India emerging as an export hub for SUVs

Soon, sports utility vehicles (SUVs) made in India would burn rubber in developed markets such as Europe, Japan, Latin America and Australia.

Global automobile majors are looking to leverage India's cost-competitive manufacturing practices and turn the country into an export hub for utility vehicles.

Domestic automobile major Mahindra & Mahindra (M&M) and French car maker Renault started exporting the XUV500 and the Duster, respectively, to Europe in December 2012.

Now, Fiat and Ford India are assessing opportunities to export SUVs to Europe, South Africa and Southeast Asia.

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Joginder Singh, president and managing director, Ford India, said, "The European equation works well with the EcoSport. We already export the Figo to 38 countries from India. We would look at a similar scale for the SUV."

While Singh didn't specify the number of EcoSport units the company had earmarked for exports, industry sources indicated it was planned about 40 per cent of the scheduled annual production of 150,000 units would be sold in foreign markets.

Overall, 380 variants of the SUV, manufactured at Ford's Maraimalai Nagar facility, would be shipped to 40 countries.

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Italian car maker Fiat, which plans to launch nine new models in the Indian market by 2016, is firming up plans to export some of these to right-hand drive markets abroad.

Recently, Enrico Atanasio, former managing director, Fiat Group Automobiles India, told Business Standard, "We are looking at leveraging India as an export hub for right-hand drive models. We have excess capacity available in India and are looking at exporting vehicles from here to the UK, Japan, Australia and South Africa."

Through the next three years, Fiat plans to introduce the Jeep, the Grand Cherokee and at least two compact utility vehicles with the Fiat badge in India.

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Fiat and Tata Motors share a production facility at Ranjangaon (Maharashtra).

Together, the two companies utilise about half the factory's capacity of 180,000 units.

"India is growing out of a portfolio of small cars for exports and the trend is being driven increasingly by global automobile manufacturers. Sedans and utility vehicles are gaining acceptance among consumers in the Indian market. To gain the requisite volumes for producing a model cost-effectively, companies have started shipping out larger vehicles from India," said V G Ramakrishnan, senior director (automotive and transportation), Frost & Sullivan.

In the last financial year, M&M exported about 2,000 units of the XUV500 to Africa and Europe. By the first half of this financial year, it plans to raise exports to Latin America.

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Abdul Majeed, partner (automotive practice), Pricewaterhouse Coopers, said, "Some exports markets do not have the volumes to justify setting up a manufacturing or assembly unit. India is a low-cost manufacturing hub and automobile makers are leveraging it as a base to grow in derivative markets."

Renault India's export strategy adheres to Majeed's views. The company plans to export 1,000-3,000 units of the Duster to the UK, where it is sold under the 'Dacia' brand.

"Like India, the UK is a right-hand drive market. Sourcing the vehicle from here enables us to leverage synergies in manufacturing," said a senior Renault India executive.

The company, which shipped the first consignment of 350 vehicles from India to the UK and Ireland in December 2012, is considering exporting the car to other right-hand drive markets such as Malaysia, Indonesia and South Africa.