India pips China in car exports
India, whose auto market is 19% of Chinas, has the edge in exports. Suzuki Motor, Hyundai Motor, and Nissan Motor are making India a hub for overseas sales of minicars as incentives lift demand for smaller, fuel-efficient autos. Helped by cheaper labor and a surging local market, India this year overtook China in auto exports and is challenging Thailand and South Korea as an alternative production centre in Asia.
There is a worldwide shift toward fuel-efficient, compact cars, said Jayesh Shroff, who helps manage about $7 billion of assets including carmaker shares at SBI Asset Management in Mumbai. This offers a huge potential for India and it can emerge as a leader in the small car segment.
Maruti Suzukis exports more than doubled to 79,860 this year. It aims to ship 130,000 vehicles in the year to March, 86% more than last year, said chairman R C Bhargava.
Car exports clock 44% growth: Siam
Indias exports of minicars and hatchbacks gained 44% between January and July to 201,138, according to the Society of Indian Automobile Manufacturers. Total exports, including vans, sport-utility vehicles and trucks, rose 18% to 229,809. Cars are exported to over 100 countries, and dont include the US or Japan. Maruti Suzuki sold a monthly record 14,847 vehicles overseas in August.
Full control
In contrast,
Chinas exports slumped 60% to 164,800 between January and July, according to government data. Vehicles produced in
Thailand for export declined 43% to 263,768, according to the Thai Automotive Club.
South Korean exports dropped 31% to 1.12 million units, according to the Korea Automobile Manufacturers Association. Japan, the worlds largest automobile producer and exporter, shipped 1.77 million cars, trucks and buses. Of those, 135 were minicars and 439,849 were compacts.
Besides the attraction of serving a market where three of four cars bought are compacts, automakers will favor India to set up an export base as China requires companies to form local joint ventures and India doesnt, said Ashvin Chotai, London-based managing director of Intelligence Automotive Asia Ltd.
Natural place
It makes companies more comfortable to have an export strategy when they have full control, he said. They dont have to give up some parts of the profits to their partner.
Small cars will account for 95% of the 690,000 passenger vehicles India will export in 2015, according to Tim Armstrong, Paris-based director of IHS Global Insight.
In 2016, India may share the top slot with Japan as the worlds biggest small car producer, building as many as 3 million units. All of Indias expertise has been the small car, Armstrong said. So obviously its a natural place to turn to to set up export units. Toyota Motor and General Motors are also expanding Indian factories and plan to export compact vehicles.
Enormous money
Nissan Motor, Japans thirdbiggest carmaker, will set up its first factory in India by May and use it to export entry-level cars to Europe. Spending on the plant is the most out of its global investments this year, said Colin Dodge, executive vice president.
Production in India will help Nissan save at least 5% of costs, he said. We needed a car that can make money in Europe, Dodge said in a June interview. BLOOMBERG
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