Auto makers shift focus to non-European markets to ramp up exports.

When Suzuki’s Indian subsidiary Maruti Suzuki looks to set up its third factory in the country, in Gujarat, the focus is on exports. As per its initial plans, the company will manufacture 2,50,000 cars per annum including some future car models beginning 2015-16, primarily to meet the growing overseas demand. The proposed factory in Gujarat is around 300 km off Mundra Port, which, for many years, is helping them export their cars to European and African markets. Maruti is not alone.

Tata Motors and General Motors have also set up manufacturing facilities in Sanand and Halol, while Ford and Peugeot are investing heavily in Gujarat to make the state their export hub. After Haryana, Chennai and Pune, which saw automobile and automotive companies flourish over last few years, Gujarat seems to be in the thick of action now, primarily because of port connectivity.

The economic slowdown in euro zone may have hit car exports from India momentarily. Auto manufacturers are now steadily shifting their focus to non-European markets to ramp up exports. For instance, Maruti Suzuki, which is India’s largest manufacturer and second largest exporter after Hyundai, is now focusing on newer markets in the Asean region. It has indicated that its vehicle exports for the financial year 2012-13 is likely to remain flat in view of the continuing sluggish market conditions in Europe. A couple of months ago, it crossed the landmark of one million exports, when it shipped an A-Star to Denmark, via Mundra, on April 30.

The car was exported along with 2,200 other cars making their way to countries like Algeria, Denmark, Malta, Sweden, Switzerland, Egypt and Morocco. Apparently, A-Star is among the most popular Maruti cars in international markets, and is being sold as Suzuki Alto in Denmark, and as Suzuki Celerio in other markets.

Maruti’s export market diversification strategy has been helping the company offset Europe sales slowdown. In 2010-11, its total exports stood at 1,27,379 units, as against 1,38,266 units in the previous year, down 7.9 per cent. The share of non-EU export sales shot up sharply from 23 per cent to 66 per cent. In the previous financial year, Maruti Suzuki’s total exports were over 1,47,000 cars, of which over 75 per cent were to Europe.

All other leading exporters such as Hyundai, Nissan, Tata Motors and Ford India are also reworking their strategies to ramp up exports. Indeed, Maruti’s export strategies are worth emulating.

Nissan said its total exports crossed 100,000 units for the first time during last financial year and the company has now emerged as a top exporter of mid-size sedans from India. With a 20 per cent share of passenger car exports in 2011-12, Nissan has emerged as a leading exporter after Hyundai and Maruti.

Tata Motors, another leading exporter, however, managed a 9 per cent growth in exports during last financial year by exporting 63,078 units, over 58,044 units in the previous year.

Tata is looking at new markets for its new ‘Nano’ brand, the lowest priced car in the world, such as Thailand, Myanmar, Indonesia and Bangladesh. The company is also working on a different version of the Nano for launch in the European market.

While other exporters are pushing their export numbers, the top exporter Hyundai has seen its exports slow down during last financial year. Last February, exports of its flagship small car model `Santro’ crossed the 500,000 units mark. Last three months since March has seen a continuous drop in exports. They are hoping to revive exports, by focusing on non-European markets.

Shipping companies operating pure car carriers (PCCs), such as NYK Line, K Line and Glovis, are gearing up to load more cars from India. Chennai Port, which accounts for a large chunk of India’s exports, gets around half-a-dozen large PCCs every month. Hyundai handles all its exports through the port, forming the bulk of Chennai’s numbers, the others being Ford and Nissan. At Mundra Port, Nissan and Maruti are the leading exporters. Mundra is planning to expand its facility to handle more car exports. Mumbai Port, another leading port handling car exports, manages exports of Tata, Volkswagon and Maruti (a part of its exports), and gets around 10 PCCs every month.

Ports should ramp up their car export facilities – both stock yards as well as berth capacity, keeping in mind a potential boom in India’s car exports, especially exports of small cars.

Source : wrd.mydigitalfc.com