Automobile exports shift to high gear

Written by Yogima Seth | New Delhi | Updated: Jul 16 2009, 06:57am hrs
The governments Automotive Mission Plan to develop India as a hub for small cars seems to be showing some results with the share of export to total revenue of the automobile industry going up by 1.5% in 2008-09 as against nearly 3% decline in share of revenue from vehicles sold in the domestic market. According to the Society of Indian Automobile Manufacturers (Siam), Rs 16,782 crore was generated from export of all kinds of vehicles from India in 2008-09 as against the revenue of Rs 13,871 crore in 2007-08, a growth of 1.4%. This comes on the backdrop of a 23.6% jump in export of vehicles at 15,30,660 units as against 12,38,333 units in the preceding financial year and has resulted in an increase in the share of export from 6.17% in 2007-08 to 7.6% last year.

On the contrary, revenue from domestic sales declined 3.4% last year at Rs 1,25,864 crore vis--vis Rs 1,35,635 crore in 2007-08 despite nearly flat sales in the last financial year. As per Siam, 97,23,391 units were sold in the domestic market in 2008-09 as compared to 96,54,435 units in 2007-08. Consequently, its contribution to overall revenue came down to 57.04% as compared to 60.4% in 2007-08.

Even the total revenue from automobile sector has declined 1.8% at Rs 2,20,646 crore in the last financial year as against Rs 2,24,706 crore in 2007-08.

Extreme fluctuation of the rupee vis--vis the dollar has helped in increasing the total revenue from exports in the last financial year. Moreover, players like Hyundai Motor India and Maruti Suzuki have become very aggressive on the export front as high local content and low labour costs makes their vehicles very price competitive in overseas markets and help them improve their margins, said Abdul Majeed, auto analyst and partner, Price Waterhouse.

Nearly 50% of total export from India takes place in dollars. This has had its benefit as the rupee depreciated by 27.4% in 2008-09 from 39.98 on April 2, 2008 to 50.95 on March 31, 2009.

According to Majeed, while volumes have gone up in the domestic market, the realisation per vehicle has come down because of higher discounts that were offered by manufacturer in the second half of 2008-09.