Indian car show goes on despite a slump in sales

Car manufacturers have launched some 50 new models at a show in India in the face of falling sales

Nearly 50 new launches amid exotic dances, thumping music and celebrity appearances.

With such fanfare and glitz, it is hard to believe that the Indian car industry is going through its worst phase in over a decade.

Car sales fell 10% last year, and the Society of Indian Automobile Manufacturers predicts local car sales could fall again this year.

India's inflation rates are the highest in Asia and the economy has slowed to less than 5%.

Customers are hardly coming into the showrooms. Borrowing has become expensive over the last couple of years.

With about two-thirds of the cars delivered in India being sold on loans, higher borrowing costs means that purchase decisions are delayed.

Yet at India's car show, most manufacturers seemed to be focused on the long-term potential of the Indian market.

This year, the Auto Expo 2014 has moved out of the capital Delhi to a new, bigger location at Greater Noida, in the neighbouring state of Uttar Pradesh.

Expecting 100,000 visitors daily, the seven-day show opens to the public on Friday.

Across the board, both small and big car makers say that they hope the show can persuade consumers here to start buying again.

So what's the mood like?

Tata Motors: Nano focus

Trying to get back into the spotlight, Tata Motors has launched the first new cars from its stable in nearly four years.

Tata's offerings include a hatchback, Bolt and a basic sedan called Zest.

It may be one of country's biggest car makers, but sales fell by more than a third last year - worse than any of its Indian rivals.

Tata hopes to capture a younger market with its new Nano Tata Motor has revamped its well hyped but poorly received Nano hoping that it will turn things around

It was not meant to pan out like this.

Tata's ultra-cheap, small car Nano was supposed to be the show-piece vehicle, and the firm expected it to revolutionise the industry.

But sales of the $2,000 (£1,200) Nano have been disappointing since its launch in 2009.

The company now wants to change its selling strategy.

"If you look at the market and the demographics of the buyers, we see younger buyers coming in," says Ankush Arora, senior vice president at Tata Motors.

"Obviously cheap is not what they are looking for. They are looking for the right value, something that enhances their identity.

"So we embarked on a complete repositioning of the Nano - really targeting those younger buyers."

Tata Motors has been struggling for a while now, and the man who was supposed to revive it, managing director Karl Slym, died recently after falling from the 22nd floor of a Bangkok hotel.

At the show, Tata officials seemed confident that there would be no delays to the company's turnaround plans because of Mr Slym's death.

Ford: Investments on the fast track

Yet the market is not uniformly bad. For instance, US car giant Ford is sitting on months of orders.

Launching an update of its existing compact car and an all-new mid-sized sedan - the company says success in India is critical for Ford's global success.

Kumar Galhotra, vice-president, engineering, Ford Motors, stands next to a Ford Figo concept car at the India motor show 2014 Ford's Kumar Galhotra says the firm is committed to significant investments in India

"We are committed to investing $2bn in India," says Kumar Galhotra, vice-president of engineering at Ford.

"A billion of that is in our new plant in Sanand in Gujarat which will be operational by the end of this year.

"We start producing cars early next year, so we see a great potential in the market."

Mr Galhotra also says he expects small car sales in India to grow from about one million units in 2013 to about two million units in 2018.

That is partly why Ford is looking to make India one of its biggest export hubs. The company exports currently to 37 countries from India and aims to increase to 50 in the coming years.

Maruti Suzuki: Rural dreams

Nearly one in two new cars sold in India is a Maruti, and now India's largest car maker has a new goal - reaching out to buyers in rural areas.

Nearly one in every two new cars sold in India is their brand. Maruti Suzuki unveiled its new concept car Ciaz

Launching two new concept cars — SX4 S-Cross and Ciaz, managing director and chief executive Kenichi Ayukawa says the good news is in the countryside.

"Our rural volumes have grown steadily. People in the villages have the money and want to access good cars.

"There are 100,000 villages in India and we want to tap into them. We will step up our rural sales outlets and have more mobile service network for rural customers."

Maruti Suzuki is already the strongest player in rural India with 1,300 dealerships. Six years ago only 3% of sales were in rural areas but now it is 30%.

A good monsoon and harvest have ensured that the country's farmers are willing to spend.

The firm now plans to hire thousands of extra salesmen in rural areas and to create mobile car workshops for villagers who buy its cars.

