Car exports to be hit as Europe removes auto sop

Maruti Suzuki and Hyundai Motors, two of India's biggest car exporters, are expected to see overseas sales fall sharply following the recent removal of a “scrappage” incentive scheme in several European countries

The scheme provided car owners a subsidy to replace their older, polluting vehicles with low-emission and fuel-efficient ones. The incentive varied from ¤750 to ¤4,000.

Governments from 11 nations — including Germany, France, Italy, Romania, Spain, Portugal, Cyprus and Luxembourg — withdrew the scheme from the last week of July or the first week of August. Only the UK has chosen to continue the scheme, which has helped raise demand for hatchbacks.

About half Hyundai’s monthly production of 42,000 to 48,000 units is exported.

Society of Indian Automobile Manufacturers data showed that Hyundai’s first-quarter exports stood at 66,500 units, a 26.54 per cent growth over the same quarter last fiscal. HMIL sells both the i10 and i20 hatchbacks to Europe.

"We have orders for the next two months — that is, till September, so we will remain unaffected by this move but exports for the last two quarters will be slightly impacted," said Arvind Saxena, senior vice-president (sales and marketing), Hyundai Motor India said.

He, however, declined to specify the extent of the drop.

Meanwhile, Maruti, which more than doubled exports in the first quarter of this fiscal to 29,314 units over the same quarter last year, said there was no let-up in exports. Demand for its A-Star hatchback, launched late last year, has been impressive in Germany, the UK, Netherlands, Spain and France, according to a recent company statement.

Mayank Pareek, executive officer (marketing and sales), Maruti said the ¤6 billion scheme in Europe was supposed to last till December but added, “The US Congress launched a similar $1 billion scheme that was supposed to last for five months but was over in five days".

According to the Brussels-based European Automobile Manufacturers Association, new car registrations grew 2.4 per cent to 1,461,859 units for the first time in 14 months in June. Germany, Europe's largest auto market, reported a growth of 40.5 per cent.