With Climate Change, Innovation and employing the right Talent being the flavour of the inaugural session, the 48th Annual SIAM Convention was inaugurated in the capital, amongst industry luminaries, ministry officials and senior bureaucrats. The day long session that saw participation from top honchos of Indian and international automobile. The auto ancillary companies celebrated the successes of 60 years of Indian automobile manufacturing while gazing into the crystal ball and identifying challenges and opportunities for the future.

Inaugurating the session, Hon. Minister of Heavy Industries and Public Enterprises – Shri. Sontosh Mohan Dev, set the tone for the convention by highlighting the challenges being faced globally by automobile manufacturers. He stressed on factors such as rising input costs, increasing fuel prices, escalation of competitive and inflationary pressures and the looming dangers of global warming and climate change while challenging Indian auto manufacturers to work around these impediments. He highlighted the need for innovation and cleaner and sustainable technologies in order to surmount these challenges.

Speaking on the government’s commitment to encouraging the Indian auto industry, Shri. Dev spoke about the Automotive Mission Plan 2016 and reiterated the government’s single minded focus to make the Indian auto sector globally competitive. Hoping to surpass set targets for coming years, the minister spoke about the Indo-German joint working group, the 5 Inter-Ministerial groups and various tax incentives that would give direction to policy initiatives in India for the auto and auto ancillary sectors.

Making the welcome address for the session, Mr. Ravi Kant – President, SIAM & Managing Director, Tata Motors started off by congratulating the industry on its consistent 13% growth in the last 7 years and highlighted Innovation as a key factor that describes the Indian auto sector today. Speaking about the Nano, Mr. Kant said that innovations such as this will change the paradigm for the sector, globally. Speaking on the Automotive Mission Plan 2006-2016, Mr. Kant expressed belief that the sector will do better in years to come, with growth predicted across segments. However, he was quick to point out the new challenges for players in the sector – shrinking demand, rising input costs, increased cost of fuel, climate change threats and the dearth of talented manpower. Highlighting inflationary pressures and rising cost of steel, copper and rubber along with increasing interest rates, Mr. Kant urged the government to take timely, and corrective measures in order to maintain momentum of the Automotive Mission Plan

Mr. Pawan Goenka, Vice President-SIAM & President (Automotive) – Mahindra & Mahindra delivered the vote of thanks and highlighted the various sessions planned out for the 48th SIAM Annual Convention. The day will see key note addresses from various ministry officials, industry leaders and technical experts and will host two panel discussions on – ‘Innovation – What would it take for India to become a key player of innovation in automotive industry’ and ‘Small car segment – Will the small car segment bring new dynamics in the auto industry?’

‘SMALL IS BIG’ – Across the world
• Small cars are here to stay and will see increased demand globally
• Alternative propulsion and sub-segmentation to define future of segment
• USA to soon become major market for small and medium cars

The age old story of the David and the Goliath is being retold in the automobile industry across the world. Mounting inflationary pressures, squeezing credits and infrastructural shortfalls are driving demand for the small car across continents. With the Tata Nano shifting paradigms and challenging existing engineering principles in auto manufacturing across the globe, many auto players are re-thinking strategies and focusing on the small car segment.

The key panel discussion on ‘Will the small car segment bring new dynamics in the auto industry?’ held at the 48th SIAM Annual Convention, brought about a general consensus among panelists that the world auto market is witnessing an increase in demand for small and medium size cars. But what would be the dynamics of this segment, where would it stand globally and in India, where would be the central markets located and what would be the prime issues to consider? These and many more questions were answered by the panel at this discussion.

A dream panel consisting of some of the biggest names in the global auto sector graced the dais today – Dr. Sergio Marchionne – Chief Executive Officer – Fiat Group and Automobiles, Italy, Mr. Fritz Henderson – President & COO, General Motors, USA, Mr. Shohei Kimura – Managing Director, Nissan Motors, India (JAMA), Mr. Shen Yang – President, SAIC-GM-Wuling Company, China and Mr. Ratan Tata - Chairman, Tata Motors. All panelists agreed that growth in demand for small cars combined with alternative propulsion (hybrid / electric) and further sub-segmentation based on geographies, price, features and technology would define the future terrain for the small car segment.

Mr. Henderson however, emphasized that the small car may not be the solution for all geographies. Explaining his opinion, he stated that the USA – undergoing a major shift in demand patterns now – will seek small and medium segment cars with high technology and safety features and high fuel efficiency. Therefore, there is a need to reconcile cost, technology and power. Concurring with Mr. Henderson, Mr. Ratan Tata reinforced the need for a small car in developing economies and especially in a country like India. India, he said, will be a dominant market for a low cost small car, while the USA would demand a small car loaded with accessories and packaged efficiently with power and technology. He also stated that the demand for bigger cars will remain in developed markets; though it may marginally reduce. Explaining the scenario in China, Mr. Yang commented that the demand in China for small cars is likely to exponentially increase in the near future due to legislation and policy measures being undertaken by the government such as reduction in subsidies for gasoline. He expects Chinese demand for small cars to go up by 12.1% y-o-y from now till 2017.

