Export of India-made cars to US goes up, America becomes 2nd-biggest market

New Delhi:  The ride of Indian-made cars to the United States continues to pick up speed. The US was the third-biggest export destination for Indian cars in FY18. Now, as per the figures for the first quarter of FY19, the country is the second-biggest market for cars from India. South Africa, which was the second-biggest market, now stands at the third position. Mexico retains the top slot.

India has exported passenger vehicles (that includes cars, utility vehicles and vans as sub-segments) worth $268 million (~18.76 billion approximately) to the US in three months ended June, data with the commerce ministry showed. Shipments to South Africa were significantly lower at $199 million in the same period. In the entire FY18, India has exported vehicles worth $654 million and $666 million to the US and South Africa, respectively.

At $268 million, US accounted for 15 per cent of total car exports in the April-June period. Mexico remains the biggest export destination for India-made cars, with a total export value of $407 million exports in the quarter. Going by the data, the US is undeniably the fastest-growing market for Indian cars. The value of exports had grown manifold from just $3 million in FY17 to $654 million in FY18. FY19 looks well placed to be another record year.

This growth in export to US is coming on the back of a single product from one carmaker, Ford. The company started exporting the EcoSport, the compact sport utility vehicle (SUV) manufactured at its Chennai plant, to the US last year. Ford India, a subsidiary of American carmaker Ford Motor Company, has exploited its Indian capacities to ramp up exports to several markets, including the US. It also overtook Hyundai as the biggest exporter of passenger vehicles last year.

The company exported about 35,000 cars to several markets, including the US in the April-June quarter. About 20,500 of these happened to be the EcoSports. Ford India does not share the destination-wise data for exports.

This surge in exports from India to the US comes at a time when US President Donald Trump has been pushing American carmakers to do more local production. “I want new plants to be built here for cars sold here,” Trump had tweeted last year, ahead of a meeting with heads of American car majors, including Ford and GM.

The US, however, is a focus market for Ford India, a company, which gets more volume from exports than from domestic sales.

“Export is one of the key pillars. It is critical for a variety of reasons. It gives us economies of scale allowing us to bring more features at competitive costs for the Indian market,” Anurag Mehrotra, president and managing director at Ford India, told Business Standard last month.

On exports to the US, he said it was business as usual for the company. “We are sure both the governments will take the right decision in the interest of ensuring ease of doing business. We haven’t baked in any risks yet,” he said.

No other carmaker in India is known to be exporting a passenger vehicle to the US market. Ford EcoSport is priced at ~780,000 and ~1,180,000 in the domestic market. “If we take a conservative average realisation of ~1 million for exports, then 18,000 units of the EcoSport may have been shipped to the US alone in the last quarter,” Mehrotra said.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.