Auto majors such as Suzuki and Hyundai Motors, South Korea’s biggest automobile maker, have seen growth buoyed by sales of small car in emerging markets. According to international media reports, Hyundai recorded about 55% of sales from China and India while Toyota saw around 31% of sales coming from emerging markets.
Hyundai, the second-largest carmaker in India, exported Santro cars and Accent sub-compacts made in India to over 100 countries, said company officials. Analysts say that small cars have emerged as a source of competitive advantage for these companies, giving them an edge over other big carmakers such as Ford and General Motors (GM), which have taken a hit in numbers.
When contacted, RC Bhargava, chairman of Maruti-Suzuki, said: “We will produce over one million cars this year and will certainly boost the consolidated balance sheet of Suzuki. A good-performing subsidiary always helps the parent company.”
Indian advantage
Suzuki’s 50% share in the rapidly-growing Indian market provides it an unusual advantage, at least in the current circumstances, compared to its much bigger rivals like Toyota and Honda who are more exposed to the US and European markets. India makes almost a quarter of Suzuki’s global production, company officials say.
Maruti Suzuki, India’s largest carmaker, also posted a 32% growth in domestic sales at 85,415 units in October 2009. Hyundai Motor India’s total sales for October 2009 stood at 51,736 units, up 11%. Tata Motors and M&M — the two largest companies owned by Indian entrepreneurs — saw growth rates in excess of 20% in October. Crucially, Tata Motors has seen a smart recovery in sales of commercial vehicles, a bellwether for economic growth.
India is the world’s fifth or sixth largest maker of passenger vehicles, depending on definitions. Sales of cars and utility vehicles is expected to be around 1.8 million units for the year ended March 31, 2010.
Despite the brisk growth rate in India, they palled compared to the eye-popping 9.6 million units sold in the first nine months of 2009 in China. The sharp contraction of consumer demand in the US has propelled China into the position of the world’s largest automobile market.
Government incentives
Domestic growth rates have been boosted by Indian government’s efforts to combat the fallout of the financial meltdown in the second half of 2008. As a result, taxes on small cars — defined according to length and the size of the engine — as well as trucks were cut to 8%, the lowest level in many years.
This is true for countries worldwide. China has halved taxes on small cars, while developed markets have sought to boost sales by encouraging consumers to bring forward purchases of new cars. The most famous of these is the ‘cash for clunkers’ programme introduced in the US that encouraged car owners to purchase a more fuel-efficient one by trading in a less-efficient car.
Both Germany and France have had similar schemes, popularly known as “scrappage schemes”. Exports of small cars from India to European countries have benefited from these.
http://economictimes.indiatimes.com/articleshow/5191121.cms
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