Auto firms shift focus to exports to beat crisis

Union Road Transport Minister Nitin Gadkari has even hinted that the government is looking at providing incentives for automobile exports.
For representational purposes
For representational purposes

With the domestic automobile market showing no signs of a quick revival, automakers are being asked to seriously consider the export market. From Union Road Transport Minister Nitin Gadkari to Asia’s top banker Uday Kotak, various voices from within and out of the industry have asked carmakers to expand their global footprint to reduce dependence on the domestic market.

Data available with the automakers’ apex body — Society of Indian Automobile Manufacturers (SIAM) — indicates that the export market has performed better than the domestic market. Last month, when domestic Passenger Vehicle (PV) sales fell nearly 32 per cent year-on-year — the lowest in over two decades — to 196,524 units, export of PVs from India grew by nearly 15 per cent at 69,749 units.

Gadkari has even hinted that the government is looking at providing incentives for automobile exports. “I have made suggestions to the Finance Minister if we can, for some time, provide incentives to manufacturers for export of automobiles,” Gadkari said. Two-wheeler exports also saw a marginal growth of 3.30 per cent last month as against a decline of 22 per cent in the domestic market. Long-term data says that auto exports, especially that of two-wheelers, have grown significantly over last five years. 

However, exports of PVs and commercial vehicles have faced stress in recent times. According to analysts, a global slowdown in economic activities and the inability of OEMs (original equipment manufacturers) to venture into newer markets have led to this decline. Many industry executives feel that as India is progressing towards BS-VI emission norms, which is at par with global standards, it would help OEMs who have facilities in India to explore new markets.

“The BS-VI compliant vehicles will give us a chance to explore new export markets. However, we haven’t decided on any particular market yet,” said Minoru Kato, president, CEO and MD of Honda Motorcycle and Scooter India (HMSI).HMSI on Wednesday introduced a variant of its popular scooter Activa that is compliant with BS-VI norms. 

Similarly, German auto major Daimler said transition to BS-VI technology from next April will throw more opportunities for exports of fully-built vehicles, engines and parts.“Daimler’s experience of already bringing 1.4 million Euro-VI trucks and buses on the roads means that we are easily ready to transition our BharatBenz trucks and buses to BS-VI by the April 2020 deadline. With this head start, we will begin exporting India-built trucks by 2021-22,” said Satyakam Arya, managing director and chief executive, Daimler.

Arya added that transition to BS-VI opens up more opportunities to export fully-built vehicles, engines and parts to countries like Mexico, Chile and Brazil that will soon migrate to similar emission norms. This further strengthens India’s position as a global production network for Daimler trucks and buses, Arya said.

Kia Motors, India’s newest entrant in the PV market, would also begin exports of its SUV Seltos later this month. To start with, the company will look to ship around 500 units to mid-South America, and later expand it to the Middle-East and South Asian markets.

According to Kia Motors India COO Jong Soo Kim, the company was looking at 30 per cent of production from its Anantpur facility to constitute its exports segment. Kia had last month launched BS-VI complaint Seltos in India for an introductory price of Rs 9.69 lakh.

The upcoming emission norms, however, is expected to cause disruption in the domestic market as prices of BS-VI compliant vehicles, especially the diesel engine powered ones, are expected to go up by 20 per cent. This will add pressure on auto firms witnessing a slowdown in demand for a year now.

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