Auto companies looking to showcase their best vehicle models in the lucrative domestic market will pay more this year than they would shell out in more developed markets such as Europe and the US.
Revised after six years, the rents for display space at the Delhi Auto Expo less than two months away are now higher than the prestigious motor shows at Frankfurt, Geneva and Detroit, say industry sources. Incidentally, the only auto show where rents are more expensive is Shanghai – China being the fastest growing and largest auto market in the world.
At Delhi, the peak rent for non-members of auto industry body Society of Indian Automobile Manufacturers (SIAM) is Rs 11,500 per sq.m, compared with Rs 15,000 at Shanghai, Rs 11,000 at Frankfurt, Rs 6,500 at Geneva and Rs 5,000 at Detroit. In the 2008 Auto Expo, around 1.2 million people turned up over seven days to see the extravaganza.
“The rentals are not market-oriented but depend on the cost of the venue – our costs have gone up 35 per cent from the last time. The demand (for space) this time has been three times that is available at Pragati Maidan. We expect around one lakh people more to turn up this time,” said an official from one of the organising bodies, Confederation of Indian Industry (CII).
The higher charges have largely been attributed to an increase in basic rent by the Government, owner of the Pragati Maidan fair venue. Also, there is a basic supply-demand function at play – with limited space available, auto companies are scrambling for display area. The number of firms showcasing their wares has also increased this year.
“The main problem was that we could not expand the fair area, though we even tried alternative locations. We had to ration space as per a formula … some premium carmakers wanted space but had to be refused,” a SIAM official said.
Added Mr Abdul Majeed, auto sector analyst at PwC, “All companies want more display space because India is a key market. Going forward, they will have to look at alternative venues.”
New participants
In its 11th edition, the 2012 Delhi Auto Expo is for the first time expected to see participation from all the 10 major global automotive groups. French automaker PSA Peugeot Citroen will be the last of this to participate, while other new players rumoured to join in the fray include Isuzu, Kamaz Vectra, Daimler Commercial Vehicles, Mini, Nissan-Renault and Mazda. Participants also include two wheeler companies and component makers.
The organisers, CII, Automotive Component Manufacturers' Association and SIAM, are likely to rake in at least Rs 55 crore as revenue just from the 60,000 sq. m display space, half of which will go to the Government.