Indian cars gain ground in Europe as global automakers ramp up exports

India is becoming a major export base for global carmakers, with shipments to Europe rising fast as companies invest more in local factories and look for alternatives to China for manufacturing

Global automakers are increasing their car exports from India to Europe, building on last year’s success in Japan, Nikkei Asia reported. This marks a major shift for factories in India, which have so far mainly supplied Latin America, Africa and West Asia.

 

Industry executives and analysts say the growing shipments to Europe reflect India’s rising role as a low-cost manufacturing hub, the news report said.

 

Why are global brands expanding production in India?

 

Companies such as Suzuki Motor and Honda Motor now consider India central to their global manufacturing plans, including for electric vehicles (EVs), as competition from Chinese brands intensifies.

 

Between April and August this year, exports to the UK, Germany, Spain and Norway reached $63 million, still only about 2 per cent of India’s total car exports, but almost nine times higher than the previous financial year.

 

The growth follows strong gains in Japan last year. In the financial year ending March, exports to Japan jumped nearly fourfold to $813 million. Between April and August this year, exports touched $328.64 million.     

 

How are carmakers expanding EV exports from India?

 

Suzuki plans to invest 1.2 trillion yen ($7.7 billion) by 2031 to raise its India manufacturing capacity from 2.5 million to 4 million units a year. The company wants to turn India into a key EV production hub. Since August, it has exported more than 7,400 units of its first EV, the midsize eVitara, to European markets, including the UK, Germany, Norway and France.

 

Honda is also stepping up. Earlier this month, it announced that India would serve as a manufacturing hub for one of its upcoming EVs, which will be exported to Japan and other Asian countries.

 

Why is India emerging as an alternative to China?

 

India-made cars are increasingly seen as competitive options to Chinese vehicles, which are rapidly expanding in global markets, the news report said. Consultancy Alix Partners expects Chinese brands’ market share in Europe to double to 10 per cent by 2030.

 

Between April and October, India exported 514,622 vehicles, nearly 67 per cent of the total exports recorded in the previous financial year. Maruti Suzuki was the top exporter, followed by Hyundai, Nissan and Volkswagen, according to the Society of Indian Automobile Manufacturers.

 

South Africa was the largest destination, accounting for 17 per cent of shipments worth $1.24 billion. It was followed by Saudi Arabia (16.5 per cent), Mexico (13 per cent), Japan (11 per cent) and the UAE (7 per cent). The news report quoted analysts as saying that new markets are opening up as India’s domestic auto sector becomes more mature, especially in terms of safety standards.   

 

How is India’s auto component sector supporting this rise?

 

India’s auto component sector is also growing rapidly. Global players like Bosch and Tenneco operate factories in the country, while local companies such as Motherson Group, Sona Comstar, Bharat Forge and Lumax Group have long supplied international markets.

 

India exported auto components worth $22.9 billion last financial year, with Europe taking 29 per cent of the shipments, according to the Automotive Component Manufacturers Association of India.