India beats China in car exports. The Indian car market is 19 percent of China’s. Car makers like Suzuki Motor Corporation, Hyundai Motor Company and Nissan Motor Company are making India a hub for overseas sales of mini cars. Helped by cheaper labour and a surging local market, India this year overtook China in car exports and is challenging Thailand and South Korea as an alternative production center in Asia.
There is a worldwide shift toward fuel-efficient, compact cars and this offers a huge potential for India and it can emerge as a leader in the small car segment. Maruti Suzuki exports more than doubled to 79,860 this year. It aims to ship 130,000 vehicles in the year to March, 86 percent more than last year, said R.C. Bhargava, Chairman of Maruti Suzuki.
Maruti Suzuki sold a monthly record 14,847 vehicles overseas in August. India’s exports of mini cars and hatchbacks gained 44 percent between January and July to 201,138, according to the Society of Indian Automobile Manufacturers (SIAM). Total exports, including vans, Sport Utility Vehicles (SUVs) and trucks, rose 18 percent to 229,809. Cars are exported to over 100 countries excluding Japan and the US.
In contrast, China’s exports slumped 60 percent to 164,800 between January and July, according to government data. Vehicles produced in Thailand for export declined 43 percent to 263,768, according to the Thai Automotive Club. South Korean exports dropped 31 percent to 1.12 million units, according to the Korea Automobile Manufacturers Association. Japan, the world’s largest automobile producer and exporter, shipped 1.77 million cars, trucks and buses. Of those, 135 were mini cars and 439,849 were compact cars.
Small cars will account for 95 percent of the 690,000 passenger vehicles India will export in 2015, according to Tim Armstrong, Paris-based director of IHS Global Insight Inc. In 2016, India may share the top slot with Japan as the world’s biggest small car producer, building as many as 3 million units.
Toyota Motor Corporation and General Motors are also expanding Indian factories and plan to export compact vehicles. Hyundai, South Korea’s largest car maker, plans to export 300,000 cars from India this year, a first since setting up a plant a decade back.
Production in India will help Nissan save at least five percent of costs, he said. “ We needed a car that can make money in Europe. Five percent saving is very significant. It’s enormous money for us.”
Indian labor costs are about 10 percent of that in the U.S. and Europe and raw material costs in the nation are lower by 11 percent. Developing a car from the design stage in India may take $225 million to $250 million, while in Europe it may be $400 million.