This biennial event has clearly become an integral part of the capitals social scape. To think that the milling crowds have come only to gawk at the leggy two-legged models or to pelt stones at the four-wheeled ones is to miss the point. The enormous popularity of the motor show mirrors the ongoing automobile revolution in the country. The draw of the event is obviously cars and two-wheelers, not sex and vicarious thrills.
To be sure, that revolution is an unfinished one. But it is very much happening, as reflected over successive Auto Expos. Memories are proverbially short, but the organisers of this event the Confederation of Indian Industry had major problems filling up the 65,000 odd sq meters of space when the event kicked off in 1986. But that gradually changed over the years, especially with the onset of the Great Indian Auto Race.
The 4th Auto Expo in 1998 was the curtain-raiser for the battle for Indias small car market. The challenge to Maruti Udyog Limiteds dominance was revealed then. The showstopper was the indigenous challenge from Telcos Indica. Hyundai showcased its Santro. Daewoo displayed the DArts. These cars have been launched since then and many global majors have set up shop in the country. A full-blown auto industry thus has taken root.
All of this is history now. Kicking off the 6th Auto Expo, a stunning announcement was made that Indias motorcycle manufacturer, Hero Honda, has become the worlds largest two-wheeler company. This distinction was based on the companys sales of 1.3 million units in 2001, which has taken it past a particular Chinese firm which split into two companies as part of a restructuring drive. This is big news indeed.
Reflecting the steady maturation of the industry, other two-wheeler manufacturers also have their place in the global sun. Bajaj Auto Ltd produces the largest numbers of scooters in the world. It is also the lowest cost manufacturer of that product. Coming to four-wheelers, MULs ubiquitous 800 cc model is the cheapest entry-level car in the world. Sundaram Fasteners produces the largest number of radiator caps.
This sure sounds impressive, but there is a long way to go. For all the celebrations regarding Hero Hondas leadership, the dragons output of 11.3 million odd motorcycles in 1999 still accounts for one-half of the worlds known motorcycle production. The roughly comparable figure in India was 1.79 million in 1999-2000. For every Hero Honda or Bajaj Auto Ltd, there are as many as 21 Chinese firms which produce 100,000 units each and 13 others with 200,000 units a piece. Clearly, Indias two-wheeler manufacturers need to have a China plan to cope with the competition in the offing.
India is one of the worlds largest two-wheeler markets, but the fact remains that ownership levels are low. Two-wheeler ownership per 1,000 people in India currently is only 27, rather low in a larger Asian context where the comparable figures for countries like Malaysia and Thailand are much higher at 224 and 174 respectively. That indeed indicates the vast upside potential when the Indian economy re-enters a faster growth trajectory.
Obviously, when there is faster GDP growth, there will be higher disposable incomes as more and more people enter the ranks of the consuming middle class. But the link between GDP growth and demand for two-wheelers is far from obvious. If GDP growth is 6.5 per cent over the next five years, motorcycle demand is expected to grow by 18 per cent per annum. If growth is faster at 8 per cent, the latters demand increases only to 20 per cent per annum.
Even if one accept these numbers crunched out by the Society of Indian Automobile Manufacturers, the end of the Tenth Plan in 2006-2007 will still witness a level of motorcycle production which is half that of China. What is undeniable, however, is that preconditions for Indian majors to acquire critical mass for becoming global players happen to be good at present. And indeed they might well be doing so. Those like the TVS Motor Company are even thinking of setting up overseas plants in Asia.
Back to the 6th Auto Expo, what one did see was tremendous excitement at the two-wheeler stalls. The assembled crowds were being entertained by the show business personalities employed by manufacturers. But it was undeniable that the romance has returned to biking, as young and old alike checked out the specs of the beautiful bikes on display. This writer was accompanied by a senior CII director, who with great difficulty resisted the temptation to sit atop the gorgeous, silvery Thunderbird, the landcruiser displayed by Enfield India Limited.
Reflecting a trend noticed in the 5th Auto Expo in 2000 was the massive presence of the auto component industry. This time, Canada appeared eager to get a bit of the action and one encountered a member of the Canada-India Business Council who sought advice on how Canadian firms could publicise their intentions through the media! As most of the global majors are already here, they have naturally been followed by their dedicated component firms or follow sources. At earlier Auto Expos, vehicle manufacturers dominated the fair grounds, but not anymore. Component firms naturally dominated the business and space during the fair.
Given the rapid transformation of the industry, the format of the future Auto Expos will change, but this event must be tracked as it holds a clear mirror to Indias auto revolution.