FROM BUSINESS WORLD OF 1 JANUARY 2006
The million-car
year
For the first
time in India’s history, the passenger car industry produced over a million
cars in 2005 – 1,012,000 to be precise. In addition to the million cars, the
industry produced 266,000 utility and multiple passenger vehicles. And it is
not just the numbers that are gratifying. From four undistinguished models of the
early 1990s, the choice for buyers has expanded to over two dozen. The industry
has not yet realized Ratan Tata’s dream of a Rs 100,000 car; but it offers
plenty of choice at the ground level between Rs 200,000 and Rs 300,000.
Whilst that is a
creditable achievement, there are signs that the pace of growth is slowing
down. The annual output growth of personal vehicles came down from 29.8 per
cent in 2004 to 8.6 per cent in 2005. The increase in output in 2005 was a mere
16,000 over the previous year’s rise of 202,000.
The slackening
growth can be attributed to demand. Last year, cars were selling so fast that sales
bit into inventories; this year, supply and demand balanced better. The middle
class is still squeezing itself into cars, but not so fast. It may look as if
prosperity is trickling down; for the growth of two-wheeler output remained
almost the same at 17 per cent. But there too, growth of domestic sales has
come down; growth has been maintained by exports. Mopeds, which are losing out
to motorcycles at home, are finding markets abroad. Two-wheelers are yet to be
exported on the scale of cars, a sixth of whose output is going abroad; but
they are getting there.
The slowing
growth of domestic demand for personal vehicles probably reflects a slackening
of the general boom conditions in the economy. But it may be that some
potential buyers are daunted by the prospect of driving on our roads. It is not
just the accident rates that put people off. As the danger of being killed by a
speeding vehicle has receded, the likelihood of being immobilized by a traffic
jam has multiplied. Even when urban arteries have not been clogged up, the
irritation of having to endure screaming motorcycles, lurching three-wheelers,
uncivilized minibuses and reckless taxis is enough to make people take buses,
which are safe havens but for an occasional pickpocket.
The areas being
developed east of Calcutta are an exception to this universal Indian bedlam. In
fact, there are roads feeding the EM bypass where drivers long to see a passing
vehicle. This is an asset that West Bengal could usefully advertise. It is not
just Deve Gowda that has dimmed Bangalore’s luster; it is the long and dreary
trek to its outskirts along perennially jammed roads. A picture of our uncluttered
highways would whet the appetite of IT entrepreneurs. That the heroic trade
unions of Calcutta never hold demonstrations on those eastern roads is an added
bonus.
