Exports Picking Up Indian Auto Industry’s Slack
Executive Summary
Automakers are working to expand not only by exporting but also by producing compact vehicles, increasing dealerships and promoting rural sales and service within India. The domestic manufacturers face the additional challenge of strengthening their technological capabilities.
MUMBAI – Exports are shoring up India’s foundering auto industry, thanks to global manufacturers shipping cars overseas at a much higher rate than the four biggest domestic automakers.
Automakers in India exported 593,507 cars and utility vehicles in the fiscal year that ended March 31, up 6.1% from the prior year, as reported by the Society of Indian Automobile Manufacturers. A 0.6% uptick in car exports was overshadowed by a 298.6% spike in utility shipments.
Domestic sales in the same vehicle categories dropped 6.1% in calendar 2013 to 3.05 million units, WardsAuto data shows.
India’s major automakers – Maruti Suzuki, Tata, Mahindra & Mahindra and Hyundai –exported 349,192 cars and utilities during the fiscal year ending March 31, down 11% from 388,594 in the prior year, according to SIAM. During the same period, the Indian subsidiaries of Ford, Nissan, Renault, Toyota and Volkswagen more than doubled their exports 50% to 239,196 units.
The global automakers active in India are growing their market share not only by exporting but also by producing compact vehicles, increasing dealerships and promoting rural sales and service for the local market.
The domestic automakers are working to match or exceed the global automakers’ efforts in the local markets, with the additional challenge of strengthening their technological capabilities.
Exports present different hurdles. Algeria and other African countries, for example, have tightened homologation norms. They also charge lower duties on imports from European Union manufacturers than those of their Indian counterparts.
Indian automakers export not only completely built-up vehicles but also kits and parts for local assembly. This also creates opportunities for Indian components makers.
Hyundai was the largest Indian exporter in the 2014 fiscal year, shipping 233,519 cars and utility vehicles for a 39.3% share, SIAM data shows. Nissan has overtaken Maruti Suzuki for second place, helped significantly by its revival of the Datsun brand.
Hyundai India is exporting models including the Eon, Santro, i10 Grand, Accent and i20 to more than 120 countries. The Korean automaker’s India-made products are in greater demand than those exported from its own domestic plants.
Nissan India ships engine and body parts to Brazil, Mexico, the U.K. and the U.S., but the automaker has exported 85% of its Indian production to developing countries since 2010.
Maruti Suzuki is facing tough competition, including Suzuki of Japan, its own majority partner, which is producing the EcoCar I in Thailand. India’s largest domestic automaker also successfully has exported Wagon R and Celerio kits to ASEAN countries. Tata is making inroads into the Philippines market with its Manza sedan, Vista Indigo and other hatchbacks and pickups.
Automakers are learning about export markets as they go along. SUVs are in high demand in African countries, while Egypt and Indonesia are among the markets more interested in the small cars that are among India’s strengths.
