India’s Automobile Sector Surprises With An Uptick In Exports In April

The export of passenger cars increased by 31.9 per cent year-on-year, in April 2024, with 30,268 vehicles shipped compared to 22,946 in April last year.

The total year-on-year growth of exports in passenger vehicles stood at 21.1 per cent, going from 40,940 in April 2023 to 49,564 in April 2024.

Exports of two-wheelers also saw a similar spurt. Scooters saw a higher export compared to motorcycles, with scooter exports registering a 33 per cent year-on-year growth. On the other hand, motorcycle exports registered a 22 per cent year-on-year growth. 

The total year-on-year growth in export of two-wheelers rose to 24.3 per cent.

In contrast, India had seen automobile exports dipping by 5.5 per cent in FY 2023-24.

The top three markets to which India usually exports automobiles globally are South Africa, Mexico, and Saudi Arabia. The exports to these three countries dipped in FY 2023-24 compared to FY 2022-23, with Saudi Arabia being the outlier, recording a healthy growth of almost 47 per cent.

The earlier year’s dip in exports can be attributed to the geopolitical tensions in the Red Sea-Suez Canal area which led to a spike in freight and insurance rates.

However, the data released by SIAM for April suggests that the exports of automobiles are turning around as markets have accepted the higher rates as the new normal. 

The optimistic outlook of the export trend can be attributed to a couple of factors such as Rupee depreciation, which makes Indian exports cheaper.

“Typically, the rupee's depreciation makes India's exports more competitive. Some of the automobile company's 2023 Q4 results have reflected this and Q1 of this year is also expected to result in healthy profits for these companies,” Nirupama Soundararajan, Founder and Partner, Policy Consensus Centre told The Secretariat.

“However, the growing shortage of dollars in many of India's trading partners in Africa can dampen the positive effects that a rupee depreciation could bring to exports,” she added. 

Rahul Bharti, Chief Investor Relations Officer, of Maruti Suzuki India, which emerged as the leader in the export of passenger cars in April 2024, spoke about the manufacturer's export plans during the Earnings Call for Q4FY24 on Tuesday.

“On exports, we did about 283,000 this year (financial year 2023-24). Despite the fact that we've increased substantially over the usual 100,000 per year that we used to do just about 4 years ago, we wish to take it further in future years. And next year, we should be doing about 300,000 units fairly diversified across markets, across products. In terms of profitability, it changes with many parameters, mostly forex rates, etcetera,” explained Bharti.

“The best strategy in exports is to diversify. So, the good part is that Maruti Suzuki exports to about 100 countries of the world across several products. And it's quite common that one of the very high-performing markets suddenly becomes zero the next year. Algeria, for example, was one of our top 5 markets at one point of time. Suddenly it became zero because of (change in) some government norm,” added Bharti.

With India looking to sign a number of trade deals in the months ahead which should give the automobile sector tax advantages in exports to the UK and EU as well as the opening of trade routes such as the trade corridor to central Asia, the outlook for automobile exports seems brighter than before.