Car makers look for growth with new models

The world’s leading car makers launched new models in India at the start of the country’s Auto Expo, eyeing a market that has slowed sharply but remains a hotspot compared with depressed Western economies, writes Adam Plowright.

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 7.0 per cent this financial year despite a recent slowdown.

General Motors, Volkswagen, Ford, Hyundai and Nissan were among the brands looking to make a splash, with several unveiling chunky SUV vehicles targeting 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 5-10 years ago,” Shinzo Nakanishi, the chief executive of India’s biggest car maker Maruti Suzuki said. “People want more luxury and well-equipped models.”

Maruti Suzuki, an Indian-Japanese 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, Volkswagen showcased its Touareg and Renault also entered 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 and 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.

Beneath the dazzling lights, pounding music and exhibition girls accompanying the launch of up to 50 new models at the sprawling exhibition centre lies a clear commercial logic.

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.

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 140,000-rupees (BD999), 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.