 "Heavy traffic moves along a busy road as it rains during a power-cut at the toll-gates at Gurgaon on the outskirts of New Delhi")
Passenger vehicle exports are growing at a rate slower than the domestic market after a gap of four years. Some export destinations are facing challenges due to factors such as crash in crude oil price, while some have seen a change in safety/emission standards making exports difficult. India exports one-fifth of the 3.22-million passenger vehicles (cars, utility vehicles and vans) it manufactures in a year.
In the April-October period of the current financial year, domestic sales grew 8.51 per cent (to 1.59 million units) against 6.34 per cent growth in exports (to 378,834 units). In FY15, exports expanded 4.42 per cent against a 3.90 per cent growth in domestic sales. Exports from India have been growing at a fast pace, thanks to the conscious export strategy adopted by many manufacturers. In the year ended March 31, 2015, India shipped a record 622,470 vehicles. Export has grown even in years when the domestic market struggled to post a growth or showed a decline. Among the leading exporters are Hyundai, Maruti and Ford.
“The global economy has been seeing serious challenges, especially China, West Asian countries, East European and African markets. This is creating challenge for volume growth. Many developed markets have seen changes in the regulatory norms related to safety and emission requiring newer products. All these are affecting rate of export growth,” said Rakesh Srivastava, senior vice-president and division head (sales and marketing) at Hyundai Motors India, the largest exporter of passenger vehicles from India.
Hyundai decided to stop exports to Europe after the European market moved to Euro VI emission norms in September last year. The decision has also allowed the Korean car maker meet the growing domestic demand in India. Hyundai’s export is down 12 per cent to 100,462 units in the April-October period of the current year. Hyundai recently received export orders for 15,770 units of its sports utility vehicle Creta. The strong demand in domestic and export market has prompted the company to expand Creta output to 10,000 units by December from 7,200 now.
Nissan Motor India, which was the third largest exporter last year, has seen shipments decline nearly four per cent in the current year so far. Consequently, Nissan has been replaced from the third position by Ford India. Ford, which commissioned its Gujarat plant early this year, has expanded export by 49 per cent in the current year. “Export will continue to be a focus for us. We aim to increase shipments by three fold in next few years. There is a capacity available”, said Anurag Mehrotra, executive director for marketing, sales and service at Ford India.
An executive with an automobile manufacturer said the cost of production in India has been moving up with increasing wages, high cost of capital and some impact of weak rupee, which makes imported auto components expensive.
