Car exports from India may have remained flat for FY13-14, but along with the export of other automobiles and components contributed towards the sustenance of the auto industry.
Car exports from India remained flat in FY14 at 5.5 lakh units. During the same period, domestic sales fell for the second consecutive year. Hyundai Motor India and Maruti Suzuki India, two of the biggest car exporters, posted a decline in shipments, while overseas sales by Nissan Motor India, Toyota Kirloskar Motor and Volkswagen India increased. Hyundai, the largest car exporter from India, recorded a 10.21 per cent drop to 2,33,260 cars from 2,59,811 units in 2012-13. Maruti Suzuki, at the other end, saw a 16 per cent fall to 99,832 units from 1,18,857 units. Europe, the biggest market for compact cars from India, is still recovering from a slump, while regulatory issues in countries including Algeria and Sri Lanka also affected shipments.
India proved to the fourth largest market for Renault Duster, Renault-Nissan Alliance pursuing a clever strategy to drive exports. Having invested in a modern manufacturing facility at Chennai, the alliance has been banking on high local content from the start. In FY13-14, Nissan’s exports rose 17.32 per cent to 1,16,113 units, from 98,971 units earlier. Battling labour issues at its plant near Bangalore, Toyota Kirloskar Motor had a good run at exports. Its exports of passenger cars rose 16.31 per cent to 27,266 units, while Volkswagen posted an almost four-fold increase in shipments to 32,588 cars. Volkswagen announced last month that its export programme has now hit critical numbers. Starting 2011, Volkswagen has come to export cars to 32 countries across three continents. It has been able to ramp up the export volumes in just two and half years. 50,000 cars were shipped to various countries, including the left-hand drive market of Mexico. Volkswagen started exporting the Vento to Mexico in October 2013. Commented Mahesh Kodumudi, Chief Representative, Volkswagen Group India and President and MD of Volkswagen India, “Our export success has helped us in tackling the volatilities in the domestic market, it has also strengthened our export leg of the business in a sustainable way.” “The success of our highest quality cars in this key market further increases our scope of export to more countries in the near future,” he said. Apart from fully-built cars, Volkswagen has been exporting parts and components of the Vento and Polo to Malaysia since April 2013. These parts and components are assembled in Malaysia to make Vento and Polo cars for the local market there.
Auto components exports continue to grow. In 2013 they grew by 4.4 per cent to US $ 9.69 billion. ACMA Executive Director Vinnie Mehta attributed the performance to growing credibility of domestic component makers. “This,” he said, “has led to many global companies setting up their sourcing centres in India.” According to Mehta, there are between 35 and 40 international purchasing (sourcing) offices in India that were set up by various global entities. If the imports of automotive components slowed down in the wake of the decline in domestic sale of automobiles, exports of automotive components increased by 8.6 per cent to Germany in Europe, at US $ 780 million. At US $ 1.98 billion, exports to US were stronger in terms of value, even though down 7.1 per cent by volume. Exports to UK rose 3.6 per cent, at US $ 580 million.
Claiming that the exports of auto components from India are often done at very low margins, an industry expert emphasised that there was a need to develop and export high value, high technology goods. To prove his point, he drew attention to imports from China, Germany, Japan, Korea and Thailand, which include components that are largely electronic in nature. Stressing that the use of electronics is increasing in India, Ashwani Aggarwal, President at Brose India Automotive, expressed that his company has invested in a development centre, which works closely with the centre in Germany to help develop electronic content. Supplying manual seat height adjusters and window regulators to many OEMs in India, Brose India exports its products to Thailand and Europe. Worth mentioning is the window regulators of the Volkswagen up!, which Brose manufactures and exports from its plant at Pune.
Driving exports in the commercial vehicle space, Daimler India has achieved up to 80 per cent localisation on its trucks. Apart from exporting the trucks made at its Chennai plant under its (Japanese) Fuso brand to 15 markets in Asia and Africa, DICV is also driving an export initiative for auto components. It is, in fact, helping its suppliers move up the value chain by contributing towards exports. In an interview to APF, Eric Nasselhauf, Vice President, Supply Chain Management, at DICV then, said that they trained their suppliers to make auto components that are on par with what the components manufacturers in other parts of the world are capable of producing. “An indicator would be the fact that we export our products in this case, our trucks,” he added. Apart from supplying to Germany, DICV vendors will soon be supplying to Daimler’s US sites. Over 1,000 part numbers are exported, and the number of suppliers ranges between 10 and 20 per cent of the company’s vendor base in India. Another example is the export of 5-litre and 8-litre Euro 6 compliant engines by Volvo Eicher’s new engine plant at Pithampur to other Volvo Group destinations around the world. VE is also said to be targeting 15 per cent of its total sales from overseas market within five years. A leader in the commercial vehicle space in India, Tata Motors has emerged one of the world’s leading commercial vehicle manufacturers exporting its vehicles with indigenous technology to several countries across the globe. Starting with export of trucks to Ceylon (Sri Lanka) in 1961, Tata Motors has come to own Jaguar Land Rover of UK and Daewoo’s commercial vehicle business in South Korea. Its exports include numerous markets around the world.
At the two-wheeler end, exports from India grew 6.52 per cent to 20,83,938 units in 2013-14 from 19,56,378 units in 2012-13. Motorcycle exports rose 6.48 per cent to 19,82,755 units, while scooter shipments were up 3.15 per cent to 93,931 units. Bajaj Auto exported 13,23,173 motorcycles, an increase of 2.31 per cent, while Hero MotoCorp’s overseas sales declined 17.05 per cent to 1,13,238 units in 2013-14. Honda Motorcycle & Scooter India (HMSI) exported 1,11,710 units, up 7.65 per cent from the previous financial year. India Yamaha’s exports stood at 1,93,129 units, up 45.8 per cent. In the scooter segment, HMSI exported 51,932 units, up 20.85 per cent, while Hero MotoCorp’s exports declined 28.55 per cent to 17,525 units. Chennai-based TVS Motor Company dispatched 18,693 units to foreign locations, recording an increase of 7.62 per cent.
Perhaps the least talked about, three-wheelers, better known as ‘autos’ or ‘autorickshaws’, recorded a sales decline of 3.45 per cent with 150,173 units in FY2013-14 against 155,540 units sold in FY12-13. On the export front however, they performed well. Demand came from markets like Sri Lanka, Bangladesh, Africa and Latin America. The export numbers showed a remarkable improvement in FY 2013-14, as they increased by 16 per cent (to 353,392 units) as against 303,088 units in FY2012-13.
Though the automobile sector in India was fraught with challenges, it was the exports that helped the industry sustain itself in FY13-14. It also reflected the fact that India is also starting to benefit at the cost of China. Ironical, but true! Chinese costs are going up, making a case for production to shift to India. Coupled with India’s currency competitiveness, which is expected to stay for some more time. Advantages like the ability to communicate better, which makes for easy exchange of information, along with the perception of quality is already helping the Indian automotive industry to increase its power to export. Better on numbers even if the domestic scenario continues to reel under a slowdown.