Friday, January 6, 2012

India's Amazing Auto-Rise

I still remember that moment, back in 1975 when my college lecturer father bought a Bajaj scooter. I think the price was about Rs 5,000. More interesting was how he broke the queue to take delivery of Hamara Bajaj. He had put in a request with a minister in the state government who happened to be an old student who liked father as a teacher. The minister's sifarish helped dad get early delivery. The normal process was: you pay the entire sale price in advance to Bajaj and wait for about three years for delivery (now you know why Bajaj Auto still has such huge cash reserves!). My elder brother clandestinely took the scooter for a spin and crashed it. Luckily, it was a minor one. The thing I remember is, my father, who has a post doctoral degree from Imperial College of London, was virtually bankrupted by that purchase and we couldn't even go for school picnics costing Rs 30 that year.

As all eyes are riveted on the grand spectacle of the 2012 version of the Auto Expo, I can't help marvel at how much India has changed since those days of innocence and hope against hope. In fact, I would go so far as to say that the changes in India's automobile industry truly reflect the mind boggling ways in which India has changed. More than IT, it is the auto industry that reflects the true manner in which the Indian economy has grown from being a third rate Third World beggar to something of substance. Back in the early 1980s when Maruti and then Hero Honda hit the roads, the total production of automobiles in India was barely a million units; cars accounting for just about 50,000 units. Today, despite the slowdown, car sales in India crossed the 1 million mark. Hero Honda did not exist back then. Today, rechristened as Hero Motor Corp, it produces more than 5 million motorcycles and scooters. Many of you are familiar with the statistics and I won't bore you with more of the same.

But some of you still remain skeptical, and sometimes even derisive about the progress made by the Indian economy and the middle class in the last three decades. You still say that automobiles are for the rich and only a small fraction of India can afford to buy them. True to some extent. But let me give you a handy piece of comparative data to let you assess how massively the middle class in India has grown since then. In the early 1980s, my elder brother became an pilot of the Indian Air Force. He needed about 9 months of his salary to buy a bike called Ind Suzuki, subsequently TVS Suzuki and now separately TVS and Suzuki. Today, a new pilot of the Indian Air Force needs a little more than one month's salary to buy a motorcycle. Back then, my elder brother couldn't even dream of buying a car. It would need more than three years worth of salary to buy a basic Maruti 800 without any frills. His juniors today need just about 6 months of salary to buy a Maruti Alto with an air-conditioner. You might say that Air Force pilots were always middle class. First, that is not true and second, let us take a salesperson in a show room. Back in the early 80s, a salesperson would need more than 4 years salary to buy a two wheeler. Today, she can buy one with just about six months worth of salary. That is how intimately the automobile industry is associated with the rise of the middle class in India. And I am not even talking of the financing options available today.

If you still think the auto industry is elitist, let me dispel your prejudice a bit further. When you walk into an auto showroom, you find a few salesmen, a few others selling insurance, some others selling a loan and many others selling accessories. None of these jobs are high paid ones, but they are jobs that did not exist earlier. The autos sold, the more the number of petrol pumps, service stations and garages. Again, low paid jobs but jobs that did not exist earlier. Think about the people selling helmets on main roads, about people selling trinkets on traffic lights and people selling old tyres and reconsider your opinion about the auto industry being elitist. Sure, the guy selling trinkets on a street light would be better off sitting in an office with a real 'job'. But he never had the opportunity to get an education, and now the auto industry, like telecom, travel, courier and retail at least offers him an escape from grinding poverty and starvation.

By all means condemn the fact that too many Indian are still poor. But at least also celebrate the fact that many Indians who could not even dream of owning a two wheeler back in the 1980s now actually own cars!


1 comment:

  1. Cars are sold, the greater the number of petrol pumps, service stations and garages.

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