Chennai, May 14 Maruti Suzuki and Hyundai Motor India are looking to benefit from fiscal incentives being offered by European governments to kickstart their economies.
A number of European countries are offering “scrapping incentives” as part of stimulus packages to get car owners to scrap aged cars for new, fuel-efficient ones that also meet higher emission standards.
The two largest compact car manufacturers in India, who are also the leading exporters, are eyeing increased orders from their European distributors thanks to these incentives.
Hyundai Motor India exports the i10 and i20 hatchbacks while Maruti Suzuki sends its A-Star hatchback, which is badged as Alto in Europe.
According to the European Automobile Manufacturers’ Association (ACEA), 12 EU countries have put in place a fleet renewal programme, including market incentives and car scrapping schemes.
These include Austria, France, Germany, Italy, Portugal and Spain.
Some more such as Belgium, the Czech Republic and Hungary are discussing introducing similar schemes while the UK will launch one shortly.
Car registrations up
Information on ACEA’s Web site shows that: new car registrations in Germany increased by 30 per cent in February after the launch of the fleet renewal scheme; roughly 20 per cent of all cars sold in France in January replaced old cars that qualified for the scrapping incentive; in Portugal, 16 per cent of all cars purchased in 2008 replaced old cars that qualified for the scrapping incentive.
The incentive varies from €1,000 for scrapping cars over 10 years old in France to €1,500 for cars over 13 years old in Austria to €2,500 in Germany for cars over nine years old.
Says Mr Arvind Saxena, Senior Vice-President – Marketing and Sales, Hyundai Motor India, Europe is doing a lot for the automobile business through its stimulus package.
Also, because of the economic slowdown, Europeans tend to be frugal, which means they will switch to smaller, fuel-efficient cars.
More orders
According to him, a single dealer for Hyundai in Germany sent in a request for 11,000 cars in February alone.
Hyundai Motor India, which is the largest passenger car exporter, started exports of the i20 premium hatchback in November 2008 and its exports have been consistent.
In January, its exports totalled 16,200 units (both i10 and i20), February - 17,039, March -21,406 and April - 22,124.
According to Maruti Suzuki, it has benefited from the scrapping incentives being offered by European nations. The company says that it has seen an upward trend in orders from its European buyers.
Maruti exported 19,000 units of the A-Star to Europe last fiscal (2008-09).
Further impetus
Thanks to the government incentive scheme, its sales have got a further impetus with distributors requesting for larger numbers of the A-Star.
In an e-mailed response, Maruti Suzuki’s Managing Director and CEO, Mr Shinzo Nakanishi, said the company hoped to export over 100,000 units of A-Star this financial year, against 70,000 in 2008-09.
Of these, about 90,000 units will be to Europe.
“This includes 30,000 to Nissan under the Pixo brand. With such incremental export volumes for A-Star, our overall exports are likely to increase substantially to around 130,000 units.”
Source : Business Line