Air conditioning is revolutionizing the auto market

Air conditioning is revolutionizing the auto market
Comment E-mail Print Share
First Published: Wed, Mar 19 2008. 10 34 AM IST

Murad Ali Baig, columinst and auto expert
Murad Ali Baig, columinst and auto expert
Updated: Wed, Mar 19 2008. 10 34 AM IST
New Delhi: One swallow may not herald the summer but most people do not unfortunately recognize the markers of significant change even when they occur. The planners of Indian cities did not recognize the fact that the advent of efficient and reliable new Japanese 100 cc bikes in 1981 and the Maruti 800 in 1983 were going to so quickly revolutionize India’s traffic.
Murad Ali Baig, columinst and auto expert
Government colonies were still being built with scooter garages because the conventional wisdom of the time was that cars were the luxuries of the rich and that the scooter was here forever. This lack of foresight and planning contributed to the awful chaos that we see on the streets of every Indian city today.
It was also in the mid 80’s that crude air-conditioners were first fitted into the cars of the more affluent. AC’s were then also deemed to be luxuries afforded solely by the rich. They were expensive optional extras that buyers would ponder over before buying a new car.
India unfortunately has a very hot and humid climate during most months of the year, and with growing middle income affluence, cars sans AC’s can no longer hope to register handsome sales. In fact, the quality of air-conditioning is now a major factor which buyers consider before picking out a brand today.
The need for air-conditioning has however spread throughout the country. From a luxury it has become a necessity for almost every middle and upper income home making the Planning Commission projections for power go completely haywire. Many people can no longer tolerate even buses or trains without AC’s and transport air-conditioning is now also increasingly becoming a necessity. Everyone naturally wants cheap transport but there are many today who are able and willing to pay more.
When Volvo launched its very luxurious and expensive air-conditioned buses some seven years ago many doomsayers predicted a gloomy end. But there were many buyers who showed that they were almost immediately willing to pay considerably higher fares for the benefit of a comfortable long distance journey.
The same pessimists were astounded that, despite its higher price, the mostly air-conditioned Toyota Qualis became such a hit in record time, especially with long distance taxi owners. Old stalwarts like Mahindra & Mahindra and Tata Motors had to quickly shift gear and offer more cool and comfortable vehicles than the ones that had sufficed earlier.
According to NCAER and other surveys, middle and upper class incomes in India are growing at around an astounding 18% per year. As costs of living are much less with inflation of about 5%, disposable incomes are significantly higher. This unprecedented surge in purchasing power is driving the popularity of malls and luxury goods in a way that was unthinkable a few years ago.
The impact of AC’s has also hit the bastion of two-wheelers. Today many modern middle income women can and want to drive but they do not like bikes or scooters that they feel are dangerous, uncomfortable and also hostile to their clothes and hairstyles. So many middle income families are now buying small air-conditioned cars, or even cheaper second hand cars that help them with all their daily errands.
Our cities are a mess and our planners are completely out of depth when it comes to matching the demands of their increasingly affluent citizens. The traffic chaos in most cities continues to grow despite the belated appearance of more and more flyovers. Before drastic steps like clearing slums, encroachments and forcibly acquiring residential properties for widening city roads are resorted to there is one step that can easily be taken.
As in most of the crowded cities of the world, India’s building laws need to be amended fast so that all new residential and commercial construction can haveRs.in-site’ parking for all vehicles that inhabitants own or use without the necessity of parking them on the streets.
Our politicians and planners seem to think that only the poor farmers and slum dwellers constitute their vote banks unaware that the roughly 200 million people who ride 50 million 2-wheelers, 12 million cars and some four million buses every day are also voters. Since they are more educated and affluent, their needs for better roads and parking places will become increasingly necessary and if they should become aggressive and demanding about their needs it would shake every civic authority.
Rural India, despite much lower annual growth rates, remains a growing market for 2-wheelers and cheaper cars but even here the winds of change are beginning to blow. Rapidly increasing land prices in most places are enabling many farming families to move out of the drudgery of farming and if they sell land, it allows them to quickly become quite affluent. They usually build new houses and want modern comforts of air-conditioning, big TV’s and cars. Television and mobiles are also making rural folk much savvier. They all know the meaning of a better life and want it.
These changing aspirations will put further pressure on India’s planners who will need more power, improved education and medical facilities and better roads than are available today. A process of modernization with modern lifestyle requirements has started and will soon become impossible to stop.
India’s automobile makers are no longer the poor cousins of their global parents. World class cars, 2-wheelers and commercial vehicles are now making an impact on many global markets and India is turning into a global source of auto technologies and auto components. All this may seem to go against the grain of our old thinking about Gandhian thrift or socialist simplicity but the growing demand for luxury and comfort is upon us and is creating a bunch of new opportunities for growth and employment.
Murad Ali Baig is one of India’s foremost auto experts. Feedback to his column can be sent at livemint@livemint.com
Comment E-mail Print Share
First Published: Wed, Mar 19 2008. 10 34 AM IST