Indian carmakers rejig Europe export plan

NEW DELHI: Indian car makers have revised downwards their export targets as governments in Europe have exhausted cash incentives for small
fuel-efficient cars.

Hyundai and Maruti Suzuki India that exports in large numbers was performing well largely due to this generous policy that lasted for eight months (February-September). During this period car exports jumped 32 per cent to 3.10 lakh cars over the same period last year.

Demand for A-Star, i10, i20 were the highest in Europe, which takes over 80 per cent of the cars shipped from India.

Countries like Germany, (the largest market for Indian cars) France, Spain, Italy, Austria.

UK, and Netherlands were offering cash benefits of up to 5,000 euros to buy new energy-efficient cars emitting lower carbon-di-oxide gas of up to 160 gms/km.

Now most of these countries have exhausted their budget and withdrawn benefits and only marginal markets like Netherlands and the UK continue to offer incentives on new cars.

Keeping the export potential in mind, Hyundai Motor India has re-jigged production and aims to export next year only 40 per cent of its made-in-India against 50 per cent that it ships currently.

Against the 2.8 lakh cars targeted to be exported during this fiscal year, Hyundai would ship around 60-70,000 cars less next year. Last month, Hyundai posted its first drop in exports (12 per cent) in three years for lack of demand from overseas markets.

Hyundai Motor India’s newly-appointed MD & CEO Han-Woo Park said, “We would focus on the domestic market to maintain our 21 per cent market share and production will be adjusted accordingly to take advantage of the buoyant demand.’’

Keeping the bleak export prospects in mind, Hyundai has shelved plan to set up a diesel engine facility in Chennai. It exports i10 and i20 in large numbers, most of which are diesel variants even though i10 diesel is not available in the domestic market. Besides it will shift part of i20 production to its plant in Turkey during the second half of the next year for better margins, tax benefits and labour issues in India.

Maruti Suzuki, India’s second largest car exporter, is looking at a sizeable drop in exports from next quarter as Europe, its largest market, has cut down on such incentives.

“There will be some rollover of the incentive from Europe till December. As most of the major markets like Germany, Italy and France have exhausted their cash inventive kitty, the next quarter will be tough for exports,” a senior Maruti executive said. Maruti has exported 80,283 cars in the first seven months of the fiscal .......and aims to export another 50,000 in the rest of the fiscal.

Indian carmakers enjoy higher margins and profits on cars sold abroad. Hyundai and Maruti Suzuki benefitted immensely from the global market’s gradual shift towards small fuel efficient cars emitting lower emissions. Profit margins on cars exported from India are almost double than the 8-9 per cent these companies get in the domestic market.