New Delhi: India’s two largest car makers, Maruti Suzuki India Ltd and Hyundai Motor India Ltd, said they plan to reduce dependence on European exports this fiscal and sell vehicles in more overseas markets.
Both firms ship a majority of their export models to Europe but a withdrawal of scrappage schemes, which provided incentives to consumers to shift to smaller, fuel-efficient cars, and the recent Greek crisis are likely to reduce demand for such vehicles this year.
The reduced demand is expected to take effect in the next two-three months as, unlike domestic orders, export orders are decided in advance.
“Yes, orders have come down after the withdrawal of the scrappage schemes and we expect to start seeing the impact of the present crisis from July or August,” said Arvind Saxena, director, sales and marketing, Hyundai Motor India.
Hyundai’s exports rose 12.75% to 285,658 units last fiscal, with the vast majority sold in Europe. This year, it plans to increase shipments to South Africa and Australia as well as markets in West Asia and north Africa to make up for the anticipated drop in European numbers. The company exports models such as the i10, the i20 and the Accent from its plant at Irungattukottai, near Chennai. Later this year, i20 production for the European market will shift to Turkey.
Maruti, which shipped 147,575 units last year, said it plans to stick to its 140,000 units export target this year. To achieve this, it plans to export to Chile, Australia, South Africa and West Asia.
“We’re watching the situation and so far we haven't seen any change,” said a spokesperson, adding that orders come with a lag.
Maruti also hedges currency requirements every six months and for the time being hasn’t seen any impact of the depreciating euro. The decline in the value of the currency would result in cars becoming more expensive in Europe. The euro closed at Rs57.22 against the rupee on Wednesday. The foreign exchange market was closed on Thursday.
“With domestic demand being strong, a slight hit in exports is not going to matter,” said Puneet Gupta, market analyst at CSM Worldwide Inc.
Maruti exports the A-Star as the Alto to Europe. It also has a contract manufacturing deal with Nissan Motor Co. Ltd to export the A-Star under the Pixo badge. In addition to the A-Star, the firm has also started exporting the Ritz and the Estilo models that have seen sluggish demand in India.