Gloom takes a backseat at Auto Expo 2014

Written by Roudra Bhattacharya | Updated: Feb 10 2014, 19:45pm hrs
One look at the strong participation by auto makers in the ongoing Delhi Auto Expo and the huge crowds thronging to see new cars and two-wheelers, and you would never believe Indias auto industry is facing one of the most severe slowdowns in its history. The gloom surrounding the dismal performance of the countrys auto market has all been left outside the walls of the Delhi Auto Expos new venue at Greater Noida. Inside, the story is about celebration and optimism, with the excitement around 70 new product launches and unveiling proving too infectious for any industry official to see anything but hope of an imminent revival.

A week back, the three organisersindustry chamber CII, auto-makers body Siam and auto components association Acmawere a worried lot. Siams deputy director-general, Sugato Sen, admitted that there were many pressing issues that could impact the success of the 12th Delhi Auto Expo, apart from low consumer sentiments. Given that a new venue being tried for the first timethe Auto Expo has been held in Pragati Maidan since its inception in 1986and the fact that the Greater Noida Expo Mart was about 50 km from the centre of New Delhi, there was concern that visitors would get discouraged. Moreover, the expo has been split into twoPragati Maidan continues to house the auto components fairlargely a B2B affair, while the vehicles expo has been relocated to Greater Noida. A new venue also means things like security, stall layout and general organisation, were all being tried for the first time. But there is a silver lininga total overhaul meant that there was also an opportunity for the organisers to script an entirely new story for Indias premier auto expo that is watched globally by investors, but has long been plagued by issues of crowd mismanagement and inefficient organisation. In a way, the sparkling new venue has uplifted the brand image of Indias auto industry.

To the credit of the organisers, the Expo this time has surely been a success. Sen had earlier said that he expected about 5.5 lakh general visitors to turn up, lower than the 7 lakh visitors seen in the 2012 edition. But already, with still two days left for the finale on February 11, the Auto Expo is close to a 4-lakh visitor count. Not only the public, but the auto-makers are a pleased lot as well. A Renault and a Volkswagen official both said that Indias Auto Expo can finally be compared with the worlds best. Total display space is up 30% as compared to the previous edition, and that means that most companies have bigger stalls and wider alleys in between for the crowd to easily move around.

The success has, however, not come easy. While work for the organisers had begun back in 2012 right after the end of the previous Expo, Siam officials also took training in project management from the worlds largest car-maker, Toyota, to make sure they are ready for any emergencies. The turnout shows that Indian customers want new vehicles. This country has among the lowest penetration of personal vehicles, there is huge potential to be tapped into, an executive from a global car-maker said in a casual conversation.

The only lingering worry is now about the future. It turns out that Greater Noida may not be a permanent home, and the organisers do not want it to be a travelling show. The Expo has always been identified with Delhi and the Pragati Maidan. We experimented this time, but we want to have a final home where the Expo can be held every two years and which has permanent facilities. I hope domestic investors sense the opportunity and set up a new venue, Acmas director-general Vinnie Mehta said. Mehta also wants both the component and vehicle fair to be held together like in the previous editions, which neither of the two venueGreater Noidas Expo Mart or Pragati Maidanhas the capacity to handle.

What the Auto Expo has done is to highlight the interest in new vehicles that customers have in this country, and the fact that the slowdown is only a temporary dip to an otherwise bullish story. It is true that passenger vehicle sales have touched their lowest point in a decade (almost 6% down to 18.3 lakh units in April-December FY14) and commercial vehicle volumes are in a two-year slump (down 18% to 4.7 lakh units). But most players believe that with the right India-specific products, growth is just around the corner. No more will global models modified for India workthis Auto Expo saw a frenzy of compact vehicles unveiled by Maruti Suzuki, Hyundai, Honda, General Motors, Ford and Nissan, with every company either showing a new hatchback, compact sedan or a compact SUV developed specifically for India.

But the industry understands that only having the right products may not guarantee success. What was a common theme among all auto-makers is the fact that every company is waiting for the general elections later this year to give a stable government that can improve business sentiment, the countrys economic growth trajectory and thereby, put more money in the hands of consumers to spend on discretionary purchases like cars. It is felt that incentives from policy-makers are deemed necessary to give a jumpstart to the auto industry after two very slow years which the industry will build upon.