Retail News Update

MUMBAI: High fuel costs and general recessionary trends are forcing car makers overseas to move away from big cars to much smaller makes, opening a huge business opportunity for car makers in India such as Maruti Suzuki and Hyundai. According to sources, car makers in markets like Latin America and Europe have ramped up sourcing orders of small cars from Indian companies, as surging fuel costs and recessionary trends take a toll on existing makes.

Nissan plans to buy 50,000 A-Star compact cars from its rival Maruti Suzuki and export to markets in Europe. It is also learnt that Tata Motors is talking to dealers to launch its Nano, the ultra low-cost car, in the western markets. Car makers prefer sourcing cars from India since operations are wholly-owned compared to China, enabling low-cost production of components.

Korean car maker Hyundai exports 40% of its small car production, primarily i10 and Santro, which sells as Atos in 97 countries across the world. “Currently, India is a small car hub for Hyundai and we have a backlog of export orders too,” says Hyundai Motor India senior V-P Arvind Saxena. In a slow domestic market, the Korean car major can divert its small cars to western markets. The company is also expanding capacities at its Chennai plant.

The country’s largest car maker Maruti Suzuki currently exports Alto, M800, Omni, Wagon R and Zen Estilo to non-European markets such as Chile, UAE, Algeria and East Africa. The Japanese car maker which exported 53,000 units in 2007-08 will up it to 2-lakh units by 2010. “We had stopped exports to Europe and now we intend to start exporting the A-Star compact car to Europe by year-end,” a company official said.

Nissan too will make a small car in India and start exporting it to Latin American and African countries by 2010. Even while Tata Motors is receiving enquiries from other countries to set up Nano plants, the auto major is also understood to be sprucing up the low-cost car with fitments such as airbags, better interiors and engine options to market it in the overseas markets.

Tata Motors sources said the company might consider issuing licences to a particular car maker in offshore markets, who would manufacture Nano. While the near-term focus is India, international marketing will take place after a few years, company officials said. The Indian car market accounts for 71% of small cars while in China it accounts for 33%. In April-June, car exports were up 46% to 66,119 units.