In idle gear

At the Auto Expo, an industry ripe for change

The biennial Auto Expo, which starts on Wednesday, has never been held under such adverse circumstances. The industry is reeling from recession. Sales volumes stagnated in 2012-13 and shrank in 2013-14 for the first time in over a decade. The enthusiasm of visitors and exhibitors alike is somewhat muted. But the industry is putting on a brave face. The Expo will launch as many as 70 new models of cars, bikes, trucks and utility vehicles. This is the largest-ever display and it includes an entire pavilion of hybrids and electrics. There's also a focus on public transport. The recession has provided a breathing space for review and introspection. India's transport sector has a large number of problems, which have been glossed over for far too long. Now that growth has slowed, it is possible that more attention will be focused on issues like inadequate pollution controls, poor safety standards, etc.

India is the world's sixth-largest market in terms of units sold. Credible projections suggest that it could become the third largest behind the United States and China by overtaking Germany, Brazil and Japan within two or three years. It is already the largest market for hatchbacks. Over 2.6 million cars and nearly 14 million two-wheelers were sold in 2012-13. Yet safety regulations lag 20 years behind standards in developed countries. Airbags, rear-seat safety belts, child-safe seats, etc are not mandatory and in order to keep prices competitive, manufacturers cut corners by not installing these in entry-level models. In a recent series of crash tests carried out in Germany by the safety watchdog Global NCAP (New Car Assessment Programme), five entry-level Indian cars scored zero in terms of safety. All were products from the stables of respected multinationals, each of which meets far more stringent safety standards when targeting other markets with the same vehicles.

Regulatory laxity and the presence of many unsafe vehicles make India the world's most dangerous driving environment. There were more than 140,000 road fatalities in 2012 - by far the highest number anywhere. The costs in terms of both lost lives and lost productivity are huge. Manufacturers could have creatively marketed better safety standards as a strong selling point, given the situation. However, India has always been played as a price-conscious market, where shaving Rs 200 off equated monthly installments is considered the best way to sell vehicles.

The downbeat sentiment of the moment may perhaps induce a radical rethink of marketing strategies and maybe even of segment focus. This year, for instance, there is some attention being paid to buses. That's welcome since public transport systems need comprehensive overhaul across India's cities and a single bus can replace over 60 personal vehicles, thereby reducing both pollution and congestion. The automobile industry, with its many forward and backward linkages, generates activity and employment across dozens of industries. A turnaround in its fortunes will be beneficial to the entire economy. If the recession leads to the addressing of these basic issues along the way, it will also have performed a service to Indian commuters.