Auto Expo reflects India's growing global might
2009-12-29

Murali Gopalan

Auto Expo 2010 may not have a showstopper like the Tata Nano that caught the fancy of the world during the 2008 event or the Tata Indica even further back in 1998.

What is significant about the present Expo is that it well and truly showcases India's coming of age in the global auto arena when most other countries, barring China, just fell apart. Nobody in India Inc could have been as optimistic in the latter half of 2008 when the Lehman crisis shook the world. India felt the tremors too when the Sensex tanked and investors just went broke overnight. It was at this juncture that the Government stepped in and announced a series of fiscal incentives to ensure that industry could hold its own against the crisis.

Rural Drive

It was this intervention that prevented the auto industry from sinking into an abyss. “Things could have been terrible otherwise and the excise duty cuts on cars went a long way in stimulating demand,” industry sources recall. Manufacturers also realised the potential of Rural India during these trying times and Maruti, Hyundai, Mahindra & Mahindra and many others cashed in on this opportunity in a big way.

As a result, 2009 turned out to be one of the best years for the country's auto industry. It almost became routine for Maruti to churn out 75,000 cars on an average each month with rival Hyundai not doing too badly with over 40,000 units. Tata Motors' commercial vehicle business began slipping back to a degree of normalcy only during the last six months but its passenger car business did reasonable numbers.

Pragati Maidan full up

It is, therefore, in this context that the 2010 Expo in New Delhi is significant. The venue, Pragati Maidan, is already bursting at its seams with halls booked months in advance. As always, Tata Motors leads the pack, in terms of space booked, with nearly 5,500 square metres. Maruti is not too far behind with around 4,700 sq m with almost every big name in the global auto business part of this parade.

Today, there are no two ways about the fact that the Delhi Auto Expo has well and truly arrived. The Tokyo Motor Show, held three months earlier, had little to offer and was largely seen as one showcasing the Japanese car industry. Today, only the Shanghai Auto Show can be termed bigger than the event in India though it would only be a matter of time before the gap is bridged even further.

Little wonder, therefore, that some of the top brass of different companies will be present in New Delhi from January 5 when Pragati Maidan throws open its gates. Be it Toyota, Honda, Volkswagen or Renault, their management hotshots will be around to size up this exciting market. In their eyes, India represents a miracle when their countries just did not have a clue to handling the slowdown.

Govt largesse

This would not have happened had it not been for the reduction in excise duty on small cars to eight per cent (from 12 per cent) and others to 20 per cent (24 per cent). In addition, the Jawaharlal Nehru National Urban Renewal Mission (where cities got funds from the Centre for infrastructure) was the best piece of news for commercial vehicle manufacturers that saw new orders coming for their buses. Europe's scrappage scheme also helped with fuel-efficient cars from Maruti and Hyundai being picked up by customers in these markets.

Halfway into 2009, carmakers' cheer seemed to be giving way to worry as a drought gripped parts of northern India. But they need not have worried as the drought did not deter customers one bit. Buying cars and two-wheelers continued at their frenzied pace though it was also clear that only new products did the trick. “Companies like Maruti, Hyundai, Mahindra & Mahindra and Bajaj Auto saw sales soar because they had something fresh to offer from time to time,” sources said.

Volkswagen's India Move

The Expo is also important to some companies keen on sending out the right message of their intentions to the Indian market. Volkswagen, for instance, will showcase the Polo that will be launched in the coming months. The German carmaker, one of the most powerful players in the world market, has taken its time about entering India possibly because it had had a good run in China.

VW's subsidiary, Skoda, has been around longer (since 2001) and has established itself as a premium player. It is now up to the parent to carve its own niche here. Clearly, VW's intent is quite aggressive going by the advertising blitzkrieg both on television and in print. “VW means business and its recent stake buyout in Suzuki reflects this intent,” sources say. Similarly, Renault's stint in India with the Logan has been little to write home about and the French carmaker would be anxious to send the right message home at the Expo. Its Chairman, Mr Carlos Ghosn, said during a recent India visit that some important announcements were likely to be made around this time which would reiterate the company's long-term commitment to the market here.

From the Japanese side, Honda and Toyota will showcase their small-car concepts at Pragati Maidan. Codenamed 800 L, the Toyota product is scheduled to debut during end-2010 while Honda's will follow a year later. Pricing will, of course, be the key in creating a presence in a segment where Maruti is well parked and is in no hurry to vacate the lot.

Japanese concepts

Both Honda are Toyota are expected to target their small cars for markets such as Brazil and Russia too though India will be the launch pad and possibly the most important hub for export of components to other countries.

Likewise, Ford will have on display its Figo small car that was unveiled by its President, Mr Alan Mulally, in New Delhi some months ago. The American carmaker will be banking on this car to boost its India presence. Ford has often been criticised for being too slow on launching new products and the Figo could be a beginning to set right this perception.

General Motors' Indian operations will now be part of a new 50:50 joint venture with Shanghai Automotive Industry Corporation. This will see the launch of Chinese-made light trucks and passenger cars in the near future which are intended to increase GM's market share in India. The company will be launching its Beat mini-car on January 4, a day ahead of the official opening of the Expo. Tata Motors and Mahindra & Mahindra will also showcase their commercial vehicles during the week-long event. Indications are that these could include the World Truck range from the former and latter's trucks being planned with ITEC of the US.

Two-wheel rev up

India's two-wheeler industry has also been doing brisk business of nearly 700,000 units each month and its Big Three — Hero Honda, Bajaj Auto and TVS Motor — will be present at the Expo. Yamaha and Suzuki, which are keen to increase their market share, will also be displaying their products.

Special mention must be made of Honda Motorcycle & Scooter India, which within a decade, has emerged the clear market leader in gearless scooters and could end up being a force to reckon with in motorcycles.

HMSI recently launched the 110cc Twister which will be on display at Pragati Maidan.