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'India's car market shrank for the first time in a decade, a turning point'

Chaitanya Kalbag     April 11, 2013
In 1908, when Henry Ford began making his revolutionary Model Ts on an assembly line in Detroit, there were 241 carmakers in the United States. (In comparison, India has 20 carmakers in 2013). "I will build a car for the great multitude. It will be large enough for the family, but small enough for the individual to run and care for…," Ford wrote in his 1922 autobiography. The Tin Lizzie's popularity presaged America's position as the world's biggest car market. Here in India sales of the Tata Nano, also touted as a "people's car", fell 18 per cent to 52, 341 units in the 11 months to February from a year earlier, and India's car market shrank for the first time in a decade, a turning point analysed by Assistant Editor Sunny Sen in the cover story.

It is important to put this reversal in context. India's car sales more than tripled between 2003 and 2010. Total sales crossed a million units in 2006/07. We are the only country to have seen a huge shift from petrol to diesel cars in the last two years. Easy loans, better roads, more disposable income, and the growing urge to get in the car with the family and head for the hills, have fuelled this rise in the number of wheels on our roads. But things are not going well, and the government's policies - ranging from a rise in the excise duty on SUVs and a widening of the definition of SUVs to include models like the Toyota Innova, the SX4, the Civic and the Corolla based on ground clearance and engine size - are not helping.

In contrast, and underlining India's economic doldrums, U.S. car and truck sales in March were the highest since 2007 at 1.45 million. Total projected sales for all of 2012/13 in India: 1.7 million. General Motors alone sold 246,000 vehicles in March in the U.S. (it sold 9,006 in India the same month), and Ford 236,000 vehicles (5,271 in India). In the U.S., the 2009 "cash for clunkers" programme, which offered financial incentives if Americans traded in their older vehicles for more fuel-efficient new ones, also helped boost sales.

Indian carmakers, staring at rising stockpiles, are desperate and are offering never-before hooks and lures. And there is "cross-badging" - selling the same model under two different brand and model names with a tiny tweak here and there. Senior Editor N. Madhavan, who nurtures our excellent case studies from Chennai, wrote a critique of cross-badging between makers like Nissan and Renault, and Volkswagen and Skoda. These sleights of hand do not seem to work with consumers.

This issue also has two other very valuable BT trademarks. Our annual SME survey, in collaboration with YES Bank, drew a record 410,000 entries this year. A very good jury, chaired by Planning Commission member Arun Maira, picked the 15 winners. SMES employ close to 62 million people and contribute 17 per cent of India's GDP and it is always heartening to showcase the best across the country. Share our discoveries.

The other survey is our quarterly Business Confidence Index, two years old now and well established as an important indicator of economic health (and here I must doff my cap to C-fore, which carries out the survey). Read Assistant Editor Manu Kaushik's narrative that confidence has now risen slowly but surely for three quarters in a row, belying our national predilection for pessimism. "The India flavour is coming back," Venugopal Dhoot told us.

That tentative optimism was on view at the annual meeting of the Confederation of Indian Industry, where presumptive heir Rahul Gandhi delivered his first "business" speech on April 4. Read our clear-eyed review. Senior Associate Editor Sebastian P.T. also examines two other netas straining at their reins - Narendra Modi and Nitish Kumar. Finally, don't miss Associate Editor E. Kumar Sharma's analysis of the pivotal Supreme Court ruling on drug patentsand intellectual-property expert Himanshu Kane's view.

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