India’s busy Auto Expo and the risk of an industry believing its own publicity

January 7, 2012

After fighting through the sea of camera-wielding car enthusiasts clutching their bags filled with corporate gifts to meet with Anand Mahindra, vice-chairman of the Mahindra group, it was difficult to argue with his rosy view of India’s car industry.

“Just look at all these people,” said Mahindra. “If these crowds translate into market appetite, it’s not much of a slowdown,” he added, shaking his head at the view from a glass-walled office high above the teeming masses at the India Auto Expo on Friday.

Mahindra has reason to be cheerful. Sales of cars by his group’s autos arm have remained strong this year. But he wasn’t the only executive shrugging off a slump in India’s car industry with glib comments about the sharp elbows of hundreds of thousands of excited punters that thronged the India Auto Expo this weekend.

The data is much less encouraging. Come April, the same executives could likely be digesting a year that saw sales volumes fall. Just a year previously, they were toasting 30 percent growth. But the Auto Show, held every two years in the capital, didn’t give the impression of an industry filled with ideas to tackle the slide.

SUVs, green technology vehicles and cutting-edge concept cars stole the headlines and drew in the crowds, aside from the free calendars and the chance to catch a glimpse of a Bollywood star or two.

But conspicuous by its absence amongst a sea of oversized SUVs was a new offering for the low-cost compact space, the segment that has accounted for most of the sales slump, as first-time buyers and those requiring financing baulk at high interest rates and rising fuel costs.

Many executives offered reasons for the struggles of Tata Motors’ much-touted low-cost Nano model, and the company’s struggles to shift anywhere near its targeted sales volume appear to have spooked an industry that couldn’t get enough of cheap, small cars just two years ago.

Strikingly, few initiatives to stimulate sales were offered, as most industry players that spoke to Reuters batted away suggestions of financing schemes or price cuts, and instead offered suggestions that the slowdown was just a passing cloud that would soon move along. A “temporary blip” was the most popular way of dismissing the gloom.

The market may well recover, and India’s rising salaries, growing middle-class and young population are all huge advantages that carmakers in the country can reassure themselves with. But, as Maruti Suzuki’s chairman R.C. Bhargava told Reuters, overall economic growth, which will likely struggle to scrape in at 7 percent for the current financial year, needs to recover before the heady heights of 30 percent car sales growth can be contemplated again.

Mahindra would later use Twitter to complain of the lack of crowd control at the event. The stages were certainly packed with potential customers excited by the products on offer. But when the concept cars are wheeled back to the research centers and the new launches arrive in showrooms, the near future of India’s car industry will be measured in sales volumes, not camera flashes.

5 comments

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This is a nice article. AutoExpo has given a good exposure to India’s automobile market. http://www.indiagarage.com/thread14401.h tml

Posted by AnnaShetty | Report as abusive

One of the most awaited events Auto Expo among the car lovers. People love technology and have been quiet excited on the upcoming new launches which are over 50 in number in 2012 in India. http://www.mycarhelpline.com

Posted by mycarhelpline | Report as abusive

Thanks for the aboce article. Definitely a great writeup. Too bad i havent been on the reuters blog till now

Posted by techsaucer.com | Report as abusive

Good Article…

Posted by RTHA | Report as abusive

Nice post here. I am been searching for this article for long time. Mahindra is the best SUV seller in the Indian Automotive industry.

http://www.limousinestrader.com/

Posted by David_Hussey | Report as abusive