Indian car show goes on despite a slump in sales

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Media captionCar 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.

Image copyright AFP
Image caption 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.

Image copyright Reuters
Image caption 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.

Image copyright Reuters
Image caption 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.

Image copyright Getty Images
Image caption 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."

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