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JANUARY 16, 2005
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Cities On The Edge
Favoured business destinations Gurgaon, Bangalore, Chennai, Pune and Hyderabad could become, thanks to poor infrastructure, victims of their own success. Read in-depth articles on each city. Plus personalised travel logs. Only at www.business-today.com.


Moving On
Diluting stake in GECIS was like a child growing up and leaving home, feels Scott R. Bayman, President and CEO of GE India. In an exclusive interview with BT, he speaks his mind on a wide range of issues.

More Net Specials

Business Today,  January 2, 2005
 
 
INDIA IN 2020
Clean And Connected
 

The next generation automobile will pollute less; it will use up fewer resources; more people will own one; and it will constantly communicate with other automobiles to minimise road congestion, emission and accidents.

While the automobile may transform in other ways as well, the evolution will be driven as much by pressures of civil society and public policy as by the compulsions of competition and the free market.

In recent years, the automobile has become more attractive, shapely and colourful. While improved aesthetics is the result of design creativity and innovation, the more decisive evolution of the automobile has, perhaps, taken place elsewhere.

In the last two decades, the power of the internal combustion engine has more than doubled. In response to legislation like the Clean Air Act in the US, its emissions are down sharply. The fuel efficiency of the internal combustion engine is far superior now than before the oil crisis of the 1970s.

This evolution was clearly inspired by macro and social concerns. In future too, the evolution in the automobile will be a response to community concerns on energy, environment and affordability that will accompany the expansion of the global automobile market.

Aspiration for the automobile will accelerate. By many accounts, the automobile industry is today poised for significant growth over the next two decades. Experts predict a dramatic increase in automobile ownership in countries like India, China, Korea, Brazil and Russia, without suggesting any major let-up in the secular growth visible in the developed economies.

Goldman Sachs has predicted that automobile ownership in China, for instance, will go up from 15 per 1,000 people to 32 per 1,000 people by 2010. In India, this figure will go up from eight to 12 cars per 1,000 people.

Certain other experts speak of India as being at the "inflexion point", from where a sustained 20 per cent annual growth in automobiles is likely. Even the most conservative projections settle for nothing less than a 12-15 per cent long-term annual growth. These experts also project a sharp growth in energy consumption to feed broader economic growth, including mounting automobile ownership.

This growth in automobiles will not spread evenly; it will most likely be skewed in favour of the prosperous zones within these countries. As such, the impact of a concentrated automobile boom on the civil society in these zones will be that much greater.

The automobile industry would foster economic and employment growth, but equally, face criticism for its impact on energy, environment, and quality of life

There may, thus, be a scenario where the automobile industry will foster economic and employment growth, but equally, face criticism for its impact on energy, environment and the quality of life. More and more people will want the joy of mobility, without the community willing to pay such a high price for it.

Already, there are pockets where public policy has responded to this. In London, for instance, car users wanting to enter select areas in the centre of the city have to pay a congestion charge of £5 (Rs 420) a day. The revenue from this is used to improve public transport in these areas.

Although there are protests from retailers in the area alleging a decline in business, car traffic in the designated area has come down by 10 per cent. The London authority is yet to meet its targets for revenue and decongestion, leading to fears that the toll may be extended to other areas!

A more comprehensive initiative has taken place in the Colombian town of Bogota, where the local mayor is determined to "squeeze out" cars from the roads and make way for pedestrians and green spaces. He is clear that he will not invest public money in flyovers or similar activities that encourage car use. Instead, he will secure more bang for the buck-and votes-by spending on public transport, parks, public amenities and bicycle tracks.

In Shanghai, the authorities are able to contain the number of cars by restricting the number of vehicle registration numbers available. These numbers are tradable, though, and the going rate is close to $4,000 (Rs 1,76,000).

The experience in Singapore is widely known, where the number of vehicles is regulated through a vehicle quota system. Users have to bid for a limited number of "certificates of entitlement" and also pay a "quota premium" before they can ply their vehicles.

These are yet isolated instances of concerted civil action to restrict use of automobiles. But over time, it will be a key factor in shaping the agenda of research and development in automobiles.

One of the ways in which the industry will respond to this is by increasing the efficiency of automobile and road use through use of information technology (it). While it has improved efficiencies across the entire range of economic activity starting from investment capital to raw material inventory to customer relationship, its potential for reducing road congestion, driver fatigue, accidents and energy consumption is yet to be tapped.

This is perhaps the best phase in the history of the automobile. It is prettier, safer and more aspired to than ever before. Just the right time to shift gears and evolve to the next grade

The industry will deploy it to reduce "wastages" in road use arising out of information gaps, such as traffic jams and search for parking space. The automobile will be completely geared to gather and interpret information on a range of subjects such as traffic conditions in the city centre, the distance between one automobile and another, and other "driver-assist" information.

There is early success in the use of GPRs and telematics, and this will evolve into a broad-based system where every automobile is part of a network capable of offering customised and real-time information to the user.

Use of it will be one route to reducing energy consumption of automobiles. The other will be innovation in engine technology. While internal combustion engines will continue to improve at a rate of 1-1.5 per cent in terms of fuel efficiency, power and emissions, the next generation vehicle will mostly likely have broken off from this 20th-century technology.

The first small step in using technology to reduce energy use and contain air damage is to enable more environment-friendly fuels like LNG and CNG This is in a nascent stage in India.

The next step is hybrid vehicles, like the Toyota Prius or Suzuki Twin Hybrid, which can be powered by both an internal combustion engine and an additional source like a battery. Although there are issues of cost and performance owing to integration of two technologies, hybrid vehicles are indeed a cleaner option.

At the frontier of engine technology is the fuel cell, the zero emission option where the vehicle effluent is just water. It is also more efficient, as it works by converting hydrogen and air into electricity, which in turn powers the automobile's motors.

The promise of the fuel cell has fostered collaborations among automobile companies on both ends of the globe. While even the most optimistic projections see a mass-produced fuel-cell vehicle as being some years away, this will certainly be the most significant point of difference between a vehicle of this generation and the next.

Even as the automobile acquires sophisticated information systems and new engine technology, and generally becomes safer and more reliable, the industry will continue to work on cost and affordability.

Much of the scorching growth predicted for the automobile industry will be on account of first-time buyers, making affordability an important attribute of the next-generation automobile.

A large part of the economies will come from collaborations between manufacturers and "communisation" of vehicle platforms. As vehicle life cycles shrink, manufacturers will be under pressure to keep costs down and reduce time to market for new models. This will foster sharing facilities among manufacturers, collaborative research and closer involvement with component suppliers.

Advanced technology and features in the next- generation automobile need not preclude affordability. They could facilitate it. Fuel cell technology, though prohibitively expensive at this stage, promises to bring down the cost of maintenance. Even the cost of the fuel cell engine itself is down to 5 per cent of what it was a decade ago.

Car makers like General Motors are already talking of how a move from mechanical systems to electronic controls will redefine the economics of the automobile. As electronic controls take over (facilitated, incidentally, by fuel cell engine technology), the chassis may not need to be linked mechanically to the body.

In that situation, it may be possible to combine alternative automobile bodies with the same chassis. Assuming the life of a chassis is 20 years, the body of the vehicle can be "renewed" every few years to yield a new automobile each time! Clearly, this flexibility will have profound consequences for the automobile business.

Although these options are still being assessed and debated, they give us the hope that sophisticated technology may not be inconsistent with affordability.

In over a century of its existence, this is perhaps the best phase in the history of the automobile. It is prettier, safer and more aspired to than ever before-just the right time to shift gears and evolve to the next grade.

 

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