Audi: Luxury continues to sell

The German luxury car maker surprised everyone by revealing its A3 sedan and its Cabriolet variant at the show.

The company sold 10,000 cars in India 2013, which is more than any other high status car maker.

China may be the world's top luxury car market, but India is fast emerging as the next favourite destination for car firms.

Audi TT car at the 12th Auto Expo in Greater Noida, India, 5 Feb, 2014 Audi is confident about growth in India's luxury car market

One estimate suggests that India's luxury auto market may quadruple by 2020, when compared with last year's sale figures - while the overall global car market is forecast to grow by 40%.

Indian buyers tend to choose cars that deliver better value, so by introducing lower priced cars and financing schemes Audi has captured many younger customers.

It has a market share of 32% and plans to increase its dealerships to 40 by the end of the year.

Joe King, who is head of Audi India, says the compact luxury segment is important and the A3 will be best suited for this.

"We see the market in the first half of the year being relatively flat, but post the elections mid-year, we see a spurt.

"So I expect that the market will grow at a similar pace to last year at least in the luxury segment. We plan to exceed our performance."

More on This Story

Global Car Industry

The BBC is not responsible for the content of external Internet sites

More Business stories


BBC Business Live

    INDIAN BUDGET 07:20: Via Email Simon Atkinson Editor, India Business Report
    Indian Finance Minister Arun Jaitley leaves his office to table the budget in parliament in New Delhi.

    Simon Atkinson, editor of India Business Report, outside the Indian parliament in Delhi, sends this on the Federal Budget: "Early on, this is a budget appealing to foreign investors. Promise to scrutinise retrospective tax laws - something that put off some firms after high profile Vodafone case and allowing up to 49% overseas ownership of defence firms."

    INDIAN BUDGET Via Twitter

    Tweet from business reporter Shilpa Kannan: Fin min @arunjaitley "We cannot spend beyond our means - fiscal prudence is important for future generations"

    MARKET UPDATE 06:54:

    Tokyo stocks declined 0.24% after the US Federal Reserve signalled its widely-expected intention to end its long-running stimulus programme in October. The Nikkei 225 index slipped 36.89 points to 15,265.76. Hong Kong stocks rose 0.28%. The benchmark Hang Seng Index added 63.79 points to 23,239.86.

    PUBLIC SECTOR STRIKE 06:42: Radio 5 live

    Professor Gregor Gall of the Bradford University School of Management is on 5 live talking about today's proposed strike. Strikers should make sure this is the "beginning of something" rather than just a one-off, like the last major public sector strike in 2011, he says. Otherwise the strike may end up just being "letting off steam but not adding to their leverage at the bargaining table."

    A member of the general trade union GMB stands outside The Houses of Parliament in London on November 30, 2011

    More than a million public sector workers are due to walk out on strike later today in a series of disputes with government over pay, pensions and job cuts. Council staff, teachers, firefighters and civil servants are among those walking out. Someone is bound to tell us how much the strike is going to cost the economy later. In the meantime, if anyone wants to have a crack at it, send your answers to or @BBCBusiness on twitter.

    NEW INDIA GOVERNMENT Via Email Yogita Limaye Business reporter, BBC News

    Dozens of media vans are parked outside parliament as the new Indian government prepares to deliver its much anticipated first budget. A short while ago, the finance minister Arun Jaitley left his office to go to parliament, posing with the traditional 'budget briefcase' - a bag that carries the document. Bureaucrats have been locked in for days preparing this plan.

    SUNDAY TRADING 06:05: Radio 5 live

    Ewen Cameron-Watt, chief investment strategist of investment institute at BlackRock, is on 5 live, talking about Sunday trading for shops. "There's a law of diminishing returns for Sunday trading," he says. Will shops make back their costs, he asks? "Are we really going to be doing our weekly shop at 10 past 8 on a Sunday?" Not him, he says.

    06:00: Howard Mustoe Business reporter

    Good morning from the Business Live team. You can get in touch via or @BBCBusiness on twitter

    06:00: Matthew West Business reporter

    Morning folks, lots of news promised for today. It's the start of a new era at Sainsbury's under boss Mike Coupe; we have the monthly interest rate decision from the Bank of England, India announces its first Budget under new prime minister Narendra Modi; another house price index - this time from the Royal Institution of Chartered Surveyors - and a trading update from Burberry. So plenty to come.



BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.