Indian car exporters are in for good times, literally. With around 10% depreciation of rupee since April, the country?s leading car exporters like Hyundai Motor India Ltd and Maruti Suzuki India Ltd are expected to improve their export margins by 4-5%, says industry experts and analysts.
?The depreciation of rupee in the last two months will benefit both the car manufacturers and component manufacturers who are exporting in a big way as henceforth exports will get cheaper,? says Abdul Majeed, auto analyst and partner, Price Waterhouse. According to Majeed, this will help companies to enhance their export margins by 4-5%.
According to Arvind Saxena, senior vice president, Hyundai Motors, margins should certainly improve as rupee has started depreciating. ?Some flexibility is always built in pricing which takes care of fluctuations in currency market,? he says, adding that the company aims to export over 2 lakh units in 2008-09.
According to the Society of Indian Automobile Manufacturers, Hyundai is India?s largest car exporter with the company witnessing a growth of 25.03% in exports at 1,44,439 units in 2007-08. For the two months starting April, the company?s exports have surged by 60.46% to 34,251 units.
Maruti, a distant second, has registered a growth of 31.49% in exports in the last fiscal at 51,669 units. The company?s exports for April and May grew by 48.68% at 7,654 units. ?This year we are eyeing exports over and above the numbers we did in the last fiscal. Moreover, with Maruti planning to start export of A-Star by December-January, it will further add to our total export volume,? says a Maruti official.
During the last fiscal, the rupee has appreciated by over 12% vis-?-vis dollar and this had eroded the export margins of car manufacturers by 6-7%. However, in just two months of this fiscal, the rupee has depreciated by around 10% and this is expected to help car exporters to improve their bottom lines.
?Last year there was an over 12% appreciation of rupee. Hence, there has to be a minimum depreciation of 12% this year to offset the squeeze in export margins in 2007-08,? says a Mumbai-based analyst.
?Better margin in the overseas markets vis-?-vis domestic market is luring car manufacturers in India to look at exports in a big way as it helps them to maintain their overall profit margins, especially at a time when there is a slowdown in domestic demand due to high inflation and high interest rates,? he adds.