congested like Mumbai’s port. Real estate costs aren’t that high either. Of course the state government sops given to auto manufacturers add to the plus points of it being the Detroit of India. Easy component sourcing and cheap transportation are other factors.”

Srivastava points out, “There’s a strong dealer network in the North and close coordination between ad agencies and marketing research agencies in the West which gives Delhi and Mumbai an upper hand over Chennai.”

3. Renault’s marketing division is located in Chennai and they obviously see the city as a  big market. Anilkumar Sathiraju, associate VP and head, South, Mudramax  points out, “The literacy rate is as high as Mumbai. It has better infrastructure, political stability, quality education, lesser real-estate cost as compared to Mumbai or Delhi.”

He admits that the exit of big advertisers has affected business sentiment, but hastens to add that Chennai is a strong retail market and Mumbai is a national market. That’s the big difference.

4. Can Chennai become a powerhouse in the near future? Oviachelven R, creative and managing director ,Rainmakers, has a theory. He says, “Chennai has been perceived to be an inward-looking market. One thing that comes to mind is the story of Kishore Biyani’s Big Bazaar. He has been quoted as saying he got the idea for Big Bazaar from a Chennai-based retailer Saravana Stores. He studied how they ran their retail outlet and modelled Big Bazaar on that concept.”

But Oviachevlen questions, “Why didn’t Saravana Stores expand this concept to other Indian cities?” He feels, “Chennai needs to shed its inward-looking stance and use its cosmopolitan flavour.

5. So what are the factors restraining Chennai from becoming an important market. M L Raghavan, VP and general manager, JWT Chennai, says, “From a realistic perspective Chennai can take-off if – One: Chennai-based brands  that have been state or south-centric decide to take the big leap in terms of investment, scale, size and go national or international; Second:  Large Indian business groups or multinationals who want to take advantage of real estate and intellectual capital decide to move their corporate headquarters into Chennai.”
This could make Chennai more than the Detroit of India.

Key players in Chennai

Manufacturing

• Ashok Leyland
• Color-Plus
• Godrej-Boyce
• Nissan
• Nokia
• Renault

Hospitality

• Courtyard Marriott
• Hilton
• Hyatt

IT and Financial Services

• Accenture
• Citibank
• HP