Skip to main content

India's Auto Expo opens as sales continue to stall

By Euan McKirdy, for CNN
February 7, 2014 -- Updated 0305 GMT (1105 HKT)
German auto major Volkswagen unveils its concept SUV Taigun for the Indian market. German auto major Volkswagen unveils its concept SUV Taigun for the Indian market.
HIDE CAPTION
10 cars to look out for at Auto Expo 2014
Jaguar F-Type Coupe
Hyundai Venace
Ford Ecosport
Jaguar Project 7
Honda Amaze
Maruti Dzire
Ford Figo
Honda Mobilio
Mercedes-Benz GLA
<<
<
1
2
3
4
5
6
7
8
9
10
>
>>
STORY HIGHLIGHTS
  • The 12th Delhi Auto Expo opens on February 7
  • Compacts continue to dominate attention
  • Auto market remains sluggish in India, but global manufacturers willing to bet on the long-term
  • India's private cars remain a big contributor to pollution and congestion woes

(CNN) -- As India hosts the world's second largest automobile trade show, its domestic market seems to be having some difficulty getting out of first gear.

Car manufacturers from across the world, along with India's homegrown car companies, have descended on New Delhi for the 12th edition of the biannual Auto Expo show.

Global manufacturers view the still-modest percentage of car owners as leaving room for long-term growth.

Boasting increasing amounts of disposable income, India's emergent middle class is viewed by the global automobile industry as a prize -- something reflected in the international interest in New Delhi.

"India's middle class has been expanding," Toshiyuki Shiga, Vice Chairman, Nissan, told CNN. "They'll increase domestic demand. We'd like to offer our vehicles at reasonable prices."

Automakers betting big on Indian market

As the event opens, some eyes are focused on the sports utility market, with Chevrolet's Adra SUV concept and Volkswagen's Taigun, a mini SUV, rumored to be launched at Auto Expo 2014. High-end marques like Jaguar will also be displaying new cars, like its F-Type Coupe.

However, it is the sub-four-meter compact sedans that are set to dominate the show this year.

New cars for the Indian market aspiring to lure the growing middle classes include the 2014 Hyundai Xcent, Honda Amaze and Maruti Dzire, Ford Figo Concept. These brands will be unveiled at the Expo alongside the domestic Maruti (in partnership with Japan's Suzuki motors), Cerelio -- expected to be the most popular launch of the event -- and Tata's Zest and Bolt hatchback models.

With these new models, Tata, the Mumbai-based manufacturer, has undergone some radical overhauls of its design and technology processes -- including the inclusion of the company's Revotron engine -- in a bid to recapture lost market share.

"These cars have been engineered for global markets, through global teams across India, the UK and Korea to set new standards in their respective segments," Ranjt Yadav, president of passenger vehicles, Tata Motors, told reporters in Delhi.

Hyundai, currently the country's second-largest car manufacturer, will cut export figures to focus more on the domestic market and maintain market share.

"Based on market requirement, we will recalibrate our production between domestic and export market," Rakesh Srivastava, Hyundai Motor India's vice-president of marketing and sales, said in an interview with the country's Economic Times.

"Then, whenever there is a need, our investor, our global parent is committed to bringing in additional investment in terms of capacity; but the additional 45,000 units added through re-engineering is enough to meet the demand in the short-term."

As India develops as an economic power and consumers become more sophisticated in their buying habits, analysts say that the automotive industry's growth is slowing down.

"The auto industry is facing significant headwinds on account of rising interest rates, increased fuel prices and reduced share of consumer wallet to discretionary purchases," Deepak Gupta, Institutional Equities, Trust Financial Group, told CNN.

"Growth has been tepid in both two- and four-wheelers, and the majority of growth is attributed to entry level vehicles."

The Society of Indian Automobile Manufacturers (SIAM) said sales of passenger vehicles declined by 5.72% during April-December 2013, compared to the same period the previous year.

India produced 2,029,589 vehicles in the first half of 2013, according to figures released by the International Organization of Motor Vehicle Manufacturers, representing an 8.7% decline over the same period the previous year.

In comparison, the United States, a country with around a quarter of the population, made 5,665,485. China, by far the world's largest auto producer, manufactured 10,751,683 vehicles in the same period.

Gupta says that, while "major car companies are bullish on India and think the economy could change post-general elections," he does not think that the Auto Expo itself will provide an upturn in market sentiment.

And while the automobile market might be in danger of stalling, India's sheer numbers mean that there are still thousands of new cars being introduced to India's already-congested roads every day.

Delhi recently stole Beijing's crown as the world's most polluted city, and lax environmental standards in domestically produced cars are considered partly to blame for Delhi's poor air quality.

Alongside smog caused by traffic, congestion as well as high accident rates and fatalities in India's urban centers mean that cars are an increasing part of the difficulties of life in the subcontinent.

Mumbai, the country's financial capital, has attempted to address the issue with the recent addition of a nine-kilometer-long monorail.

The line, which opened at the beginning of February, traverses the western Indian city and will offer respite to some commuters but much of the remainder of the country's public transportation network is antiquated and overburdened, meaning that cars are increasingly the choice of the growing middle class.

ADVERTISEMENT
Part of complete coverage on
August 22, 2014 -- Updated 1231 GMT (2031 HKT)
James Dawes: Evil is the strongest word we have to prepare ourselves to kill others.
August 23, 2014 -- Updated 0159 GMT (0959 HKT)
As protests over the shooting of an unarmed black teen calmed down, the question remains: Where's the police officer who pulled the trigger?
August 22, 2014 -- Updated 0922 GMT (1722 HKT)
CNN's Tim Lister: Getting rid of ISIS will be tougher than taking on al Qaeda.
August 22, 2014 -- Updated 0042 GMT (0842 HKT)
American patients infected with Ebola are being released from the hospital. What now?
August 22, 2014 -- Updated 1048 GMT (1848 HKT)
One of the first observers at the MH17 crash site in Ukraine describes the harrowing scene.
August 21, 2014 -- Updated 1353 GMT (2153 HKT)
Five survivors of acid attacks capture India's attention with a "ground breaking" photo shoot.
August 20, 2014 -- Updated 1219 GMT (2019 HKT)
In an exclusive CNN interview, Lance Armstrong admits to having a "f**k you" attitude.
August 20, 2014 -- Updated 0036 GMT (0836 HKT)
The pain that Michael Brown's parents are going through is something Sybrina Fulton can relate to. She, too, lost a son in a controversial shooting.
August 22, 2014 -- Updated 1149 GMT (1949 HKT)
Cristiano Ronaldo of Real Madrid gestures during the UEFA Super Cup match between Real Madrid and Sevilla at Cardiff City Stadium on August 12, 2014 Cardiff, Wales.
"We are like one grain of sand against a whole beach," says Eibar fan Unai Eraso.
CNN joins the fight to end modern-day slavery by shining a spotlight on its horrors and highlighting success stories.
Browse through images from CNN teams around the world that you don't always see on news reports.
August 22, 2014 -- Updated 1022 GMT (1822 HKT)
From fierce protests in Ferguson, to an Ebola survivor discharged from a hospital in Atlanta, browse through the photos of the week.
ADVERTISEMENT