Localisation, exports can help tide over slowdown

Gurgaon, October 8, 2013: As part of its initiative to suggest ways to enable the automotive industry to emerge unscathed from the ongoing slowdown, Autocar Professional collaborated with technology leader DuPont to present an interactive dialogue ‘Let’s solve the challenges for automotive growth in India,” at Gurgaon yesterday.

Held at the Leela Kempinski, the seminar, which was attended by over 120 automotive industry professionals, revealed interesting responses from the four top-notch panellists (Mayank Pareek, COO – marketing & sales, Maruti Suzuki India; Lowell Paddock, president & MD, General Motors India; Deepak Chopra, Group CEO of Anand Automotive Ltd; and Dr Rajeev A Vaidya, president, DuPont South Asia & ASEAN) on various ways to tackle the downturn while at the same time enabling industry to keep its head above water.

Hormazd Sorabjee, editor, Autocar India, who moderated the panel discussion, began with an overview of the market. He said Maruti Suzuki as the manufacturer with the largest market share in India is the first to catch a cold when the economy sneezes. “A slowdown like this has not happened in a long time and we are, maybe, bumping along at the bottom with still no light visible at the end of the tunnel,” saying the only lights for the moment seemed to be Diwali lights.

Elaborating on the theme of the event, Mayank Pareek spoke of how the slowdown has now become a way of life and everyone would have to find their own solutions to get out of it. Historically, double-digit growth for the automotive industry was expected to be a norm but no longer. While maintaining that in the short term there will be stress, he said in the medium to long term, the industry has huge potential. “Because of the slowdown, the game has changed and the rules of the game have changed. So we have to find new rules and work and play under those rules.”

However, some segments are growing very rapidly like rural markets, which have grown by 24 percent between April-September 2013. In the absence of a mass market, Pareek suggested that industry find different niches, small niches, segmented markets and leverage micro- marketing. For instance, Maruti has conducted upwards of 10,000 events in rural markets with 350 events organised daily last month.

While Lowell Paddock agreed that even GM India is recognising rural opportunities, he added that they do not come on their own. “Every day you need to get out into distant markets and villages and build up your equity and credibility. Another way of growing is through localisation that is very easy for Maruti, being part of its DNA, but for General Motors, it is a more recent development involving reduction of costs by energising the supplier base to maintain cost competitiveness.” Paddock visualised growing by leveraging exports as another possibility and said that India has grown dramatically as an export base in the last 5 years, not only to emerging markets but also to developed markets.



On the other hand, Anand Automotive’s Deepak Chopra suggested that while OEMs look for new markets to beat the slowdown, suppliers could look through their value chain to see what wastages could be trimmed to improve the quality of operations of their Tier 2 and Tier 3 supply chain. “We have a lot of initiatives at the Anand Group for our Tier 2s and 3s to bring up their quality base which has helped improve savings and preserve margins. Some inflation is bound to be passed onto consumers but we have to keep it to the minimum because the situation is very competitive. We have a programme called VSME (Visionary Small and Medium Enterprises) and our group has taken the leadership role with CII and JAICA and with the help of Japanese professors is running it for the past 4 years. Four batches have gone through this programme and it helped 120 of Anand suppliers to improve their operations. Many of them improved productivity and reduced costs by 40-50 percent.”

DuPont’s Dr Vaidya spoke of the potential of science to solve problems. “Science can bring in solutions very relevant to the Indian market place. At present, 85 percent of our fuel requirements come from fossil fuels and the importance of lightweighting is huge. What we can bring through advanced materials has a large potential, not only for lightweighting and improvements in performance, but for delivering value to the Indian consumer.” He stated that in many cases, car models that have sold in this downturn are really those models that are bringing new value to the Indian consumer that requires innovation and collaboration across the value chain and hence DuPont considers the scope of science to be huge.

The full report on this seminar will appear in Autocar Professional’s forthcoming October 15 issue.

SHOBHA MATHUR

Top photograph (L-R): Deepak Chopra, Group CEO of Anand Automotive Ltd; Lowell Paddock, president & MD, General Motors India; Hormazd Sorabjee, editor, Autocar India, Mayank Pareek, COO – marketing & sales, Maruti Suzuki India; and Dr Rajeev A Vaidya, president, DuPont South Asia & ASEAN at the panel discussion in Gurgaon on October 7.