Indian carmakers seek to drive up local demand

25 August 2010

NEW DELHI: Some of India's largest automakers have decided to export fewer vehicles overseas in a bid to meet rising demand in their home country.

India is the category's third largest market in Asia behind China and Japan, and saw growth of 33%, to 756,000 purchases, during the four months ending in July 2010.

Exports climbed by 2% in July to 34,219 units, when local shipments rose 27%, indicating heightened interest among Indian customers while consumers in areas like Europe become increasingly hesitant.

Hyundai Motor India manufactures the greatest number of vehicles then sold abroad, at around 20,000 cars per month.

The company can produce up to 600,000 sedans, coupés and other models a year, and is currently hitting this target.

But the cars are being used primarily for serving buyers in India.

"This is critical to strike a balance between export and domestic demand," Arvind Saxena, senior vice president of sales and marketing at Hyundai, argued in an interview with Livemint, the daily business title.

Maruti Suzuki India is in second place after Hyundai regarding in terms of its volume output that ends up on roads in foreign countries.

It sold 870,000 cars in India in the last fiscal year, and chairman RC Bhargava said indigenous sales would protect against widespread uncertainty in regions suffering heavily as a result of the downturn.

"If we have an opportunity to grow in domestic market, why expose ourselves to such risks?" he stated.

With waiting lists running at between four and eight weeks for different models, Maruti Suzuki is planning to direct just 15% of its stock overseas annually in the next five years, Bhargava added.

Data sourced from Livemint; additional content by Warc staff