The sale of Indian-made cars has reached new heights in the United States as the automotive market experiences a steady escalating growth. In FY18, US happened to be the third-largest export market for Indian cars. (i)
However, as per recent figures, for the first quarter of FY19, the United States has raced ahead to become the second-biggest export destination for cars manufactured in India. South Africa is ranked at the third slot where Mexico still maintains the top position.
Latest reports on exports from the Ministry of Commerce revealed that the US is deemed to hold a 15% of the market share of the total export of India made passenger vehicles (including sub-segments of cars, utility vehicles and vans) worth $268 million in April to June period.
Although South Africa netted a total $666 million in FY18 and was holding the 2nd position, in FY19, for the same period, shipments to the country went drastically down to $199 million. Mexico grossed an overall export worth $407 million in the April-June quarter and retained the top spot as India’s greatest export destination for indigenous cars.
For the US, the export value has unbelievably spiralled up manifolds from a measly $3.52 million in the FY17 to a staggering $654 million in the FY18. For the whole of FY18, India exported shipments valued at $666 million and $654 million to South Africa and the US respectively. Automotive consulting firms in India forecast FY19 to become a milestone chapter in the history of Indian car exports to the US.(ii)
Thanks to the dispiriting slowdown in other foreign countries, the US, which was a complete non-entity in the export business for Indian car manufacturers till FY17 have now assumed the rank of second-biggest export destination.
According to industry experts from leading Market Research Companies in India, the downbeat impact of Brexit and rising prices of commodities severely hit the most populous export markets like the UK and Europe. They further added that carmakers were increasingly looking forward to having one or a couple of countries as a functional and cost-competitive manufacturing nerve centre for producing preferred models.
The findings also show that in FY17, the UK which ranked second in the market after Mexico had its exports fall by nearly half to a figure of $220 million in FY18. Meanwhile, exports to Italy dropped by 25% to $263 million and to Spain by 30% to $137 million.
Only exports to Mexico rose by almost 8% to reach an astounding record worth $1.69 billion. However, the noticeable surge in the exports to the US accounted for an overall remarkable growth for FY18.(iii)
This rapid growth in the US exports piggybacks on a single carmaker Ford with their one product EcoSport. The company commenced exporting the compact SUV from its Chennai based manufacturing plant, aggressively to the US in FY18.
Ford India which is an auxiliary establishment of the American automotive giant Ford Motor Company is fiercely competitive in exploiting its Indian competence to expand export business opportunities to sundry world-wide markets, including the US.
The company recognizes the US as one of its key markets because the company, in contrast to its domestic sales amasses more volume from exports. Last year, Ford raced past Korean carmaker Hyundai to turn into the largest exporter of passenger cars from India.
In the April-June quarter of FY19, Ford India exported around 35,000 units to diverse marketplaces, including the US. Approximately, 20,500 cars of the total number are Ford EcoSports. Although Ford India does not disclose the data of exports destination-wise, it is estimated that Ford exported roughly 90,500 EcoSport cars to several markets in FY18.(i)
For Ford India, the momentum of exports to the US appears to be significantly more grounded in the present financial year. If we flow on with the pecking order in April 2019, the US has already positioned itself as the second-greatest market with export consignments worth $98 million.(i)
From FY17, the two American automotive behemoths, Ford and General Motors began exporting passenger vehicles to the US on a large scale. General Motors has all the way shut down their India sales. They currently use their complete production capacity for export purpose, especially to the US. Ford EcoSport and Chevrolet Beat are reported to be the cars that garner the maximum export share.
The US keeps on being the biggest auto market in the world and Indian exports are just touching skin deep. Being a market with a broader perimeter joint ventures companies in India especially Maruti Suzuki and others like Hyundai and Volkswagen have initiated their exports progressively to the US from India, which in turn has developed into a voluminous automotive manufacturing hub that exports to almost 175 countries.
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