For three auto makers, exports offer a way to salvage Indian investment2 min read . Updated: 14 Aug 2015, 12:32 AM IST
During April-July, Nissan India, Ford India and Volkswagen India shipped out more cars out of the country than they sold locally
New Delhi: They may not be dearly loved car brands in India. Faced with big Indian auto firms, some of them may even be facing an existential crisis. But, they have found a way to make it work.
Their way out: Sell anywhere, but make in India.
During April-July, Nissan Motor India Pvt. Ltd, Ford India Pvt. Ltd and Volkswagen India Pvt. Ltd shipped more cars out of the country than they sold locally, indicating that companies that invested in India anticipating a demand surge are now using those facilities to meet their global requirements.
During the period, Nissan exported 33,088 units, up 5.64% year-on-year, even as its domestic sales declined 19.65% to 14,138 units. Volkswagen’s exports were up 17% to 22,608 units, while its domestic sales were way lower at 15,807 units, though growing 30%. For Ford, exports went up 13% to 28,478 units while domestic sales declined 33% to 18,546 units.
During the fiscal ended 31 March, Nissan exported 120,331 units. Volkswagen’s exports stood at 64,994 units, while Ford shipped out 81,703 units.
To be sure, none of these companies is a leader when it comes to exports. There too, the lead is with domestic giants Hyundai Motor India Ltd and Maruti Suzuki India Ltd, exporting 57,640 and 46,917 units, respectively, in the April-July period. During the last financial year, Hyundai shipped 191,221 units, followed by Maruti with 121,701 units.
In the years to come, all this could change. Together, Nissan, Ford and Volkswagen have invested more than $4 billion in India and they would want to see returns sooner than later.
But for now, exports seem to be the only viable option for them, said Abdul Majeed, partner and national automotive leader at consultancy firm PricewaterhouseCoopers.
“Given the kind of focus that multinational companies have put on exports, I think the total number of cars exported from India will double in the next 3-4 years," Majeed said.
In fact, General Motors India Pvt Ltd, which shut down one of its plants in India, has made it clear that it needs to export ‘Made in India’ cars to sustain its business in India.
General Motors India, which exported around 1,000 vehicles in 2014, aims to ship out as many as 19,000 units in the current year and 40,000 next year. The firm plans to export to as many as 30 countries from India.
Ford has invested $2 billion on expanding its manufacturing facilities and sales and service footprint.
With its Sanand plant going operational, it has doubled its annual installed manufacturing capacity to 610,000 engines and 440,000 vehicles.
“Ford is positioning India as a centre of excellence for small cars and low-displacement engines for both domestic and exports and has embarked on an accelerated export strategy," the company said in an email.
According to auto consultancy IHS Automotive, India will be able to ship 1 million units by 2020.
“Overseas shipments are primarily driven by local regulations. However, we expect the likes of Maruti, General Motors and Ford to continue to expand exports from India. Political stability, low cost structure and a favourable exchange regime are some factors aiding exports from India," said Anil Sharma, principal analyst, IHS Automotive.
India exported as many as 6.2 lakh passenger vehicles in the last fiscal, up 4.42%, while the domestic industry grew 3.90% to 2.6 million units.