Delhi Auto Expo

Auto Expo 2012 may have a second venue within the capital region because the entire space at Pragati Maidan has been sold and there is a long queue of prospective participants outside.

"We are contemplating a second location to accommodate the entire auto industry in an integrated manner," said Vishnu Mathur who heads the country's auto industry body. The Indian Auto Expo has become a priority destination for most automakers over the years when the country emerged the second fastest-growing car market and a global leader in truck and bus sales. But space is scarce.

The entire exhibition space at Pragati Maidan, which hosted all the 10 previous motor shows here, was sold in less than a week. And many multinationals are yet to ensure their participation in the world's largest motor show in attracting visitors. The venue has 55,000 square metre space, which is just about half of total demand, according to Mathur, director general of the Society of Indian Automobile Industry.

The society jointly organises the show with industry body CII and auto component body ACMA. A person close to the organisers said Expo Mart at Noida could be the second venue that will accommodate component makers and ancillaries units. Space crunch had forced some big companies including Ford India to miss the previous auto show in 2010. There were several disruptions including cancellation of promotional events.

The problem will be worse next year if Pragati Maidan remains the only venue, because there are more participants and there may be more visitors than last year's two million. There will also be 35 vehicle launches, 10 more than last time.

Ambassador's new venture

Hindustan Motors’ iconic car is set to get a radical makeover, but is it too late in the day?

The oldest face of Indian automobiles is set to get a radical makeover with a new design and styling. But not many are convinced whether nostalgia and the latest move by Hindustan Motors (HM) would be enough to ensure a smooth ride for the Ambassador (Amby) in future.

Many say that the Amby is to Indians what the iconic Volkswagen Beetle is to Germans. But the similarity ends there. While Europe’s largest car manufacturer has painstakingly resurrected the original ‘People’s Car’, making it one of the most popular small cars ever made, the Amby has had a neglected past.

The biggest problem is while the Indian auto market has changed completely, HM has remained in the past for far too long, giving almost a free run to newer models from nimble-footed competitors.

India’s top automobile designer Dilip Chhabria says, “It’s an uphill ride. Apart from some very timid efforts, they haven’t done anything to it for decades. Being an icon is what has powered Amby sales since 1950’s. I believe the company should treat it the way Porsche has treated the 911, and BMW has treated the Mini.”

The five-seater Ambassador has so far largely retained its first generation styling borrowed from Morris Oxford III, even 50 years after Morris Motor Company, the UK-based auto firm discontinued the model. Dated looks, a fuel guzzling engine and raging competition pushed the Ambassador down the popularity charts as it now records less than 400 units a month in sales, with more than 50 per cent of it coming from government and institutional demand.

But HM wants to change all that and has kickstarted a development programme for a completely new Amby, sporting a new design and styling – both exterior as well as interior..

HM says the all-new range, which will debut in the second half of next year and will cost more than the present day model, shows the company’s commitment to cater to varied aspirations of new-age customers.

HM Managing Director Manoj Jha says the company is working on several variants of the Ambassador. The one with micro changes will debut soon and the one with macro changes will be introduced later.

The company, according to sources, is also planning to have a shorter version of the car, which would qualify it for the excise benefit given to compact cars having length of less than four meters. This new small car may get launched earlier than the new Ambassador.

HM is expanding its research and development wing rapidly and carrying out most the work for the new Amby in-house. Some of the complicated process such as design and styling has been outsourced to a Pune-based design firm Onio.

Design is one area which, experts believe, would require huge attention as it is crucial for engineers to carry forward the basic styling of the Amby, which has remained the same for the last 40 years, while keeping the essential and practical style elements intact.

Chhabria adds, “The success of the new Amby depends on how well the company treats it. But I believe HM lacks the creative intensity to make significant changes. It has a fabulous legacy, and if do it right, it could have a great upside.”

HM is bending backwards to remove the drawbacks of the current generation model which lies in its noisy engines. The company says it will strap the new model with a new engine that is more powerful and efficient.

“There will be different types of engines for different variants of the Ambassador. Some of these will be produced in-house . HM is also keen on establishing a partnership with a European company for technology transfer”, says a senior company executive.

While some new variants will be targeted at the mass segment with an affordable price tag, a more ‘refined’ segment of buyers will get a more luxurious Amby with added features.

The company thus expects to more than quadruple its monthly sale of the car to about 2,000 units.

HM is also keen on reducing the share of government and institutional sales and promote the Amby among individual customers. The company is doubling its dealer network to 140 to enhance the retail count.

A Chennai-based auto analyst says, “It would not be easy for the company to shed its present image. But on the upside, even today, people talk about the tank-like build of the Amby. The all-new version is hopefully built keeping in mind the basic essence of the car”.

Domestic-Foreign division in Siam

The Indian auto industry is divided with deep cracks appearing between the homegrown and foreign carmakers. Over the last few months these differences have only intensified. At the heart of the controversy is the continued demand from the players such as Mahindra & Mahindra, Tata Motors and Maruti Suzuki for high tariff on imports to protect their investments in the country.

This was evident in the way industry lobby group Siam, which is headed by M&M president Pawan Goenka, responded to the moves to lower tariffs in the proposed trade agreement between India and the European Union.

While Goenka struck a protectionist move and opposed the move which would have lowered the duty on imported cars, foreign makers supported duty reduction. Senior officials from Audi, BMW and Mercedes openly took a line different to that of Siam, arguing that the domestic industry needs to shed protection if it wants to be globally competitive.

Then, Siam decided to ignore the new definition of completely build and completely knocked down cars, proposed in the Budget, along with changes in the duty structure. The government decided to fix customs duty on CKD-assembled cars at 30% against 10% before the Budget. On February 28, Siam feigned complete ignorance saying it was yet to study the proposal. Government officials, however, say that the revenue department had consulted the auto industry last June.

The situation was much the same last week, when the Delhi government decided to slap additional levy on diesel vehicles. Siam issued a statement criticizing the move. While Siam officials said that automakers are putting up a unified front, industry insiders said in private, "It is a divided house at Siam."

Siam was again criticized by many of its constituents for the "shoddy manner" (as many described it) in which it organized the Delhi Auto Expo, for which it has industry body CII and component makers body ACMA as joint organizers. Siam was accused by many of its constituents of mismanagement, poor organization and lack of coordination.

Companies said their CEOs and MDs had to slug it out in long queues as there was no proper arrangement for them to enter the venue. "And this despite our paying such exorbitant fee to the organizers. We had to ask our senior officials, many of whom were from global headquarters, to avoid visiting the expo due to such shortcomings," an official of a German company said. "It has been an agonizing experience for us to participate at the Delhi Auto Expo," a senior official with a Japanese car company said, on condition of anonymity as nobody wanted to anger Siam by airing grievances in public.

Many of the foreign constituents of Siam are also not satisfied that the auto body has not raised crucial issues like an official recall policy for Indian automakers.

However, Siam does not agree. "Siam works on the basis of consensus. In order to generate a consensus, often the individual interests have to be viewed from the perspective of overall industry interest. In any such activity, the decisions are based on the highest common factor rather than the least common denominator," said Sugato Sen, a senior director. He said Siam had pushed for lower duty on CKD that saw it getting reduced from 60% to 30%.

On criticism of the auto expo, he said, "We are all aware of the shortcomings of the venue at which this show is held. The organizers have to bear with the constraints of the venue which can sometimes be overbearing for the organizers, exhibitors as well as the visitors."