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Changing paradigms in India’s automobile sector

Changing paradigms in India’s automobile sector
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First Published: Fri, Jun 29 2007. 11 13 AM IST

Updated: Fri, Jun 29 2007. 11 13 AM IST
New Delhi: Last year, India’s passenger car industry crossed the one million sales figure in the domestic market in addition to selling 200,000 utility vehicles that are often used for personal transport.
This growth of 22% over the previous year reflects the rapid increase in Indian consumers’ purchasing power. But while we are euphoric with the annual growth of 8-9% it must be remembered that this is only the average, because growth in agriculture and mining is much lower and several surveys show that annual growth of middle and upper income groups is well over 18%. Clearly, this has to be the main driver of such huge consumer demand.
However, there are many a “whine” behind the “shine” because growth is also putting immense pressure on infrastructure. Indian roads can no longer cope with the 60 million 2-wheelers, 12 million cars and 6 million trucks and buses. Better highways are being built but driving in towns remains a nightmare. Till such time that planners and politicians understand that they have to pander not just to the vote bank comprising the poor but also the 180 million strong motorized transport using population, the situation is not likely to improve.
Unfortunately, our cars are of the 21st century but traffic management systems archaic and reminiscent of the bullock cart age. Better public transport will help somewhat but with growing affluence, people as in other countries, will desire private ownership. They will also want better transport. A low cost car sounds tempting, except that buyers also want air-conditioning, power steering, music systems and more sophisticated features.
Motorcycles and scooters have been filling this need but the relatively slower growth of 2-wheelers shows that the trend towards the four wheels variety will continue to grow. With liberal financing options available, many young people are willing to pay that wee bit extra for comfort and prestige that comes from owning a better product.
It is an accepted fact that many of the old templates are changing. With new cars now being reliable, engine life is no longer a cause of worry. They are fuel-efficient and fuel consumption is mainly dependant on the weight or size of a car. Despite the concern about fuel prices, buyers are slowly going for bigger models.
Air conditioners that were once a luxury are now a standard requirement. Young customers are also attracted to space age designs that shock their elders. New models must have high-end music systems and sockets to accommodate their many electronic gizmos. It will therefore not be long before Indian buyers will follow their global counterparts and pay extra for the convenience of automatic gears.
Once upon a time there used to be a huge difference between a petrol engined car and it’s sluggish, noisy and unreliable diesel counterpart. Today, new diesel mills with a common rail offer such good performance and fuel economics that they would be in demand even if diesel prices escalated.
Electronic micro motors, sensors and mini computers presently govern almost every function of engine, brakes and suspensions. Interestingly, there may be as many chips in a modern car as in a packet of wafers. Ride comfort, handling and road holding are becoming important as more and more people travel out of town for family holidays to the sea or mountain resorts.
These require better suspensions and superior tyres because it is tyres that perform bulk of the work. The days of cheap or retreaded tyres are gone because they are dangerous at the high speeds that are possible on India’s new highways. And tyres are getting so good that an increasing number of people are changing their cars before they change their tyres.
As technology gets progressive, modifications in cars have been made. Like several high-end luxury cars have no stepney tyre to compete for boot space. Rather they come fitted with Rs.run flat’ tyres that can safely take a car a few hundred kilometers. Though, their repairs may be slightly difficult and expensive.
High performance and high speeds require expensive safety features. All modern cars must meet high standards of passive and active safety. Passive safety concerns a car’s ability to survive crash tests with minimal injury to the occupants. Mandatory seat belts and optional air bags are part of this passive safety kit. Active safety involves improvement to the steering, handling and braking that can take a driver safely through dangerous road situations.
Meeting the increasingly difficult environment protection laws pushes up the cost of cars but since no country can ignore the increase in respiratory diseases especially with global warming turning into a global nightmare, all modern engines will have to meet stricter
pollution laws with turbochargers, multiple spark plugs and variable valves and catalytic converters for cleaning exhaust gases.
Auto technologies are now looking further afield. Several companies have developed hybrids like the Toyota Prius that combines a fuel-efficient 1500 cc petrol engine along with a battery pack to drive an electric motor. When accelerating both the engine and motor power of the wheels, the engine cuts out later and the car is powered by the motor. When battery level dips, engine cuts in to power the wheels and recharge the batteries and while braking or decelerating, motors turn in to dynamos to recharge the batteries.
These cars are being marketed but are still expensive. Companies like BMW and GM are opting for a pure hydrogen route. Hydrogen is the most explosive gas, which implies that a special tough cylinder of compressed gas will be able to take a car for thousands of kms. Using this requires little modification to a petrol engine so it is cost effective and the exhaust gas is only a little harmless steam but unless there are numerous hydrogen dispensing stations, it will not be a practical solution.
China is reported to be in the process of setting up a thousand such stations. Though hydrogen is pollution free, making hydrogen is not, for it requires electricity mainly made from fossil fuels that split water into hydrogen and oxygen. However, pollution levels are much lower, since most power plants are located in low population areas.
Auto industry is seriously looking at the new Rs.fuel cell’ technology where petrol or methanol is directly converted into electricity. Many prototypes have been developed and though a bit heavy and expensive at the moment, it is seen as the most likely candidate for the auto industry.
Meanwhile, use of environment friendly alternative fuels is being seriously looked at. Countries like India have gone for compressed natural gas (CNG) but as this is not practical in places far from gas pipelines, LPG is seen as being more successful worldwide, presently driving over 12 million cars worldwide.
Gasohol using ethanol as in alcohol mixed with petrol has been a huge success in Brazil but this is basically to save fossil fuels rather then to reduce pollution. India is belatedly adopting this route that will also put some money into the pocket of India’s cane growers. Other biofuels are extracts from plants like Jetropha that can replace diesel.
Auto industry is the world’s largest manufacturing industry making over 70 million cars, 15 million 2-wheelers and 15 million commercial vehicles per year. Millions of jobs depend on it so it knows that with the pressures of depleting fossil fuels and threats of global warming, it has to find new solutions, if the industry is to survive.
Murad Ali Baig is one of India’s foremost auto experts. Feedback to his column can be sent at livemint@livemint.com
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First Published: Fri, Jun 29 2007. 11 13 AM IST