As China Advances, India Emerges as New 'Detroit of Asia'

India is increasingly positioning itself as a global export hub for Japanese automakers, echoing Thailand's earlier ascent as the "Detroit of Asia."

In 2025, Japan imported a record number of Japanese-brand vehicles built overseas, with India accounting for much of the rise. The surge in re-imports, despite the weak yen, reflects not only India's cost advantages but also significant gains in local manufacturing quality and technical standards.

The New Detroit of Asia

As Chinese automakers erode Japan's long-held dominance in Southeast Asia, the South Asian country is emerging as a crucial new pillar of strategy and growth.

Data from the Japan Automobile Importers Association show that re-imported vehicles reached 111,513 in 2025, exceeding the previous peak of 107,092 recorded in 1995. Yet the dynamics underpinning today's increase differ fundamentally from those of past eras.

In the 1990s, when the yen was strong, hovering around ¥90 JPY per dollar, re-imports from the United States temporarily increased. These flows also helped ease trade friction between Tokyo and Washington.

However, with the yen now above ¥150 per dollar, conventional logic would favor manufacturing in Japan for export.

That re-imports are rising despite this reflects the growing role of India, which surpassed Japan in 2022 to become the world's third-largest passenger vehicle market and is gaining prominence both as a market and as a production hub.

Building the New Auto Hub

Suzuki's re-imports surged 7.4-fold year-on-year to 43,266 units. The company is shipping models such as the Fronx, a compact SUV produced by its Indian subsidiary, Maruti Suzuki, to Japan.

"For models exported globally, it is more cost-effective to manufacture them in India than in Japan," said Toshihide Takeuchi, president of Maruti Suzuki.

Labor costs in India's manufacturing sector are estimated to be about one-fifth of those in Japan, while the quality of locally produced vehicles has improved markedly.

In the early 2000s, Thailand promoted its automotive sector under the slogan "Detroit of Asia," achieving export-led growth. India is now pursuing a similar path, with the government introducing incentive programs and other measures to boost domestic production and exports.

JETRO estimates India's automobile output reached about 6.01 million units in 2024, ranking fourth globally, behind Japan's roughly 8.23 million units.

Major Japanese automakers are actively positioning India as a global production hub, moving ahead with investments in advanced facilities and workforce development.

Suzuki plans to invest ¥4 trillion in R&D and capital expenditures between fiscal 2025 and 2030, with ¥1.2 trillion allocated to capital spending in India alone. Toyota Motor Corporation is also set to begin operations at its third plant in India in 2026.

China's Rise, India's Opportunity

Meanwhile, Japanese automakers are steadily ceding ground in Southeast Asia, a region that has long underpinned their profitability, as Chinese rivals capture market share. In Thailand, a key market, the share of Japanese vehicles fell from 77.8% in 2023 to 69.3% in 2025. During that same period, Chinese brands expanded their share from 10.9% to 18.2%.

A similar trend is evident in Indonesia, where Japanese automakers' market share declined below 90% in 2024 as Chinese brands continue to gain market share.

Yet Chinese automakers have made only limited inroads into India, constrained by New Delhi's restrictive approach to Chinese investment since their border dispute. Japanese manufacturers are moving to capitalize on this, positioning India as a central pillar of their global strategies.

Honda, which recently posted significant losses after reassessing its EV business in North America, has also indicated that it will "designate India as a priority market and strengthen its efforts there," according to Vice President Noriya Kaibara.

Author: Takehiko Nagata, The Sankei Shimbun

(Read this article in Japanese)