By Avik Chattopadhyay
At the recently-concluded COP-26 Climate Conference in Glasgow Prime Minister Narendra Modi presented a five-point agenda in his ‘National Statement’. He termed it as the ‘Panchamrit’ or the ‘five nectar elements’. The 50-year plan has ambitious targets on non-fossil fuel energy generation, use of renewable energy and reduction in carbon emissions.
What implications do these elements have on the Indian automotive industry? Will switching to electric mobility be the answer to all its collective problems? Are the problems only with the type of vehicles made? Will the industry also set 50-year long targets for itself?
First, the industry should assess its contribution to the larger cause as vehicle emissions contribute at the most 20% of the total atmospheric pollution. It should set simple and achievable 5-year targets to go after. Create a “Panchamrit Blueprint” and share with the policy makers to set the agenda and then to run it.
Second, the actions lie not only in making greener vehicles but also in how they are made, sold, and serviced.
In this field the Indian automotive industry must set into motion five specific actions within the next 5 years as the first step. They are: Cleaning the Downstream, trimming the portfolio, multi-tasking the engines, retraining and redeploying the human resources, and sustainability audit
Clean the downstream
While the upstream operations of all automakers have been the focus of sustainable practices, the sales and service operations of all automakers (the downstream) need massive overhauling. They are not the most efficient when it comes to sustainable practices. Look around any showroom or service centre and you will see indiscriminate use of resources and energy – plastics, non-recyclable inputs, air-conditioning, ground water, paper…the list goes on.
The amount of ‘flex’ material used for banners, hoardings and other advertising media is criminal. The huge plastic covers for upholstery needs to be done away with. Simple things like plastic / Styrofoam glasses, coasters and plastic folders need to be substituted right away.
While some automakers have incorporated water-less vehicle washing, the rest of the service operations are still resource-intensive. The use of solar, biogas and other renewable energy sources has been neglected till now. The basic design of the showrooms has always been flawed for a country like India – the amount of glazing, artificial lighting and giant LED screens are disrespectful to the reality of the land. Mumbai simply cannot be Manhattan.
Lastly, prune the number of showrooms you have. They are a burden staring all automakers in the face. Unless you have no physical presence at all in a key location, do not appoint new network partners for opening new showrooms. The ‘small town’ / ‘rural’ needs to go to a showroom is an excuse, not any logic. The less the number of physical structures, the less the pressure on resources.
Trim the portfolio
Vehicle offers have increased in complexity over the years. While various customer requirements need to be addressed, automakers have insisted on creating all variants in-house rather than set up a network of customisers closer to the customer. The more variants you make in your plants the more the energy you consume per vehicle manufactured.
Automakers have to stop using the bogie of “attractive entry price” by creating variants that hardly sell but only lead to excessive energy consumption. It’s time for the portfolios to be trimmed. The price bands will remain the same so you will not lose your customers to competition. And once the entire industry agrees to undertake such a mature move, it is a mutually beneficial solution.
Multi-task the engines
After a long time, the push on flex fuels by the government has been a step in the right direction. The policy makers have come down from their high horse and realised that a single energy solution like electric cannot be a pragmatic one for India. The industry must grab this with both hands and make it happen on the double. Bio-ethanol, bio-diesel and bio-CNG will be the best flex fuels to work with, keeping in mind factors like availability of raw material, compatibility with existing engine types, affordability, well-to-wheel emissions and economic viability.
Hybrid is the way to be in the post-Covid ‘new normal’, whether at work or the energy source for mobility. Electric four-wheelers will take time to gain traction of volumes for personal mobility.While two-wheelers, public transport and light commercial vehicles will certainly become electric, the four wheelers will have to go through the transition of hybrid / flex fuel options before propellants like electric or hydrogen become the mainstream.
Retrain and re-deploy human resources
Job loss is a looming threat the industry wishes to look away from. All global automakers have been projecting job losses across their operations as they move to electric vehicle portfolios. Right now, Herbert Diess of VW is facing a no confidence motion as he has stated that close to 30,000 jobs would be lost in Wolfsburg itself if the brand did not move fast and ramp up EV production.
The same will apply to automakers here in the transition to an electric portfolio. The interim of hybrid / flex fuels will help soften the blow in the interim. The entry of new players in the EV space, especially in two-wheelers and CVs, will force legacy automakers to lay off people. Closure of showrooms will add to the excess manpower in the marketplace. Greater digitisation and automation will make current jobs redundant.
This necessitates retraining employees in new functions like direct sales and service so that most of them can be redeployed. Those that cannot be retained should be employable in jobs in the marketplace and the automaker should make all efforts to see every lost employee is gainfully re-engaged.
The auto industry has to demonstrate a level of maturity in bringing in domain experts to audit its sustainability and measure it through an index applicable to all. While all automakers have started acting on sustainable business practices, there is no single measure that covers all types of initiatives and processes as well as comparing one automaker with the other.
India needs an “automotive sustainability index” (ASI) on the lines of the JD Power CSI and SSI, though not with similar eventual fate. The JD Power indices definitely drove automakers into becoming more customer-focused in the sales and service operations. Though the average car buyer might not have been aware of the index, he / she surely did enjoy and benefit from the improvement in customer management across the industry.
The ASI needs to be a joint effort of the ministry and the industry body SIAM to ensure adoption and unbiased audit. Automakers need to be ranked on the same and accorded some kind of a badge that can be proudly displayed at all points of customer interaction to drive choice.
These five specific elements are what the Indian automobile industry should collectively adopt and act upon for the next five years as the first milestone in the 2070 journey. A good start will allow the industry to reach its own sustainability goals before that deadline and make it a benchmark for other industries to emulate.
That will be the best demonstration of the industry’s motto of “Building the nation, responsibly”.
(The author is co-creator of Expereal India. Also, he is former head of marketing, product planning and PR at Volkswagen India.)