Indian Auto Exports Growing by Fits and Starts

MUMBAI – Auto exports from India are following an uneven path of growth that automakers believe will lead to more than 1 million shipments a year by 2020.

Society of Indian Automobile Manufacturers data shows 10 of the country’s light-vehicle makers exported 622,470 light vehicles in the fiscal year ending in March, up 4.4% from prior-year.

Exports surged 32.9% to 446,145 in 2010 and 14.1% to 507,318 the following year, then slowed to 9% in 2013. Growth was up just 2.9% in the first four months of the current fiscal year.

Indian automakers, however, have reasons to expect long-term growth in exports.

‟India's political stability, low cost structure and favorable exchange regime help promote exports from India,” analyst Anil Sharma explains.

Adds Sugato Sen, deputy director general-SIAM, ‟Exports serve the purpose of a buffer to balance volatility in domestic markets.”

Hyundai India, Maruti Suzuki and Nissan India control 70% of the country’s car-export market.

Hyundai exports to 119 countries, Maruti Suzuki to 100 and Nissan to 106. Ford India, Volkswagen India and Toyota Kirloskar have a combined 26% share, while Tata, Mahindra & Mahindra, Honda and Renault account for the remainder.

Nissan, Ford and Volkswagen exported 267,028 vehicles from India in the fiscal year ending in March, surpassing combined local sales of 167,630. Ford is underscoring its emphasis on the country as an export hub by shipping India-made products to 50 countries, and may raise that number to 90.

Global automakers such as Ford have advantages that local exporters such as Tata and Mahindra do not: established products, brand images and distribution networks. But the Indian manufacturers are working to build reputations based on quality.

Parent Suzuki opposed Maruti Suzuki Chairman R C Bhargava’s proposal to export vehicles built by the JV, but he argued the idea was not to explore new markets or even make money, but to test the quality of Indian-made cars in global markets.

‟We adhere to the same global standards of quality,” says N. Raja, senior vice president and director-Toyota Kirloskar. “As a result our products have a universal acceptability.”

India also offers manufacturing costs up to 40% lower than in many automakers’ home countries. For that reason, Hyundai Group Chairman Chung Mong-koo said during a recent visit, “We are looking at building a third plant in India.”