|Auto Expo’s show-stopper|
|Monday, 09 January 2012 00:00|
Despite all the crowds BMW’s iconic Mini Cooper or other beauties drew at the Auto Expo over the weekend, the real show-stopper was India, the size of its consumer market and the depth of its potential. Big investors, both in India and overseas, may be talking of how India’s a lousy place to invest in right now, but none of this seemed to bother auto giants at the Expo who, by the way, are now paying rentals for space that are almost as high for motor shows in Frankfurt or Paris (Geneva and Seoul cost less!)—one of the exciting newbies this time around is the iconic UK-based bike firm Triumph. But more than the cars, the SUVs and the bikes, between all of them, firms at the Expo announced investment plans adding up to a couple of billion dollars, and that’s not counting Peugeot which had announced a $932 million plan for Gujarat prior to the Expo. While Mahindra & Mahindra announced plans for R5,000 crore for the next two years, Honda spoke of another R1,000 crore … others including Maruti Suzuki, Hyundai and Honda Siel also announced expansion plans—the current slowdown notwithstanding, no one doubts India’s growth potential and the rapidly increasing middle class.
What makes Honda even more exciting than the money are its plans—after splitting from Hero, the bike manufacturer wants to hike its market share from the current 13% to 30% by 2020, and also plans to make India a part of its global export hubs. Which means that, as production declines/stagnates in Japan as costs in that country keep rising, India will be a vital part of its growth story. That means not just production for exports, it means R&D in India, it means designing here. Just look at how Maruti has grown once Suzuki decided it would be part of the global operations—not only are Maruti engineers now an integral part of R&D for Suzuki’s global models such as the Ertiga that was showcased in the Expo, the R&D centre has 1,080 engineers and even a test track, the first Suzuki built outside of Japan. If the Nano was the darling of previous Expos, Bajaj Auto’s non-car, the RE60, showcased the kind of innovative capacity that is attracting auto majors to India. Of course, there is the fear that India can still get it wrong—do you see Indian unions agreeing to a no-strike pact of the sort Korean Ssangyong’s workers have agreed to for 3 years with Mahindra & Mahindra, and land acquisition remains a serious bugbear. But for every Mamata Banerjee that gets it wrong, there’s a Narendra Modi who’s getting it right—for automobile firms, that’s the main thing.