To start with the obvious, India is a country of 1.2 billion population and one of world's largest oil importer. So its not a surprise that fuel price and traffic will effect the evolution of the Indian transportation industry. But that's not all, relatively poor economic condition, very different cultural nature, social structure and poor road conditions have shaped the automotive industry in a very different manner most of the western world see it. In this discussion I will site the conditions first and then I will describe the evolution of the industry along those lines.
Lets begin with some relatively funny examples and experiences I saw of Indian society and culture. A culture very much unexplored by the west. Being an Indian, I am certain of that.
A Two Seater Car - A bad idea at least till today.
A lot of people will disagree with me for not understanding the value proposition of the product but in India, I seriously do not understand that. Problem is with three aspects space, speed and scrap value (resale value or to be frank, what to do with the car once its job is done).
First space, we have a lot of population and naturally our families are big. Certainly, a two seater car is not for family, its either for a long drive with girlfriend at max. But interestingly Indian society does not work that way. On an average girlfriends get married at some point, and relatively Indian marriages are very stable compared to the western society and two becomes at least three. In Germany (I am sure in a lot of developed countries have similar situation), I have seen a lot of 35-40 age single or divorcee people who have significant financial and social condition to have a two seater car. In India, because of very stable marriages this situation is less. Now a days, the situation is changing slowly but the market is too small.
Second speed, 3 - 4 years back I was working with a Bus manufacturer and I got a project proposal that the bus should have a maximum speed 100 but average speed 40, and you have to tune the drive train according to that. I was new in the industry and the other projects I did for other continents, I thought that there is some kind of a mistake. Later on I found that, in the city, the traffic is so much that average 40 is good and in rural and smaller places the road condition is such that its best to keep them in 40. Though India has world's 2nd Largest road network, it has the smallest expressway among all the developed and developing countries. So, for a two seater car, the speed is not an advantage in that market.
Third, once you get any of these two mutually exclusive sets, whom do you sell the car. Its better to have a 4 seater and avoid one of these problems with a little emotional sacrifice.
Recently, I saw an article saying that the airline industry statistics suggest that Indians carry maximum luggage. No regret, we love that! When its our market industry has to adapt, and they do.
Motorbikes are a very cheap transportation automobile in India, $1000, you get a decent new bike in India, and that's nothing! One of my colleague was planning to buy one bike and he was quite rich guy. For a same bike there was a fuel efficient and marginally better version bike there with $100 more cost. So some of us were discussing on a 'smoking break', we told him to take the fuel efficient one. We were having fun, he took out his mobile calculator, and with internet tool he started to calculate the break even for that additional $100. His purpose for that bike was to come to office from his home and go back. He found that for his application and current fuel price he has to wait for 3 yrs to get the $100 back (by the way oil price has fallen after that). And his calculation was flawless, we could not find a fault. We found a couple of days later be bought the low cost one. His argument was right there was no value addition for that minor little $100 for a relatively rich kid. In west people may not think that way but in India people does. As a result the market is extremely cost sensitive. A lot of diesel car models still struggling to make a cut because of this reason. People do calculate! and they calculate for there purpose of application.
Second speed, 3 - 4 years back I was working with a Bus manufacturer and I got a project proposal that the bus should have a maximum speed 100 but average speed 40, and you have to tune the drive train according to that. I was new in the industry and the other projects I did for other continents, I thought that there is some kind of a mistake. Later on I found that, in the city, the traffic is so much that average 40 is good and in rural and smaller places the road condition is such that its best to keep them in 40. Though India has world's 2nd Largest road network, it has the smallest expressway among all the developed and developing countries. So, for a two seater car, the speed is not an advantage in that market.
Third, once you get any of these two mutually exclusive sets, whom do you sell the car. Its better to have a 4 seater and avoid one of these problems with a little emotional sacrifice.
There is not much luggage space !
Recently, I saw an article saying that the airline industry statistics suggest that Indians carry maximum luggage. No regret, we love that! When its our market industry has to adapt, and they do.
In 2012, I was in New Delhi auto expo, I was going through a relatively expensive German car manufacturers stall. I saw a gentleman of about 25 age, looked sloppy (not really an 'European elegance' type), but if you have worked in Indian market you can tell that kid belongs to a family of money. He is a customer of that kind of vehicle. The gentleman, looked the car closely, sat in the driving seat again and again, while the marketing executive of that company was explaining him about different features and taking note of the feedback. Suddenly, the gentleman said, there is not much of luggage space. Once the gentleman left I spoke with the marketing guy also in his late 20's and I asked him 'I am sure you have received a lot of feedback like this today'. He literally expressed his frustration and said 'ya, sir, they don't get the motive of the vehicle' may be he is right, but I believe this is wrong. Articles suggest that lack of understanding and inertia to push EU and US vehicles costed Ford and Volkswagen very badly in Indian market. In-spite of superior technology and financial might they failed to make an impact in the Indian market.
Fuel price, cost and culture
Motorbikes are a very cheap transportation automobile in India, $1000, you get a decent new bike in India, and that's nothing! One of my colleague was planning to buy one bike and he was quite rich guy. For a same bike there was a fuel efficient and marginally better version bike there with $100 more cost. So some of us were discussing on a 'smoking break', we told him to take the fuel efficient one. We were having fun, he took out his mobile calculator, and with internet tool he started to calculate the break even for that additional $100. His purpose for that bike was to come to office from his home and go back. He found that for his application and current fuel price he has to wait for 3 yrs to get the $100 back (by the way oil price has fallen after that). And his calculation was flawless, we could not find a fault. We found a couple of days later be bought the low cost one. His argument was right there was no value addition for that minor little $100 for a relatively rich kid. In west people may not think that way but in India people does. As a result the market is extremely cost sensitive. A lot of diesel car models still struggling to make a cut because of this reason. People do calculate! and they calculate for there purpose of application.
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