But do small cars mean small margins and lower profitability for car makers? No, says Dr. Sergio, while explaining that that was a perceived view. He said that different sub-segments of the small car may have varying profit margins, but overall, small cars do not spell lower profitability. He added that with dead markets such as the USA opening up to small cars and slated to grow, there is promising potential for the segment across the globe. Mr. Henderson added that the key factor for profitability was also getting the right price for the right sub-segment. Explaining that no company can play profitably across all sub-segments of the small car, Mr. Henderson said that it would be best to pick your segment of competency and excel.

Speaking from a different perspective, Mr. Tata stated that the overall issue was not of profitability but that of scale, in a country like India. He said that players will need to find commonalities across variants in order to optimize scale and therefore margins. However, having said this, he wholeheartedly agreed that India was a bright and potential destination for sales and production of small cars.

Addressing the concern of infrastructure vis-à-vis increasing automobile demand, all panelists agreed that infrastructure in India had not kept pace with growing demand for automobiles. However, they said that the government is taking notice of this fact and is enhancing road systems and connectivity in order to improve mobility and quality of infrastructure.

India is fast becoming the automobile hub of the world and has all the potential to lead and direct automobile research and innovation for all the BRIC nations in the future. This was the broad consensus among panelists at the key panel discussion on ‘What would it take for India to become a key player of innovation in the automotive industry’ at the 48th SIAM Annual Convention held in New Delhi on September 4th. While applauding India for its recent achievements in innovation that has made the world sit up and take notice, the panelists also highlighted several areas that would require focus in order to maintain this momentum.

The panelists included eminent Indian and international auto leaders – Dr. R Chidambaram – Principle Scientific Advisor, Govt of India, Mr. Rajiv Bajaj – Managing Director, Bajaj Auto, Mr. Christoph Eisenhardt – Executive Vice President, Continental, Germany, Dr. Stephan Pischinger – President & CEO, FEV Group, Germany, Mr. Paolo Pinninfarnia – Chairman, Pinninfarnia, Italy.

Over a 120 years of automobile manufacturing has seen players face various challenges. However, the last few years have seen a shift in the nature of impediments for the sector – primarily, rising fuel prices, rising input costs, changing customer demand and expectations and climate change threats that have forced manufacturers to go back to the drawing board and rethink and innovate. The increasing need to club innovation and business performance is driving auto manufacturers to the R&D centre. But how do we do this? This laid the foundation for the panel discussion.

India can be a global leader across sectors, but needs to think beyond just product innovation and look at process and design innovation, said Dr. Chidambaram. He also highlighted HR development as a major requirement to makeover innovation. Agreeing with him, Mr. Pischinger went on to define innovation as bringing ideas to the market and creating customer value. He stressed on the customer and ‘boundary conditions’ as primary drivers for innovation. Rajiv Bajaj also spoke about the customer as the primary driver who will develop the market and therefore decide path of innovation for auto manufacturers. He also made a significant point of lack of profitability globally among auto players in the last 5 years of so. “We invest millions of dollars in R&D, bring out new products and file many a patents … but are still unable to correlate innovation with business performance”, he said. Providing a new perspective to the discussion, Mr. Eisenhardt spoke of India and China as potential leaders of auto manufacturing by 2012. He emphasized on increasing innovation spends as crucial in the face of newer challenges of globalization and aggressive market competition.

Summing up the session, the panelists spoke about what it is that India can do in order to increase its innovative advantage and convert it to business performance. Recommendations varied from focusing on education and driving innovation with a mission to unlocking fixed mindsets and ‘unlearning engineering’ as we know it today. The need for relevant partnerships and collaborations between OEMs and suppliers emerged as a strong recommendation by the panelists. The role of legislation in ensuring political, financial and infrastructural stability and in encouraging innovation and R&D by removing barriers was also discussed intently. Focus on development and relevant application of research combined with Academia-Industry interaction will also encourage and improve quality and relevance of innovation, said the panelists.

Having contributed immensely to the Indian growth story, the automobile sector is now all set to become a global hub for manufacturing and exports, commented Hon. Minister of Commerce & Industry, Shri. Kamal Nath at the concluding session of the 48th SIAM Annual Convention held in New Delhi. India’s growth has been synonymous with the Indian auto sector and this sector has been an outstanding feature of our economy, he added.

Speaking about varied competencies and the growth story of the sector, Mr. Nath brought out the example of Tata Motors – saying “years ago, who would have thought that a company like Tata Motors would have a Nano and a Jaguar in the same stable”. He applauded the automobile sector on its various successes.

Addressing the challenges faced by the sector, Mr. Nath highlighted the need to steer the growth and stimulate future growth in the sector. He also drew attention to the issue of land acquisition for manufacturing. He said that the 100 million odd farmers who had been shifted out of agriculture due industrialization, would have to be rehabilitated to alternate sectors like the service sector.

Speaking earlier at the session, Mr. Madhur Bajaj, Vice Chairman, Bajaj Auto stressed on the challenging times that lay ahead for the Indian industry. He mentioned issues such as high input costs, increasing interest rates and tightening norms to watch out for in the future. He however, expressed the view that the Indian automobile sector was indeed set to become a global hub. This view, he said, was ratified by international players such as Hyundai and Suzuki. Mr. Bajaj pointed out that this growth would be possible and sustainable only through increased focus on R&D and innovation. Urging the government and the WTO to encourage all segments of the automotive industry, Mr. Bajaj said that if Design is to Italy, what Engineering is to Germany and Software is to the USA – ‘Productionising’ should be to India in the future.