Growth of the Key Factors in the Indian Automotive industry : Light-weighting, Cost Competitiveness, Safety and Aesthetics
Since their invention in 1860s, automobiles have been an indispensable part of the human growth story. The global automotive industry has been flourishing since then and the global annual vehicles production has hit the landmark of 90 million vehicles. If we consider the span of past thirty years, the global annual vehicles production has seen a staggering 100% growth.
This massive growth is partly a result of umpteen improvements and enhancements that automobiles have undergone over past 30 years. This growth story can be understood if we compare the cars we see today with their 30 year old self. Numerous design enhancements and technical upliftments have played a crucial role in increasing the automobile sales. Vehicles today are more affordable in terms of buying, running and maintenance costs. They are a pleasure to drive and much more appealing from an aesthetics point of view. Today’s vehicles offer many more safety features (for passengers as well as pedestrians) at a much competitive price point.
These enhancements are primarily a result of two factors : Increasing consumer preference to better designer and safer vehicles, and government’s push towards upgrading the regulations and standards. Even in cost competitive markets like India, consumers are evaluating multiple options and are clearly showing inclination towards safer and ‘feature rich’ models.
One interesting trend in the automotive segment over past few years is rise of ‘technology providers’ as against ‘suppliers’. The increasing automotive market has resulted in creation of a full-fledged ecosystem comprising of manufacturers, suppliers and technology providers who are coming up with innovative technologies and solutions which can further enhance the consumer appeal vehicles. There are many success stories of manufacturers partnering with technology providers to develop ‘feature-strong’ model which carved out considerable market share for itself.
As an outcome of these shifts, manufacturers are always looking for solutions and technologies to improve their vehicles on multiple factors. The four factors which could lead to a potential breakthrough are Light Weighting, Aesthetics, Cost Competitiveness and Safety. Let us take a closer look at these parameters and explore what role they have to play in creating a future ‘segment leader’.
Light Weighting : The Sure-shot Formula to Success
Upgrading of vehicle emissions norms and consumer preference to high mileage vehicles has resulted in light weighting being a primary focus point of manufacturers. Light-weighting has been engrained as a priority in the DNAs of OEMs as well as suppliers.
Higher mileage has been the unique selling point of many vehicles in Indian Market, especially in the A and B segment cars. The market is dominated by entry level, high mileage vehicles. To tap in to this market, OEMs are keen on light weighting vehicles, many of them being below 1000 kg (kerb weight).
Over the past few years, the dispensable income in India is growing constantly and that has resulted in the consumers opting for feature rich cars. Though nuclear families are growing within the country, outings with extended family are common and inseparable part of life. This kind of consumer behaviour has resulted in high demand for MPV segment vehicles. While the consumers are exploring the option of buying feature rich and large sized vehicles, mileage is still one of the most important factors which significantly influences the decision. Ever tightening emission norms further push the need for high mileage vehicles.
As a result, though consumers in India want their next car to be ‘loaded’ with features, it has to be lightweight to be fuel efficient and to comply with the emission norms. Weight reduction is a must as every 10% dip in kerb weight boosts the mileage by 8%.
Reducing overall weight of the vehicles can be a very challenging task for the OEMs but it stands out as most promising way of making inroads in the market. Exploring new joining technics, advanced materials and new approach to assembly lines could help in achieving the light weighting targets.
Aesthetics : What We Buy, Defines Us
For a long time, Indian consumer valued economic viability above the aesthetics. As the number of young buyers is on increase and as cars become much more than ‘convenience’, one can see high consumer pull towards aesthetically better cars. Aesthetics of any vehicle form first impression and often users judge the technical superiority through aesthetic finesse of the vehicle. Aesthetics are not limited only to just ‘look’ of the vehicle; a better design achieves many things in one go- better aerodynamics lead to better ride quality on road stability and better fuel efficiency.
As the consumers become more and more sensitive about carbon footprint and ecological impact, sustainable aesthetics could earn brands consumer loyalty. This focus on design has resulted in car makers adapting ‘agile’ way of launching cars and tweaking their designs. Use of alternative materials or new machining Technics can open up huge possibilities in improving vehicle aesthetics.
Cost Competitiveness: The Best Way to Stand out
For a very long time, Indian market comprised of cost sensitive customers whose first choice was small, fuel efficient cars. Cars were looked upon only as a means to get from one destination to the other. This attitude is changing very fast and premium segment vehicles will find larger pull from the consumers. Increase in disposable income, global exposure and increasing aspirations are resulting in a major preference shift among Indian consumers. Feature packed SUVs and MUVs are witnessing increasing demand. The present Indian market has a wide range of models placed at different price point in a same segment. This price variation is primarily due to variation in safety and usability features. In such a ‘red ocean’ market, being cost competitive is imperative. Being cost competitive without compromising on quality and features is a herculean task and adapting newer technologies can prove beneficial. Platform consolidation, streamlining manufacturing lines, strategic partnerships with technology providers are a few steps in the right direction.
Safety : Being Safe is Being Sane
The Indian Automotive industry in the recent years has been embracing Global Safety Standards and adopting them aggressively. The implementation gap between Indian and European regulations has come down to 2 years and is expected to decrease further. Despite this, India is the first and only country to mandate the use of Seat Belt reminders for the co-passenger with the introduction of the AIS 145. This clearly highlights safety being on the top of the minds of law makers. In spite of this push for passenger safety and comfort, there is still a clear lack about of pedestrian safety. A report by the Society of Automotive Engineers suggests that nearly 15,800 pedestrians were killed in India in 2016. These Pedestrians were mainly exposed to risk when crossing and walking on the road in urban and rural areas. This number is huge considering most of these had no fault of their own during accidents like these. It is likely that pedestrian safety will be the next large shift.
But things are expected to change with the Government mandating technologies and components that would make safety a key factor in every car. With Global NCAP now being considered by every carmaker, vehicles manufactured are complying to global safety standards. And soon enough, Indian vehicles will provide appropriate safety for passenger and pedestrian