Bollywood, cricket stars bring sparkle to Indian car show

The Bollywood star Katrina Kaif and the cricket legend Sachin Tendulkar were among the brand ambassadors that global car makers at the Auto Expo in New Delhi rolled out to promote their ­vehicles.

Car companies are investing heavily as they compete to tap a country in which they have enormous scope to increase their sales amid rising incomes. India is also becoming an increasingly important manufacturing base for the industry. The Auto Expo, held in Greater Noida, on the outskirts of the city, opened on Friday and runs until Tuesday.

“India has made significant progress in the past few years economically and the potential of this county is huge,” said Jurgen Stackmann, a board member for sales, marketing and aftersales at Volkswagen. “India ranks high on the agenda for all of us at Volkswagen. By the year 2020, we do believe that this could be one of the biggest car markets in the world. India also opens the door to other markets, like the Asean [Association of South East Asian Nations]. Of course we see much more potential in India beyond our current share and volume.”

The German car maker’s investment in India in the past few years has totalled €800 million (Dh3.28 billion). At the car show, VW unveiled what Mr Stackmann described as its first “100 per cent India car” – a compact sedan called the Ameo, “designed only for the India market”. The vehicle will be manufactured at its plant in Chakan, a hub for car makers near Pune in the western state of Maharashtra.

Last year, India’s car sector started to show signs of a turnaround following a couple of challenging years. Sales rose for the fourteenth consecutive month in December, up almost 13 per cent on the same month the previous year to 172,671 vehicles, according to data from the Society of Indian Automobile Manufacturers. It expects India to become the world’s third largest car market by 2020.

“India’s automobile industry is looking forward to a better 2016 after the gradual recovery seen in select segments last year,” according to a report published last week by Crisil Research – part of Standard & Poor’s ratings agency. “Tailwinds from improving macros – softening interest rates, lower fuel cost and inflation – are expected to drive sales growth in cars,” the report states.

But it added that there could also be obstacles for the sector, and figures from car makers show that sales were slow last month, with most major companies posting single-digit growth, while Tata Motors and Honda suffered dips in sales.

“Uncertainty on rural demand revival, which is critically dependent on a normal monsoon, and tightening safety and emission norms, will have a bearing on the overall trend,” according to Crisil.

One of the main launches at the car show was Jaguar’s XE sports saloon, which will be assembled in India, with prices starting at 3.99m Indian rupees (Dh215,898). Jaguar brought in Bollywood actress Kaif to launch the car at the show.

“Our commitment to India deepens in many ways,” said Ralf Speth, the chief executive of Jaguar Land Rover, which is owned by Tata Group. The Indian conglomerate bought Jaguar Land Rover from Ford for US$2.3bn in 2008.

Jaguar also has a manufacturing facility in Chakan.

Other car makers also highlighted India’s significance to their global strategy.

“India is a most important strategic market and production base,” said Toshihiro Suzuki, the president and chief operating officer of Suzuki Motor. “In response to market growth, Suzuki has already started our new manufacturing project in Gujarat.”

Japan’s Suzuki operates in India with joint venture partner Maruti as Maruti Suzuki, which is India’s biggest automobile manufacturer. Maruti Suzuki last week exported its made-in-India hatchback Baleno to Japan from Mundra port in Gujarat, west India.

Mr Suzuki says that he “is convinced that the Baleno will be the success story of ‘Make in India’”, referring to Indian prime minister Narendra Modi’s campaign to transform he country into one of the world’s biggest manufacturing hubs.

Honda is another Japanese company that is focusing on the country.

“India is one of the most important and fastest-growing markets for Honda,” said Takahiro Hachigo, the chief executive and president of Honda.

Roland Folger, the managing director and chief executive of Mercedes-Benz India, said at the show that Mercedes last year saw it sales in India increase by one third more than the previous year.

Mercedes in 2009 set up a production facility over 100 acres in Chakan, in which it has invested more than 10bn rupees.

Mr Folger said that Mercedes planned to continue to grow in India by offering “fascinating products from all of our global portfolio” and expanding and improving its dealership network.

BMW, meanwhile, was also striving to win over Indian customers. Sachin Tendulkar unveiled BMW’s new 7-Series at the exhibition with prices starting at 11m rupees. With companies well aware of the reach of cricket and Bollywood in India, cricketer Virat Kohli and Bollywood stars Ranbir Kapoor and Alia Bhatt were also involved in launches at the show.

Dhairya Gupta, a journalist for Motoroids, an online motoring magazine, said he thought the Auto Expo, held every two years, was growing.

“This year the auto sector seems to be in a boom and we are seeing a lot of manufacturers manufacturing cars and exporting from India, and I think that’s also good.”

But Mr Gupta said he was a bit disappointed not to see more launches at the show, with many of the products on display already on the market, or vehicles that would only be on sale in India at a much later date.

One aspect that has created uncertainty for the car sector is Delhi’s decision to clamp down on diesel vehicles because of the problem of high pollution levels in the capital. The supreme court has banned the registration of diesel vehicles with a capacity above 2 litres in Delhi until the end of March. This has created uncertainty for car companies.

Mr Stackmann apologised on behalf of VW to India for the mistakes it had made, following an emissions scandal in which it admitted to installing devices in vehicles to cheat diesel emissions tests.

“I assure you we are committed to making things absolutely right,” said Mr Stackmann. “I know that many of our Indian customers are wondering whether their car might be affected too in all of this. We have examined this very carefully under the observation of the Indian authorities and we came to the conclusion that our cars do fully comply with Indian emissions standards and regulations today.”

But he added that the company had decided to voluntarily update cars with the affected diesel engines in India to make them “as clean as the affected cars in Europe”, free of cost.

Tata Motors was also trying to manage a marketing crisis. It was showcasing its new small car, the Zica, at the exhibition which is endorsed by world star footballer Lionel Messi. But Tata is being forced to rebrand the car because of the similarity of the name to the Zika virus, which has been hitting the headlines amid the latest outbreak. Tata has launched a competition via social media to allow consumers to rename the car.

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