Hit in export markets but these cars find few takers in India

Spotting certain models of cars on India’s crowded roads might not be an easy task owing to their low volumes. But, some of these cars are riding to glory in the export market, helping manufacturers in better utilisation of their plants. These are some of the most exported vehicles from the country. 

Take the case of General Motors, the world’s third-largest auto maker. Its entry level hatchback, Beat, has remained a disappointment in the Indian market. In a predominantly small car market, the auto maker is not able to sell even a thousand cars a month. In the export market, however, Beat is clocking a monthly average of almost 5,500 units this year. 

 

Export has grown three-fold while domestic volume is on a weak footing. Beat’s domestic sales have declined 21% in the first half of FY17 to 4,541 units. In effect, the export volume for Beat in some of the months are more than double to sales of GM’s all models put together in the country. 

GM India exported a record 7,661 units of Beat in September to export markets in Central and South America. In the same month, it sold only 2,100 vehicles in domestic market.
 

India is fast becoming a major export hub for a number of manufacturers and GM India is no exception, said Kaher Kazem, president and managing director of GM India. The company, like Volkswagen, Ford and Nissan, sells more India-made vehicles outside than within the country. 

Kazem said factors contributing to the growth of small car exports from India include a skilled labour base, low cost of manufacturing and significant improvements to supplier quality. Beat gets shipped to Mexico, Chile, Peru, Central American and Caribbean Countries, Uruguay and Argentina. “As FTAs (free-trade agreements) open up more markets, we see exports continuing to play an important role in India’s automotive industry,” said Kazem. 

Analysts say the Indian buyer today is spoilt for choices. “Launch of several new competitively priced vehicles with better designs and latest features in the past two to three years have created challenges for some of the older models, forcing firms to look for more export volumes for better capacity utilisation,” said a sector analyst.

Beat is not alone on this list. The story of Micra, manufactured by Japanese auto major Nissan, is identical. In the seven months ended October 2016, the company has shipped about 45,000 units of the hatchback to some hundred countries. Against this, the volume sold in the domestic market is about 8,000 units. Interestingly, many of the advanced markets such as the UK, European countries, Germany, Switzerland and Italy are the biggest destination for Micra.

“Our strategy to use the Chennai plant as an export hub is a major part of our long-term plans for growth in India. Nissan exports around 100,000 units a year from the Chennai plant to 106 countries,” said Guillaume Sicard, president at Nissan India. Irrespective of Micra’s domestic volume, Sicard maintains the vehicle plays a pivotal role in the growth strategy of Nissan in India. 

Sicard adds that rising volumes and demand, coupled with low labour costs and high local content, are the key factors favouring India to be more competitive than other countries. 

American car maker Ford is seeing a similar trend with the EcoSport, once a highly popular sports utility vehicle (SUV) in the domestic market. In the first six months of FY17, the company exported 42,354 units of the vehicle against 25,975 units in domestic market.

Launch of new SUVs such as Hyundai Creta and Maruti Suzuki Baleno has impacted the fortunes of this Ford vehicle, forcing the company to take steep price cuts. German auto major Volkswagen also ships a much higher number of its Vento sedan than the domestic volume.