Exports by Indian small car producers such as Maruti Suzuki and Hyundai Motor have started shrinking as scrappage schemes in various European markets are set to lapse by the end of the year, a local paper reported.
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These big automakers saw their exports shoot up 35-40 % in the last few months on the back of incentives offered by Germany, France and the UK to help owners of older cars and vans buy new fuel-efficient vehicles, the Economic Times of India (ETI) said.
Germany, the biggest market in Europe, and Austria have already concluded their scrappage programmes and other countries are expected to wrap up their schemes by December. So, as exports to Europe start declining, Indian carmakers have started looking at non-European markets.
“While we are hoping the European countries will announce new schemes to encourage small car exports or the existing schemes in some countries get a further extension, we are simultaneously working with non-European countries too,” a senior official at a Delhi-based car company told the business daily.
Up to 30 September, Maruti Suzuki had exported over 58,500 units, with the A-Star (exported as the Alto) accounting for 33,500 units, the Nissan Pixo derivative made on an OEM basis at over 25,000 units and other models contributing about 7,900 units. The country’s largest carmaker has targeted exports of 130,000 units in fiscal 2009-10 versus 70,023 units in the last fiscal year.
“We are focusing on non-European markets for exports, but once the scrappage incentives are exhausted in Europe, the export numbers are likely to normalise,” a Maruti-Suzuki spokesman told ETI.
Analysts, however, do not expect Maruti Suzuki’s exports to pass 116,000 units this year as many European countries have withdrawn their scrappage schemes. Of the total targeted exports, Europe would account for 90,000 units and the balance 30,000 units from non-European countries.
Hyundai Motor India (HMIL), the country’s largest car exporter, also benefited from additional European export orders.
“More than 50% of our exports are targeted at European countries with Germany accounting for the [most],” Arvind Saxena, HMIL’s senior vice-president for sales and marketing, told the paper. The company aims to export about 270,000 units in fiscal 2009-10 compared with 245,000 last year.
“We are covered for the calendar year as we get advance export orders. The export orders have lowered and we will start seeing the impact,” Saxena said. HMIL exports its i10 and i20 to Europe.
The i10, in particular, has been a huge hit here in the UK. Last August, Hyundai UK announced it was their first model ever to chart in the UK top 10 with 3,084 sold in July, making it the ninth most popular car that month.
“It’s the number one selling car under the government’s scrappage scheme, with buyers literally queuing at dealerships to trade in their older, polluting cars,” the automaker said at the time.
Germany created a EUR5bn fund for its scrappage scheme, doling out EUR2,500 incentives to buyers. France set aside EUR220m, offering EUR1,000 incentives and deferred tax benefits of up to EUR5,000.
The UK government initially created a GBP300m fund and offered GBP1,000 with automakers kickin in another GBP1,000. It recently extended the popular scheme with another GBP100m of funding. Other European countries that imported small cars under the scrappage programme were Spain, Italy, Austria and the Netherlands, the ETI said.
