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Friday, January 6, 2012
Business

Car makers head to Indian expo seeking growth

The world's leading car makers jostled for space at the start of India's Auto Expo on Thursday, eyeing a market that has slowed sharply but remains a hotspot compared with depressed Western economies.

The exhibition, which takes place every two years, has grown in stature in line with interest in the Indian economy, which is expected by economists to expand by 7.0 percent this financial year despite a recent slowdown.

"We now see this as one of the most important shows on the calendar," Ford's Asia-Pacific president Joe Hinrichs said ahead of the opening, adding that the group expected India's market to be the world's third-biggest by 2020.

In a sign of changing priorities in the industry, Jaguar Land Rover, the British brands bought by India's Tata conglomerate in 2008, decided to skip the overlapping Detroit motorshow to focus on the New Delhi expo.

Beneath the dazzling lights, pounding music and exhibition girls accompanying the launch of up to 50 new models lies a clear commercial logic.

Car ownership remains low in India, a country of 1.2 billion people where two-thirds live below the poverty line, but an expanding economy is minting millions of new middle-class families and millionaires each year.

Growth of the passenger car market hit 31 percent in 2010, but has since dropped off sharply due to rising interest rates, higher commodity prices and economic uncertainty.

The Society of Indian Automobile Manufacturers (SIAM) expects sales in the fiscal year to March to rise between two and four percent.

Far from discouraged by what analysts say is a temporary blip, French auto giant PSA Peugeot Citroen is to announce its return to India after an unhappy and ultimately aborted alliance with a local partner in the 1990s.

Fellow French manufacturer Renault re-launched itself in India last year amid a big marketing push and will unveil its new Pulse model and an SUV at the Delhi Expo, which ends on January 11.

Peugeot, Renault and BMW, the German manufacturer that dominates in the luxury segment of the Indian market, face dire market conditions at home as the European debt crisis dampens consumer spending.

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