India takes centrestage as vehicle exports grow in 2016-17

In 2016-17, India exported 6.02 lakh passenger cars, up 13 per cent from 5.32 lakh units in the previous year. Utility vehicles (comprising MUVs, SUVs and multipurpose vehicles) saw a 30 per cent jump in exports to 1.54 lakh units.
Cars rule the roost

“India’s basket of exports has grown to cover compact UVs and sedans while maintaining its dominance in small car exports,” says Binaifer F Jehani, Director, Industry & Customised Research, Crisil Research. “While predominantly a small car exporter, the share of this segment has reduced from 81 per cent in FY 2013 to 65 per cent in FY 2017.”

This is clearly evident in the case of mid-size sedans whose exports continue to surpass one lakh units annually over the last three years. Volkswagen and Nissan are the big players here. The same goes for compact SUVs, which are hitting the bull’s-eye both in India and overseas markets.

Ford is the largest exporter in this product range with a share of 52 per cent, followed by Hyundai, which shipped out nearly 48,000 Cretas last fiscal. Maruti Suzuki, whose Vitara Brezza is a top-seller, is looking at other markets beyond India.

“Share of UVs in overall exports has grown from just two per cent in FY ‘13 to 20 per cent four years later, says Jehani. “This is largely because of models such as the Ford Ecosport, Hyundai Creta as well as Maruti’s S-Cross and Vitara Brezza.”

Positive cost structure

The story will only grow in the coming years as emerging markets across Latin America, Africa and ASEAN will need similar vehicles. It is only natural, therefore, that the supplier competencies developed here will be leveraged to meet the needs of these markets. Customers here are extremely price-conscious and this is where the cost structure developed in India will come in handy.

This is as evident in the two-wheeler space where companies like Yamaha are looking at Africa as the next growth engine with India playing a big role. This is where the company’s recently commissioned Chennai plant will be part of the script where competitively priced commuter motorcycles can be shipped out to countries in central and West Africa.

At this point in time, some economies may not be in the best of shape thanks to the oil price crisis but it is only a matter of time before things are back in shape and this is when Yamaha will bank on India to lend a shoulder to its Africa business.

Bajaj Auto is already the largest exporter of two-wheelers from India, and Africa is one of its most important markets. It now plans to enhance its ASEAN presence with global ally, KTM, whose bikes are already being made at the Bajaj plant in Chakan and exported to the US, Europe and Australia.

TVS Motor, likewise, has been revving up its exports business and, once again, Africa will be a key play. When Bharat Stage VI norms become a reality in 2020, Honda will use its India two-wheeler base to increase exports of bikes and scooters to countries, which will be adopting similar emission norms.

The global hub

Daimler and Volvo have been using India as their hub to service truck markets in the Middle-East, Africa, ASEAN and SAARC nations. Since the time it kicked off operations in 2013, Daimler India Commercial Vehicles (DICV) has exported over 7,500 trucks to 33 countries with 10 more to be added this year.

“In addition, production of a third truck product family will start soon. The new sub-nine tonne vehicle will initially be designated only for exports as Fuso-brand variants,” says Erich Nesselhauf, Managing Director and CEO, DICV.