Auto Expo: Not surcharged, but still electric

Takahiro Hachigo and Han-Woo Park were the only two global chiefs present at the Delhi Auto Expo, which kicked off on Wednesday. In the process, this sent a strong message of their companies’ intent in India.

Hachigo is President & CEO of Honda Motor Company while Park, likewise, is President of Kia Motors. The Japanese automaker has been in India for decades now with its two-wheeler operations doing particularly well and aiming for leadership position by 2021. The same cannot be said of its cars where it is only the City that stands tall.

Kia is a new entrant whose first cars will roll out of its Andhra Pradesh plant only towards the end of next year. Yet, the huge crowds that thronged its pavilion at the Expo seemed to suggest that the Korean brand is already a winner here.

Star attractions

Beyond Hachigo and Park, the fact that there were no other heavyweights from the MNC space only seemed to reinforce the point that this year’s Expo somehow lacked the mojo prevalent on previous occasions. Given that top brands such as Volkswagen, Audi, Skoda, Ford, Nissan, Jaguar Land Rover and Fiat Chrysler chose to give the event a skip meant that it was really up to the others to try and hold things together.

At one level, things did not really look too bad on the first day where market leader, Maruti Suzuki, showcased its new concept and articulated the roadmap ahead. The momentum continued through the day as photographers had a field day at the various pavilions of Hyundai, Kia, Honda, Mercedes, BMW, Mahindra, Tata and Toyota.

These companies pulled out all the stops to infuse tremendous energy into the proceedings with celebrities such as Sachin Tendulkar and Bollywood stars, Akshay Kumar and Shah Rukh Khan, wowing the crowds. The two-wheeler pavilions were also hugely attractive thanks to the efforts of Yamaha, Honda and TVS, which had their products on display.

However, the same levels of energy were not present on the second day even while the Expo gets set to open its gates at Greater Noida to the public till February 14. Auto industry executives admitted that the fizz was just not there this time around, which was particularly odd for a country tipped to be the automobile powerhouse of the future after China and the US.

Focus on e-mobility

The ‘electric’ theme at the Expo was doubtless a tribute to manufacturers’ competence and intent in the clean air drive but there was no taking away the fact that there world beyond Greater Noida is completely different. Delhi has been in the news for its foul air and even while the Centre is keen to embrace e-mobility in a big way, it is more than obvious that the job is easier said than done.

“First, there were talks of going 100 per cent electric by 2030, which has since been pruned to 40 per cent,” said a top executive. “Even this is a bit of a stretch considering that a leader like China has not set itself such a target.”

To that extent, India just needs to present a more credible image of its intent in the global auto market. It was barely three years ago when sales of 2000cc diesel cars were banned in Delhi for a considerable period of time. Then came the directive to liquidate Bharat Stage III stocks in less than three days last year.

While the industry has managed to move beyond the demonetisation shocker of November 2016, the recent Budget announcement to hike import duty only signals greater protectionism. Each of these decisions has impacted automakers’ business plans and they really cannot be blamed for being extra paranoid lately.

After all, the next big challenge comes in the form of BS VI, which will become a reality in just 26 months from now. India has decided to skip BS V in the process and this is something no other country in the world has attempted in such a tight timeframe.

To their credit, manufacturers are not complaining despite the fact that this is going to involve huge investments in a market that is particularly price-sensitive.

Moving on with the Expo, it was incredible to see how Maruti refuses to be lulled into a sense of complacency even while it is leagues ahead of the rest. With a 50 per cent market share, the company continues to push the envelope in its product and retail strategy.

The next big thrust will be the global stage where parent, Suzuki, has made it clear that its Indian arm will service markets such as Latin America and Africa. This is where the new Gujarat plant, with its prolixity to a port, will become a critical gateway to the world. By 2020, Suzuki and its new ally Toyota will also kickstart their joint e-mobility initiative in India and it will be interesting to see how this global partnership will grow in the coming years.

As indicated, Kia was the big draw at the Expo and what came through loud and clear is its intent to go flat out in this market. It will bank on design and styling while focusing on products that will remain a differentiator.

Given that India is primarily a compact car market, which is also seeing an SUV boom, it is only logical that Kia will focus on this space. Yet, it is expected to go the extra mile in designing and developing products that meet the needs of a young, funky generation in India, which loves colourful sneakers and smart gadgets.

Kia is part of the Hyundai group but will remain its rival in the market even while the two will work on synergies at the back-end. On the subject of groups and brands, Honda has been extraordinary successful with its two-wheeler business where it has emerged a strong No 2. It is now exploring the option of building on synergies with its car unit, which could do with a boost.

Eyeing two-wheeler market

This could lead to tapping the substantially larger two-wheeler customer base and hopefully elevate them to a Honda car. The challenge, however, is to build a strong retail presence in smaller towns while offering a viable product. The all-new Amaze launched at the Expo should also make a difference to the fortunes of the car business in the coming months.

The exact opposite is Suzuki, which is the monarch of the Indian automobile segment though its two-wheelers are lagging behind the rest. With a stronger focus on premium bikes and scooters, Suzuki Motorcycles is determined to build its presence here while building its global business from India too. Unlike Honda, synergies may not be conceivable at least for now.

In conclusion, what is in store for the 2020 Delhi Auto Expo? Will more companies participate or will the absentee list increase? This is a serious issue to be considered for the organisers and every effort needs to be made to woo manufacturers to be present at this big event.

It will also send the right message to the world and will, hopefully, see more of their CEOs land up here as they do in China’s auto shows that are truly glittering events.

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