In order to push auto exports in major markets like Africa, the Indian automobile industry has urged the Government to consider a rupee-based payment mechanism for trading with these nations as domestic companies face a major hurdle in dollar-denominated payout. It has also approached the Government for negotiating free trade agreements (FTAs) with more Latin American countries like Chile, Peru and Colombia to boost exports.
“We have approached the Ministry of Commerce for rupee trade with African countries as we are facing a challenge in dollar trade in these big export markets like Algeria and Nigeria,” the Society of Indian Automobile Manufacturers (SIAM), Deputy Director General Sugato Sen said.
These countries cannot make payments in dollars, and that is impacting the trade with these nations. “So we have asked the Commerce Ministry to negotiate rupee trade with these countries. It is a long-term bilateral thing, and these countries also need to study it,” he added.
Of the total automobile exports of around $8.86 billion in 2015-16, Africa alone accounted for 30-35 per cent of the total overseas shipments in value terms. With issues like falling prices of crude and commodities, African countries are facing problems with dollar payments.
Countries like Algeria, Nigeria and Morocco are among the major export markets for the domestic automobile industry.
“These countries are inking FTAs with various competitors like South Korea, Japan and the US and as a result and due to the enhanced competition our position is getting eroded. So we are seeking FTAs with more countries in the continent,” Mr. Sen said.
In the past few years there has been a clear shift in automobile exports from developed regions like the EU to developing markets like Africa, Latin America and the ASEAN region.
Automobile exports from India to Latin America stood at $91 million in 2004-05. It grew to $1,044 million in 2013-14. ASEAN, Africa and Latin America are the fastest growing markets for Indian vehicles since 2004-05. However, the country’s exports to SAARC nations have been declining, which has upset the industry.
Meanwhile, passenger car sales in India declined marginally in May as some of the demand shifted from sedans to the newly-launched utility vehicles (UVs) amid continuing slowdown in rural areas impacting sales of entry-level hatchbacks.
According to the data released by SIAM, domestic passenger car sales stood at 1,58,996 units in May as against 1,60,371 units in the same month last year.
“Car sales were slightly negative last month as some of the sedan sales are getting transferred to the utility vehicle segment which saw launches of various new compact SUVs,” the SIAM Director-General, Mr. Vishnu Mathur, said.
The continued slowdown in rural markets has impacted small car sales. The passenger car segment has also been impacted by the shift from diesel to petrol cars. During last month, total passenger vehicle sales rose by 6.26 per cent to 2,31,640 units as against 2,17,984 units in the year ago period.
“The utility vehicles led by Hyundai Creta and other models like Maruti Vitara Brezza and Mahindra TUV300 and KUV100 have fuelled the growth in the overall passenger vehicle segment,” he said.
Utility vehicles grew by 35.88 per cent to 58,793 units in May as against 43,269 units in the same month of the previous year. While total two-wheeler sales rose 9.75 per cent to 15,15,556 units, motorcycle sales moved up 3.34 per cent to 9,85,158 units from 9,53,311 units a year earlier.
“Growth continues to be impacted by slowdown in rural sales. From a growth of 16.24 per cent in April, it has come down to 3.34 per cent in May,” said Mr. Mathur.
The industry is still far from its peak performance. “In none of the categories we have reached the peak levels we saw during the 2011-12 period,” he added.
In the motorcycle segment, market leader Hero MotoCorp’s sales were 5,01,009 units as against 5,09,427 units in the year-ago month, down 1.65 per cent.
Commercial vehicle sales rose 16.89 per cent to 57,089 units in May while sales of vehicles across categories registered an increase of 9.89 per cent to 18,50,764 units from 16,84,263 units last month.
– PTI Economic Service