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Published on : May 21, 2015

In the fiscal year 2014-15, Indian factories exported a record number of 3.5 million vehicles, which is 15% higher than what they managed a year back. However, domestic sales rose by only 5% since last financial year, with 2.6 million units being sold. 

Exports of utility vehicles, commercial vehicles, cars and two- wheelers have increased every year since 2000. But domestic car sales dropped by 7% in 2012-13, further dipped by 5% during 2013-14 to finally increase by 5% in 2014-15. The slow demand in the local market in the past three years has seen automobile manufacturers focusing more on exports. 

Even though overall automobile exports increased, car exports dropped by 1.66% in 2014-15, which led to the export of 542,082 units in the year compared to the export of 551,218 units in the previous year. Industry experts attribute the fall to Hyundai Motor stalling the shipments to European market from its manufacturing facility in Chennai. Though India serves as its manufacturing hub for the markets in Latin America, Australia, and Asia, European market accounted for 40% of Hyundai’s exports. However, other automotive players such as Volkswagen AG, and Ford Motor Co. increased their exports even though their domestic sales slipped. Volkswagen AG increased its exports by 95% whereas Ford Motor Co. increased its exports by 70%. Ford is now investing on its second plant in Gujarat, which will triple its exports. Japan’s Nissan Motor Co. Ltd also had higher percentage of exports in overall volume during 2014-15.

Industry experts mentioned that auto industry contributes to more than 40% of India’s manufacturing sector. With Prime Minister Modi inviting other automotive players to build their manufacturing facilities in India, auto industry and overall manufacturing sector in India is likely to get boosted.