NEW DELHI: India’s aspirations of becoming a global small car hub may be fading away with car companies considering curbing exports to maintain their profitability. With the rapid weakening of dollar against Indian rupee and withdrawal of incentives for export by the government, major car companies are reconsidering their export plans.
Car companies are netting more profits in the domestic market. According to automobile experts, profit margin on domestic sales stand close to 12%, while it has shrunk to 5-7%, from the lucrative 15-20% in the overseas markets after the dollar started depreciating. Dollar has fallen by around 14% against the Indian rupee in the past 15 months.
The largest exporter of passenger cars from India, the largest Korean car maker, Hyundai Motor India (HMIL) is facing margin pressure in its overseas markets. HMIL managing director and CEO HS Lheem said, “There are no incentives for exports from India. We have invested hugely in production facility in India and plan to make a cumulative investment of Rs 7,000 crore in the next five years. With no support on exports from the government, nor any incentivising policy, car exports from India are loosing sheen.”
The company is downscaling its original target of exporting 50% production from India, its global manufacturing hub for its small models like i10, Santro, Getz and Accent. As per its revised target, Hyundai plans to export 2.12 lakh units this year out of the total 5.3 lakh units likely to be manufactured in 2008.
