It is a biennial jamboree that generates a lot of excitement among automobile enthusiasts, the media and industry, and the 11 edition of Auto Expo held in New Delhi was no different. The gloom that pervades the global economy and the fog that has enveloped the auto industry in India in the form of slowing sales due to high finance and fuel costs did little to spoil the party. With an estimated 1,500 participants — vehicle manufacturers, component suppliers and service providers — from 24 countries exhibiting their wares, there was enough and more for the large crowds that thronged the venue at Pragati Maidan. More than 50 new products — passenger cars, two-wheelers and buses/trucks — were unveiled during the show. Except for the President and CEO of Ford Motor Company, Alan Mulally, none of the marquee names turned up. This was indeed surprising given that all the big automobile companies have a major presence in India, which is touted as the market of the future especially for passenger cars. This perhaps had to with the scheduling of the expo during the annual holiday season, or with the troubles that most of the big companies are embroiled in.
The brave show of enthusiasm notwithstanding, the fact remains that the automobile industry is up against stiff challenges on multiple fronts. The high interest rates on car loans and rising petrol prices are pulling down sales. Sales growth of all categories of vehicles put together plunged by more than half, to 13 per cent in the first eight months of the current fiscal compared to the same period last year. Not surprisingly, cars have been hit the most with growth rate winding down to zero from 32 per cent. The possibility of the government imposing a higher tax on diesel cars to correct the distortion in sales pattern due to the wide gap between petrol and diesel prices is a source of anxiety. Some of the manufacturers have invested in diesel engine plants while others are all set to do so. For those who have set up large capacities with an eye on exports, the poor state of infrastructure in ports and connectivity is cause for concern. In addition, labour unrest in some automobile hubs, notably Gurgaon/Manesar and to some extent in Chennai/Bangalore, is also weighing down the industry. There is little doubt the government has to play a big supportive role if that enormous long-term potential of this industry is to be realised. Indeed, government support is the sine qua non for the party to continue in the next edition of Auto Expo in 2014.
