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Scams, divorces and foul air hog headlines in 2015

| Updated on: Dec 24, 2015
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Hit by the emissions scam, Volkswagen stunned the world

It truly was the monarch of all it surveyed. For the first half of this year, there was no stopping Volkswagen as it raced away to become the world’s leading carmaker ahead of Toyota.

This feat was particularly significant as the company had set 2018 as the year it would emerge as the leader in the global auto arena. It had already achieved its objective, even as Toyota was in consolidation mode this year and had taken a break from expansions.

But, there was no stopping VW which was sitting on piles of cash with a dozen top brands in its portfolio right from Audi, Porsche, Lamborghini and Bentley to Scania, MAN and Ducati. In addition, it was the leading player in China and growing from strength to strength. How could it possibly go wrong in its insatiable appetite for growth?

All fall down

The first setback occurred when a court ruled that the German carmaker divest its shares in Suzuki Motor Corporation. VW had a 19.9 per cent stake which it had acquired in 2009 as part of an alliance with its smaller Japanese ally. The idea was to collaborate on a slew of technological initiatives but nothing concrete emerged.

Instead, what set in was enough bitterness for Suzuki to call it quits except that VW was not going to part with its stake in a hurry. International legal intervention was sought and the unthinkable happened when the invincible Goliath actually yielded to a relentless David.

Bad surprise

All this only preceded a bigger crash that followed and sent shock waves across the automotive world. VW was indicted in an emissions scam where it was conclusively proved that it had hoodwinked regulators in the US using a defeat device. Nobody would have imagined that the world’s top carmaker would resort to this kind of subterfuge in its bid to stay ahead. It was only inevitable that VW’s charismatic CEO, Martin Winterkorn resigned following the scam as more heads threatened to roll. It was not the kind of ending that Winterkorn would have hoped for, given that he was the man who spearheaded the company’s drive to lord over the rest.

With Matthias Muller in the driver’s seat now, VW is expected to tone down its aggressive growth plans in the coming years. Not only will it have to slow down considerably after the breathtaking pace of expansion but will also have to cough up billions of dollars to atone for this serious lapse.

Next in line

While VW was the biggest newsmaker for all the wrong reasons, its former partner, Suzuki, also hit the headlines on more than one occasion. Chairman Osamu Suzuki finally made known that his son Toshihiro would succeed him by elevating him to the post of President and Chief Operating Officer.

Suzuki senior also had reason to celebrate after the VW divorce and famously declared that it was akin to clearing a bone from his throat. There is no telling if the Japanese carmaker will look for another global ally in the coming years. If one is speculating, Fiat Auto seems the top contender.

In India Osamu Suzuki made the news again as the key speaker at an automotive conference. He reiterated that quality was critical as part of the ‘Make in India’ drive and told ancillary suppliers that they needed to focus solely on their business and not get swayed by other interests like hotels and so on. This message struck a chord with the audience which was visibly awestruck by the octogenarian who has steered Maruti Suzuki to an invincible position in India.

New entrants

Perhaps a rival brand could just be emerging in the form of the Renault Kwid which has struck gold with over 75,000 bookings.

The compact car has the potential to be a winner and finally take on Maruti’s dominance in the entry segment where the Alto reigns supreme.

Again, on the subject of small cars, Tata Motors is getting ready to launch the Zica in the coming weeks. The company has also roped in Lionel Messi, as its brand ambassador. Market gossip suggests that the football star has been paid a ‘whopping sum’ and it will be interesting to see whether his association will give Tatas the zip it so desperately needs in cars.

The inability of General Motors to make an impact in India despite its two-decade tenure has been strange. With a market share of less than 3 per cent, the company is now keen on stepping on the gas.

Its CEO, Mary Barra, was recently in India and announced substantial investments going forward. Yet, there was some not-so-encouraging news in its intent to close the Gujarat plant and focus on the Pune operations instead.

Odd moves

Diesel has been gradually ceding ground to petrol as a fuel of choice in India ever since the Centre decided to yank it out of the irksome subsidy mechanism. It continues to be used in SUVs and top-end luxury cars. Recently, some of its manufacturers were in for a rude shock when the Supreme Court banned registration of all personal diesel vehicles in Delhi with engine capacities of over 2,000 cc.

The worst hit companies were Mahindra & Mahindra and Mercedes-Benz which will have to cope with disruptions in their supply chain of dealers and ancillary suppliers. Sure, Delhi is in the midst of a foul air crisis where it is almost impossible to breathe comfortably but will this ban solve the problem?

It was this issue of emissions that also prompted Delhi Chief Minister Arvind Kejriwal to implement the odd-even rule for all vehicles from January 1 as part of an experiment for a fortnight. Though the move has had more than its share of critics, there are some who back Kejriwal’s decision insisting that it is an honest effort.

Published on March 10, 2018

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