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Crisis: Automakers reworking export strategy

Swaraj Baggonkar in Mumbai | January 05, 2009 09:46 IST

Indian auto makers, hit hard by slowing domestic sales, are stepping up their exports to stay afloat.

Car companies such as Korea's Hyundai Motor, and Chennai-based two- and three-wheeler maker TVS [Get Quote] Motor are having a fresh look at their export strategy.

India's second largest two-wheeler manufacturer, Bajaj Auto [Get Quote], and the country's biggest car maker, Maruti Suzuki, too are now banking on exports to provide the much-needed succour after local sales slump. 

Arvind Saxena, senior V-P (marketing and sales), Hyundai Motor India, said, "We had initially targeted more numbers for the domestic market but now due to the slump in the domestic market our exports will be more than half of our production.

"Earlier, the plan was to sell more than 50 per cent in the domestic market but now we think that exports will be more than 50 per cent of the total production."

A majority of HMIL's current export comprises the i10 model, which is exported to Asia, Latin America and Western Europe. In addition, the company has stated that 90 per cent of the i20 model (a premium hatchback) will be exported. The company will produce 150,000 units of the model annually.  

During the nine-month period ended December 31, 2008, HMIL clocked a growth of 100 per cent in exports at 198,600 units. Its domestic sales during the same period stood at 177,095 units. During last year's April-December period, the company exported 99,035 units.

Similarly, TVS Motor has also hiked its export contribution to total sales to 18 per cent by the end of the year from 12-13 per cent set earlier. According to figures released by vehicle manufacturers' body SIAM, TVS' current export share stands at 13 per cent till October.

In addition, the company will also scale up its product offering in the export segment by launching its three-wheelers abroad. It currently exports only two-wheelers, including scooters and motorcycles.

H S Goindi, president (marketing), TVS Motor, said, "Exports is certainly helping us cover up our production and for the loss in the domestic market. By the end of next year, exports will contribute to 30 per cent of the total production, especially after our three-wheeler exports begin this year". 

Exports of TVS Motor have grown by almost 48 per cent during April-December at 146,397 units, whereas, its domestic sales have grown by 2 per cent at 863,061 units, according to SIAM figures.

Mumbai-based analysts say that due to the depreciating value of Indian currency, automotive companies are able to derive better realisations on their products. However, the companies have refrained from elaborating on the issue.

Pune-based Bajaj Auto is also bullish on shipping its vehicles as demand for its bikes has increased substantially overseas.

It has recorded an increase of more than 35 per cent in exports, which stood at 620,880 units as of December 2008.

A senior executive from the company stated that exports continued to grow despite a slump in demand domestically. "We are able to adjust to demand internationally as there is a decline here," said the executive.

The company, which makes bikes, including Pulsar, Platina and Discover, and passenger and goods-carrying three-wheelers, exports to markets including Far East, Central America and Africa.

Meanwhile, Maruti Suzuki has commenced export operations of the A-Star model to regions in the Europe. This will hike its export share to 14,000 units per month as against 6,000 units currently. However, company officials say that the ramp up in production will be spread over a few months.

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