Auto makers riding hopes on campaign-bound politicians
Call it the election drive! Indian automobile makers are looking forward to the elections to rev up sales of sports utility vehicles (SUVs) as politicians and supporters hit the campaign trail.delhi Updated: Apr 08, 2009 15:35 IST
Call it the election drive! Indian automobile makers are looking forward to the elections to rev up sales of sports utility vehicles (SUVs) as politicians and supporters hit the campaign trail.
Companies like Toyota Kirloskar, Mahindra and Mahindra, Ford India, Tata Motors, General Motors and Maruti Suzuki had already fine-tuned their production lines in the run-up to the five-phase elections, industry watchers said.
Now, they hope their sales would make up for what was otherwise an uphill climb this season in the wake of the slowdown that has seen sales of SUVs decline 7.9 percent during the first 11 months of the previous fiscal, they added.
Marketing executives in these companies said the politicians were not only opting for time-tested vehicles like Maruti Gypsy and Tata Safari, but also some relatively newer offerings such as Mahindra's Xylo and Scorpio, Toyota's Innova and Ford's Endeavour.
If Tata Safari continued to be the preferred choice of Congress party president Sonia Gandhi and Leader of the Opposition L K Advani, others like Telugu cine-star Chiranjeevi are riding the costlier Honda CRV.
"Election campaigns are really tough and demanding. We are on the roads for some 15-16 hours, or even longer, every day," said Madhu Gaud Yaskhi, the sitting Lok Sabha member of Congress party representing Nizamabad in Andhra Pradesh.
"Sports utility vehicles are sturdy, comfortable and safe - not just on highways but also on the mud roads and bylanes we have to encounter. They are clearly my vehicle of choice," Yaskhi, who has bought a Safari and a Scorpio, said.
Some politicians are also paying additional cost, sometimes as much as the price of their vehicles, for add-ons such as bullet-proofing, armour-plating, fuel tank enhancement, refrigeration and even satellite television.
According to Abdul Majeed, the principle automobile analyst at consulting and audit firm PricewaterhouseCoopers (PwC), since the bulk of the voters in India are in rural areas, leaders need to ride that extra mile to reach out to them.
"So sports utility vehicles are preferred over other cars because of their all-terrain capabilities. These vehicles have all-wheel drive, which make them the best available options in terms of access and safety," Majeed said.
Little wonder then, the sales of such vehicles shoot up in the run-up to the elections, as evident from the statistics available with the Society of Indian Automobile Manufacturers (SIAM), the lobby for the auto industry.
In March 2004, for example, when campaigning for elections had just started, the sales of SUVs jumped 30 percent to 15,915 units over the like month the previous year, with Maruti registering a four-fold increase in sales, a 42-percent jump for Toyota Kirloskar and 20 percent for Tata Motors.
In April 2004, when campaigning was in full swing, overall sales of SUVs shot up 51 percent to 13,198 units, with Maruti registering a two-fold increase, 85-percent jump for Toyota Kirloskar and 60 percent for Tata Motors.
Dilip Chenoy, director general of SIAM, expected auto companies to log higher sales for SUVs in states like Uttar Pradesh, Madhya Pradesh, Rajasthan, Bihar and Maharashtra - a view shared by Gaurav Saxena, general manager, auto sector, for Mahindra and Mahindra.
"States with a wider geography and higher rural electoral base do present larger opportunities for car makers," said Chenoy, but added the companies were also anxious, given the tough election code and closer tab on election spending.
"India, like other countries in the subcontinent, presents a unique opportunity to car makers. They do not hesitate to cash in on the increased demand," said Van Fisher, analyst with global consulting major Renoir.
"This is quite unlike in the West where elections slow down auto sales, as companies wait for new policies. Auto makers also contribute a lot to fund-raising and, if anything, the months prior to elections dig a hole in their coffers."