It’s hard to escape the influence of the auto industry in Chennai, a city in southern India known as the nation’s Detroit. Schoolyards have billboards proclaiming they’re “supported by” big carmakers such as Daimler, Renault, and Nissan Motor. Even the public toilets in a nearby slum are sponsored by the country’s largest tiremaker.
With a rising middle class and rapid urbanization, this should be boom times for the country’s automotive industry, the fourth-largest in the world. Car density—measured by the number of passenger cars per 1,000 people—was only 27 last year, vs. 145 in China and 570 in Germany, according to Fitch Ratings. That leaves huge potential for growth. McKinsey & Co. projected in 2018 that India could overtake Japan as the No. 3 car market by 2021.