Share of passenger vehicle output geared for export at 10-year low in 2023

The share of passenger vehicle (PV) exports relative to total production in India reached its lowest in a decade in 2023, notwithstanding the government’s ambitions to transform the country into a global auto manufacturing hub, according to the latest data from BNP Paribas.

India’s share of production geared for export is the lowest in Asia, trailing South Korea, Thailand, Japan, and Indonesia. 

In 2023, exports accounted for just 13 per cent of total PV production in India, down from 14 per cent in 2022 and a significant drop from the pre-pandemic level of 18 per cent in 2019. The peak was in 2014, with exports comprising 19 per cent of production, a record that remains unbroken, the data revealed. By contrast, in 2023, Japan exported half of its car production, South Korea 66 per cent, Thailand 61 per cent, and Indonesia 18 per cent.

 

R C Bhargava, chairman of Maruti Suzuki, attributed India’s declining export share to its lack of competitiveness in larger car segments: “For exports, you require bigger cars, in which India does not have economies of scale to be globally competitive. What we have exported are smaller cars, and our volumes have gone up from 100,000 in 2014.”

B V R Subbu, former president of Hyundai Motors in India and now  director in several auto companies, highlighted a different issue: “The two major Indian carmakers, Tata Motors and Mahindra & Mahindra, have seen huge growth in the domestic market but seem unable to establish a significant global presence. They are not doing the heavy lifting in terms of exports, and so is Toyota. They are content with the Indian market, which is unfortunate. In contrast, two-wheeler majors like Bajaj and TVS have a strong export presence.”

The exit of American automakers, which once accounted for 35 per cent of India’s PV exports, has severely impacted export volumes over recent years, said Kumar Rakesh, an analyst at BNP Paribas for the information technology and auto sectors.

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Thus, India has a lot of catching up to do: In 2023, India’s PV exports were 727,863 units, still lower than the pre-pandemic level of 747,430 units in 2019. However, Rakesh noted that Indian auto OEMs are making significant investments to expand capacity, which will also be used for exports. “Some global OEMs are considering making India their export hub, which could boost India’s PV exports in the coming years,” he added.

India breached the 800,000 mark in car exports only once, in 2016. While volumes have picked up since a dismal 2020, reaching 727,863 units in 2023 — a 3 per cent increase from 706,719 in 2022 — there’s room for growth. Maruti Suzuki, for instance, plans to launch its electric vehicle foray by exporting its first EV models at the end of this year before selling them in the domestic market.

While export figures appear to have faltered, India’s share of global PV production amongst Asian countries  is only below Japan, with its global production share crossing 5 per cent for the first time since 2000 in 2021, reaching 6.2 per cent in 2022, though it slightly declined to 6 per cent in 2023.

In Asia, only Japan, with a 9.5 per cent global share in PV production in 2023, surpassed India. South Korea and Indonesia combined barely matched India’s share. The combined production share of Thailand, Malaysia, the Philippines, Vietnam, and Indonesia stood at 4.7 per cent.