Allocation for improvements are just 5% of advertising & marketing spend
How much does a typical automobile company in India spend on research and development (R&D) vis-à-vis the amount spent on advertisements and marketing? Hard numbers are difficult to come by, especially since many automobile companies in India are wholly-owned subsidiaries of foreign companies; trying to read through the fine print is like trying to find a noodle without MSG (monosodium glutamate) in it. However, anecdotal evidence suggests that, even after being generous, the number for actual R&D would be around 5% of the amount spent on advertisements and marketing.
Yet, some manufacturers complain that sales are bad for a variety of reasons—none of which is obviously their fault—and then demand more tax sops. All this, when R&D is 100% tax deductible, in most cases.
What do customers expect in terms of R&D for automobiles made for Indian conditions? The answer is not far to see. Just get on the road and see how old vehicles look like and perform. It is easy to blame ‘bad maintenance’ for this; but what does R&D show? Should the critical parts not have been engineered for Indian conditions from the very start?
One manufacturer that spends a lot on R&D is Tata Motors. This shows in their leadership position in commercial vehicles. If they were to apply the same to personal vehicles and motor cars, maybe they would have a winner, and that would take some minor genuine R&D.Tata Motors is skipping a dividend this year for the first time since 2002.
Good News for the Differently-abled
Some months ago, we noted how difficult it was for differently-abled to get their driving licences—new or renewed—and to get excise waivers on purchase of new motor vehicles. Well, over the past few months, there is some good news from different states. In Indore (Madhya Pradesh), a gentleman who uses his feet to drive, will get a driving licence, if media reports are to be believed. Likewise, in Maharashtra, a gentleman who has been having a rough time with the authorities towards getting the excise rebate for a purchase of a new motor car has finally succeeded. However, some states still lag behind in this context; we, at Moneylife, would like to know more about how this issue is being handled in different states. For those who are keen to know more, or do more, about making mobility better for the differently-abled, write to us.
Celerio Diesel as Taxi
This author ran into a diesel Celerio, a few days ago. I have nothing against diesel clatter: a well-tuned diesel engine will settle down into a pleasant purr after a few minutes and give you years of driving joy. But there are some—in auto-rickshaws and cargo three-wheelers, for example—which you know by intuition will never settle down to a pleasant anything. The diesel Celerio appears to be aimed at the Maruti Alto taxi market. The higher ground clearance suggested may or may not last with five people inside. High torque will pull it through mountain roads, where the Alto is popular, but where climate change makes a diesel engine capable of going through deeper waters than possible. But, unless you are looking at driving more than 3,000km a month in a very thin tin can, you may wish to look elsewhere, even in Suzuki Maruti’s stable if it comes to that, for a reasonable three- or four-cylinder petrol engine car. The Celerio 125 diesel is, in my opinion, for the taxi trade. It may well be cheaper than a bus.
(Veeresh Malik started and sold a couple of companies, is now back to his first love—writing. He is also involved in helping small and midsize family-run businesses re-invent themselves.