Data for March from the Society of Indian Automobile Manufacturers (SIAM) shows a sharp 6.7% decline in passenger car exports from the year-ago period. For the full fiscal year 2018 (FY18), the drop has been 3.8%. Including the two other sub-segments (vans and utility vehicles) passenger vehicle (PV) exports contracted by 1.5% during the year.

True, the quantum of exports is small compared to domestic sales. And domestic sales are zooming. But falling exports do not go down well with the aim of making India the automobile export hub.

For perspective, the Automotive Mission Plan for 2016-2026 aims to increase vehicle exports by five times. Also, barring the 16% growth in FY17, car exports grew in single digits during the previous five years.

Perhaps, one internal roadblock to exports is rising domestic sales. Maruti Suzuki India Ltd, which sells one in every two cars produced in the country, is constrained for capacity in the near term. And surely, it would not want to sacrifice domestic market share for exports. Consequently, the company’s exports were only a tad higher in FY18 from a year ago.

But the other worrying reason is that some global manufacturers have reworked their export strategies. For example, Hyundai Motor India Ltd, which had 120 exporting countries on its map until recently, now caters to only 88. The Korean parent has restructured its exports with some European markets being serviced by its factories in Turkey and Czechoslovakia. Hyundai’s exports from India dropped by 7.9%.

Likewise, exports from Nissan dropped hugely during the year under consideration.

The only exception that beat global peers was Ford Motor India Ltd, whose exports during the year rose by 14%.

It was the passenger car segment that dragged down overall PV exports. Fortunately, utility vehicle exports rose by 7.8%, helping to offset the overall drop to some extent. Analysts reckon that perhaps the rising preference for compact utility vehicles over the sedans and compact cars in some of the developed markets, may be a reason for the steeper drop in car exports.

What’s more, the PV market in developed countries has been contracting too. According to SIAM, during calendar year 2017, PV sales were 11.9% lower in the US and 5.1% lower in the UK when compared to the previous year. These regions are also seeing a shift away from the existing diesel models. Environmental compliance issues are perhaps leading to preference for electric vehicles, which are not yet catered to from the India hub.

One hopes the poor export performance in FY18 is an aberration. In its presentation released on Tuesday, SIAM forecasts that global recovery is expected to gather pace in FY19. That should help exports, which were also affected by GST (goods and services tax) related issues.