Export Markets New Combat Zone for Indian Automakers

MUMBAI – Light-vehicle exports by India’s automakers increased 6.1% to 593,507 units in the 2013-2014 fiscal year, industry statistics show. In the first quarter of the current fiscal year, they rose 6.9% to 141,307 units.

The scale and direction of exports, as well as the types of vehicles and players, are changing rapidly.

In the most recent fiscal year, Society of Indian Automobile Manufacturers data shows, exports by India’s Big Four – Hyundai, Maruti Suzuki, Tata and Mahindra & Mahindra – declined 11.2% to 349,192 units from fiscal 2012-2013. Exports by the Indian subsidiaries of Nissan-Renault, Volkswagen, Honda, Toyota and Ford jumped 47.5% to 244,315.

Five years ago Hyundai India was the leading exporter, commanding 65%-75% of overseas shipments. Maruti Suzuki was just emerging with a 20%-25% share, and a few nominal automakers made up the balance.

Amid fast-growing competition, Hyundai’s penetration of the export market was below 40% in fiscal 2013-2014 and Maruti’s portion had slipped to one-sixth. Looking at the growth opportunities, Ford India, Honda India, Toyota Kirloskar, Volkswagen India and Renault-Nissan have joined the export scramble with small cars, compact sedans and SUVs.

Tata, already a marginal export player, has skidded further, reporting just 6,981 builds for export in fiscal 2013-2014. SUV specialist Mahindra is joining the export field, and shipments climbed 23.1% in fiscal 2013-2014, but volumes were thin at 7,599.

Each automaker has its own strategy and target market. But all offer a variety of products from small cars to CUVs, compact SUVs and light trucks, and plan to export both fully assembled vehicles and kits for local assembly in the importing country. Their products are destined for all areas of the world, from Asia-Pacific, Africa and the Middle East to Europe and the Americas.

“Indian vehicles are so representative of the kind of vehicles people want across the world,” a Ford India spokesperson says.

Competition from other countries is intense, as well. Indian automakers’ claims to the U.S. and European Union markets are contested by Thailand, where the major exporters include Suzuki and Ford, who also export from India.

Thailand has better infrastructure and technology, higher quality and lower costs than does India. Despite installed capacity of 5.1 million units among 17 companies, actual utilization is just 60%. Thailand has active capacity of 3 million units fully utilized by 10 automakers. However, the automakers have kept vehicle models for India and Thailand separate and conflict is unlikely.

Ford India President Joginder Singh says the Figo small hatchback, priced at just $6,600, is exported to 38 countries and the EcoSport compact CUV is shipped to 40 countries.

India and China are pivotal in Ford’s export strategy. The automaker is investing $5 billion in four new plants in China, and its two plants in India soon will have total capacity for 440,000 cars and 610,000 engines.

Like Ford, Volkswagen is ramping up plans to double its exports from India to 30 countries and is considering the U.S. and EU. The automaker already has enjoyed success in Mexico.

Mahesh Kodumudi, president-VW India, says there is tremendous potential for exports because of the weakening rupee. In the past three years the U.S. dollar-Indian Rupee exchange rate has weakened from Rs45:$1 to more than Rs60:$1. VW plans to increase exports in the current fiscal year to 55,000, up from 32,588 in fiscal 2013-2014.

Honda India has just started to explore export markets. It plans to ship 6,000 cars this year to Nepal and Bhutan and auto components to South Africa and the EU. Exports include the Amaze compact car, which features a powerful, efficient diesel engine and is less than 157.5 ins. (4,000 mm) long.

Renault-Nissan has become prominent among the new exporters, with 131,043 shipments in fiscal 2013-2014. Nissan accounted for 89% of the total, exporting Datsun Go, Micra and Sunny models to the Americas, Africa and EU as a hedge against shrinking demand in Asia.

Fiat Chrysler Automobiles has no current plans to export from India. But it is eyeing nine new models for the country by 2016 and is considering selling right-hand-drive models made for India in the U.K., Japan, Australia and South Africa.

There is a side benefit of this trend: “Exports help us keep prices competitive in India,” the Ford India spokesperson says.