New Delhi: At least six automobile companies are likely to skip the biennial Auto Expo 2018, South Asia’s largest show, as they seek to cut costs amid weak sales.
Ford India Pvt. Ltd, Volkswagen India Pvt. Ltd, Skoda India Pvt. Ltd, Audi India Pvt. Ltd, Nissan India Pvt. Ltd, Ducati India and General Motors India Pvt. Ltd (which is exiting India) have decided against participating in the show, at least one executive in each of the companies said, requesting anonymity.
Eicher Motors Ltd-controlled Royal Enfield, Bajaj Auto Ltd and Harley-Davidson India Ltd skipped the show in 2016, citing high participation cost and inadequate returns and have also decided against participating in next year’s event.
A Skoda India spokesperson said the company will not participate in the show. Volkswagen India too confirmed that it won’t participate in the expo. Emails sent to the other companies did not elicit any response till press time.
The executives cited non-availability of India-specific models to showcase in the show and financial constraints as reasons for not participating.
“They have not been able to sell vehicles. All the money that they get from customers, half of that goes to the government in terms of taxes,” said an executive at a carmaker, who declined to be named.
In the four months ended July, sales at Ford India grew 0.24% from a year earlier; GM India sales plunged 70%; and Nissan’s sales fell 7.15%. Skoda India’s sales grew 29% and Volkswagen’s grew by 3.84% from a low base. That compares with the 7.29% growth in the Indian passenger vehicle industry during the period.
“Auto Expo is not only about price that they pay for the space but also about construction, labour, imported materials and cars,” the industry executive cited above added.
While several companies may skip the show, SAIC Motor Corp. Ltd’s MG Motor unit, Peugeot SA and Kia Motors Co. are likely to participate for the first time.
The auto expo is scheduled to be held in Greater Noida, near New Delhi, in February. It offers an opportunity for carmakers to build their brand in a country that is expected to be the third largest car market in the world by 2025.
“But, it does not mean that sales swell immediately after the show. We end up spending anywhere between Rs50-60 crore but returns are not as desired. The excitement about new concepts fizzles out soon,” said an executive from one of the six companies cited earlier.
Writing for The Detroit News in January, columnist John McCormick questioned the relevance of auto shows with companies increasingly skipping big shows. In Detroit this year, the list of no-shows included Porsche Automobil Holding SE and Jaguar Land Rover Automotive Plc.
“Lots of factors are at work here. Firstly, auto companies are fed up with the costs involved in a full-scale media presentation, which can exceed $5 million. Multiply that figure by the number of global tier-one shows and it’s easy to see why automakers are increasingly saying no,” McCormick wrote.
The expected non-participation of several automakers could be because they don’t have “suitable products to show, especially in a market like India where customers like touch and feel”, said Anil Sharma, principal analyst at IHS Automotive.
India is still an emerging market where car penetration is still 18 per 1,000 people, as against 800 per 1,000 in the US. “Automobiles still have aspirational value attached to them and that utilitarian value has not seeped in yet…” Sharma said.