BOLLYWOOD OR BUST

Ford India President Michael Boneham, Ford Motor Co. President and Chief Executive Officer Alan Mulally and Ford Asia Pacific President Joe Hinrichs present at last week’s opening of the India Auto Expo in New Delhi, India, the new Ford EcoSport, a subcompact SUV that’s intended for global release. AFP PHOTO

Carmakers look for growth at India Auto Expo

NEW Delhi: The world’s leading carmakers last week launched new models in India at the start of the country’s Auto Expo held in the capital city, eyeing a market that has slowed sharply but remains a hotspot compared with depressed Western economies.

The exhibition, which takes place every two years, has grown in stature in line with interest in the Indian economy, which is expected by economists to expand by 7 percent this financial year despite a recent slowdown. Ford, Volkswagen, Hyundai, General Motors and Nissan were among the brands looking to make a splash on the first day, with several unveiling vehicles that target India’s increasingly demanding car buyers.

While the low-income country remains a cost-sensitive market dominated by sales of small family cars, a recent slowdown has led many manufacturers to look for profits from the more affluent middle classes.

“Pricing is important, but people are also thinking differently from five years to 10 years ago,” said Shinzo Nakanishi, chief executive of Suzuki Maruti, India’s biggest carmaker. “People want more luxury and well-equipped models.”

New models
Suzuki Maruti, a Japanese-Indian group which sells four in every 10 cars in India, launched the XA-Alpha concept SUV, whose rugged looks were apparently inspired by Indian wrestling.

Ford also premiered its new EcoSport SUV, a redesigned version of a model on sale in South America, as Volkswagen showcased its Touareg while Renault enters the segment with its Duster.

Ford’s Asia Pacific President Joe Hinrichs said the Indian auto expo was “one of the most important shows on the calendar” as India is expected to be the world’s third-biggest market by 2020.

In a sign of changing priorities in the industry, Jaguar Land Rover, the British brands bought by India’s Tata conglomerate in 2008, has decided to skip the overlapping Detroit motor show to focus on New Delhi.

Nouveau riche
Beneath the dazzling lights, pounding music and exhibition girls accompanying the launch of up to 50 new models at the sprawling exhibition center lies a clear commercial logic. Car ownership remains low in a country of 1.2 billion people where two-thirds live below the poverty line, but an expanding economy is minting millions of new middle-class families and millionaires each year.

Growth of the passenger car market hit 31 percent in 2010, but has since dropped off sharply due to rising interest rates, higher commodity prices and economic uncertainty. The Society of Indian Automobile Manufacturers (SIAM) expects sales in the financial year to March to rise between 2 percent and 4 percent, but industry insiders see flat growth.

Undaunted by what analysts say is a temporary blip, French auto giant PSA Peugeot Citroen appeared for the first time at the Delhi expo to re-launch its brand in India. PSA is a latecomer to the country and is banking on selling luxury models such as its 506, manufactured at its nearly $1-billion new factory in the western state of Gujarat, which will start operations in 2014.

“One of the ways to differentiate ourselves from the local groups is to position ourselves with high-end vehicles,” said Frederic Fabre, PSA’s head of emerging markets.

European manufacturers such as Peugeot, Renault and BMW, the German manufacturer that dominates in the luxury part of the Indian market, are desperate for overseas sales as a debt crisis at home dampens consumer spending.

For Ford’s Hinrichs, however, India “is always going to be about the value proposition,” meaning the biggest sales will be in small cars pitched at the low end of the market.

Tata Motors had hoped to benefit from the millions of poorer Indians looking to upgrade their motorbikes for four wheels. It launched the Nano, the world’s cheapest car at $2,650 in 2009 but demand has failed to take off. Sales hit a low of 509 in November 2010 and averaged only about 4,000 a month in 2011. Chairman of the Tata conglomerate Ratan Tata conceded that the group had made mistakes, including not having an adequate advertising campaign or dealer network immediately after the launch. He also said the vehicle had been wrongly perceived, referring to criticism that it had come to be seen simply as a cheap car instead of an “aspirational” one for the status-conscious middle classes.

“We’ve never pushed it as a poor man’s car but an affordable, all-weather, family car,” Tata said. “But whatever stigma has been attached to it, we will undo going forward.”