Fall In Exports Not Effecting Car Companies

The sale of cars overseas is not too convincing for the car makers but it has been compensated within the domestic market. Specifically Maruti Suzuki is facing a huge hitch in the foreign exchange terms. The decline in the export market has been due to the less demand in Europe following the withdrawal of incentive for small cars.

However, the car makers are filling their treasuries with the profit accrued in the local market. There has been a fall in export for Maruti in December 2010 with just 9756 units against the one made a year ago same period. This accounted for the net sale volume by 10% from the anticipated 15%. This had not made any deep impact on the company’s show, said its Chairman as there has been an increase of 25% sale in the domestic market in 12 months. The fall of export market may hit the net figure in December for Maruti by 30-40 basic points than that of September quarter. Normally one basic point equals one-hundredth of a percentage point. However, Hyundai Motor tops the list in terms of export market fall which faced 15.6% by exporting 21060 units in December.

Earlier Hyundai had much potential in European market by exporting almost 50% of its production. The combined volume of these two companies has brought down the country’s export potential to 285000 units during March-November 2010. This accounted for a fall of 1.64% against the one achieved in the previous year, said SIAM. Both companies faced this fall as a result of the withdrawal of scheme in Europe for exchange of old cars for new. The scheme was suspended in July last. The figure during Jan-November 2010, which represents the bookings for new passenger vehicles in Europe is 12.3 million which is still short fall by 6%, said the European Automobile Manufacturers Association.

This was echoed by an analyst of Pincmoney of Pioneer Investcorp Ltd. Who said there has been a proportionate profit in the domestic market following the downfall in the export market. The car segment witnessed a wait period for more than 3 months for certain models making a rise in the net sale volume for the car makers. This made the companies to increase the production and to expand the facilities further.

The Chairman of Maruti said that there is no scope for further revival of market potential in Europe and the earlier period proved to be genuine for the companies to reap the benefits. The analysis from the London-based one reveals that the fall in export market will not be a hitch for the Indian car market to become the world hub. There will be devising of new strategies and new models, as evidenced by Nissan which slated for entry into Europe with new launches. The company was bold enough to shut down its units in Europe once it had launched the facilities in India. Nissan exported its recent launch Micra in 21000 units during the period of October-December 2010 while plans are there to export further 110000 units for the first year of its launch. The countries earmarked for export are West Asia and Africa.