It’s been an eventful year for the auto industry. Innovative products.
Public-private partnership. Green strategies. Fresh loans to boost consumer
been big deals at home and overseas. Indian companies have gone all out to
conquer the world with big ideas, big innovations and big deals. Here are some of the top CEOs in the industry for some pointers to 2008. What
will rule the next 12 months?
What trends or big ideas will make a
difference in the new year? What is that one clinching trigger that will drive
the automotive industry in the months to come?
The answers varied in
both vision and vehemence. Spanning every-thing from retail finance to
global-local integration, Motown’s big bosses offered some unique insight
into the trends and triggers that will define the industry in the near future.
Take Bajaj Auto MD
Rajiv Bajaj. For him the one big idea what will drive the industry will be a
unique form of public-private partnership to address the environment issue
beyond just emissions.
“I believe the big idea that will shape 2008 will be
government and industry teaming up to address global warming, fossil fuel
dependence, and traffic congestion,” says Bajaj. These are issues that
will increasingly determine not just design and development of vehicles but also
business models for automotive companies.
As Europe moves towards
mandated CO2 emissions and even recyclable components in a vehicle, other
markets will follow suit and automotive companies will have to partner with
government to come up with sustainable solutions.
The big trend
though will be product specific, he says. “Next year the big trend will be
small cars and the big development, affordable hybrids,” says Bajaj.
Both tie-in with the larger environment issues that will drive the
industry. As gasoline becomes more expensive and the search for both fuel
efficiency and an alternative powertrain continues, the challenge for the auto
industry will be to marry that demand with
That’s also where Indian industry’s
increasing global ties will come in handy. And that’s what TAFE director
Mallika Srinivasan says will drive the next 12 months.
most important trend in the coming year will be the full-scale integration of
the Indian automotive industry into the global automotive supply chain,”
she says. Most of the action in the industry, she says, is currently centred
around that trend.
The flurry of joint
ventures between global and local players, the import and export of components
and vehicles, India’s growth as an ex-port hub, Indian companies going all
out to acquire overseas companies and assets—all of these are pointers to
that one trend. “It’s going on on all fronts,” says
Srinivasan. “And it will determine the course the industry will take in
the years to come.”
Of course smart products, global integration and big deals
won’t make a difference unless consumer spending improves back home.
That’s why for Venu Srinivasan, MD of two-wheeler major TVS,
the big trigger will be consumer lending rather than any impetus from the macro
or manufacturing side.
“Getting back lending into the market
will be crucial in 2008,” he says. “Consumer lending is at an
all-time low and with the Supreme Court ruling on the seizure of defaulting
vehicles, banks are even more reluctant to lend.” The direct impact of
that is al-ready visible in the two-wheeler industry.
accounting for the festival demand spurt, the cumulative sales in the
September-December period in 2007 is around 10 per cent lower than last year.
“Consumer buying is not where it was before,” says Srinivasan.
“Housing spend is low, consumer confidence is low. So it is
important for money to come back for retail buying.” Without that even the
biggest and best ideas and products will not be able to revive the market, he
Like him Siddhartha Lal, CEO of Eicher (which makes commercial
vehicles and has just tied up with Volvo), also sees the macro factors being the
biggest trigger in 2008.
“The expansion of
the highway net-work will improve road transportation and change the dynamics of
that business,” he says. That will impact CV players like himself in
particular and the auto industry in general.
Also important, he says, are the new global-local joint ventures
that are cropping up in the commercial vehicles segment. First MAN and Force
Motors tied up. Then M&M partnered with Navistar company ITEC.
Earlier this year Tata announced a partnership with Iveco, followed
by the Nissan-Ashok Leyland alliance for light vehicles. And then in quick
succession two JVs came along — first Volvo-Eicher and then Daimler-Hero.
“Just as new competition and the products it spawned changed
the car industry in the late 90s, the truck business will also change
dramatically but mostly in the heavies segment,” says Lal. “2008
will be the start.”
Of course in the car segment it will be the
Tata Rs 1 lakh car that will change all rules and make some new ones as well.
“It’s a truly inno-vative idea and its success or failure will have
a huge impact,” says Lal.
Clearly the auto industry will see
some interesting times in the new year. New ideas. New innovations. New market
dynamics. New deals. New norms. And new ways of doing business. It’s gonna
be a top-gear 2008. Happy New Year.
Via the Times of India