Global automakers see chance to turn India into an export hub

Global car manufacturers aim to turn India into an export hub as locally produced vehicles targeting wealthier drivers become more globally competitive.

India, which overtook Japan as the world’s third-largest car market after the U.S. and China last year, saw a 14% uptick in auto exports in the year through March, with 662,891 units shipped. That is still well behind Japan’s figure of 3.37 million cars for the same period, but automakers in India see room for further growth.

As incomes rise, Indian drivers are opting for more expensive sport utility vehicles and sedans over hatchbacks. Global makers have responded by launching cars designed specifically for India, which they are now keen to introduce in other markets.

Frank Torres, president of Nissan India, told Nikkei Asia that the Japanese automaker “wants to use India as a big hub for exports.”

Nissan currently exports the Magnite SUV, launched in India in late 2020, to 15 South Asian, Southeast Asian and African nations. The company plans to start exporting left-hand drive variants of the SUV to the Middle East and Latin America. Nissan and its partner Renault committed $600 million this year to roll out six new cars, including electric vehicles, that will go on sale in 2025. All those models will be exported.

“Export [from India] is one of the pillars of our strategy,” Torres said. “It is not only to increase the revenue but also increase our [production] capacity utilization.”

Analysts say the shift in local demand from small, inexpensive cars to higher-quality vehicles could encourage other global automakers to plan more “India-first” models that are eventually exported.

“Carmakers have learnt that if you make a compelling product, Indians are not averse to it,” said Harshvardhan Sharma, head of automotive retail practice at Nomura Research Institute. “Manufacturers need not plan track one for India and track two for the global markets, as the Indian market is quite in sync and harmonized with global markets.”

India’s exports are already on par with its major Southeast Asian rivals. Indonesia exported 512,448 cars in the year through March, up 70% on the year, while Thailand exported 300,000 units between January and June, according to local automobile associations.

Source: Valor Econômico and Nikkei Asia

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