Maruti Suzuki shifts focus from recession hit Europe to fast growing Africa

India largest car maker Maruti Suzuki has turned to Africa for growth in exports. This move from Maruti comes at a time when recession hit Europe is contributing lower numbers to the Indian car maker’s exports. Maruti Suzuki’s exports to Europe have fallen to 25% of its total export numbers in recent months , a far cry from the 75% figure that Europe used to deliver in terms of exports for Maruti three years ago. The big fall in Maruti’s exports to Europe has been caused by a range of factors: recession, scrapping of the car scrappage scheme and the scrapping of the GSP benefits leading to higher import duties.

2012 Maruti Alto 800 Small Car Front

2013 Maruti Alto 800 Small Car used as an illustration

Even as Europe isn’t bringing cheer for Maruti Suzuki on the exports front, Africa is. Maruti’s exports to Africa are said to be growing at a stellar 50% figure, so much so that Africa now accounts for 30% of the car maker’s exports. In the coming years, Africa is expected to emerge as Maruti Suzuki’s top export destination as the continent remains untouched by the recession that has slowed down most developed economies across the globe. Currently, Maruti Suzuki exports completely built cars such as the Maruti 800 and the Alto to African countries such as Algeria and Egypt.

This strategy is expected to continue in the near future with Maruti Suzuki officials stating that assembly facilities in Africa are not in the offing anytime soon. Maruti Suzuki exports cars to Africa with the Suzuki badge on the bonnet as Suzuki is a well known Japanese brand across the globe. Maruti Suzuki will begin construction of its Gujarat factory in the coming months. The new factory is expected to  be geared towards exports, making use of Gujarat’s well developed port facilities to export cars to the Middle East and Africa.

Another big reason for Maruti Suzuki betting big on Africa could be the dieselization of the Indian car market. The big price difference between petrol and diesel, and the inherent fuel efficiency of diesel powered engines has meant that car buyers in India are now preferring diesel engined cars. Maruti Suzuki, which is sitting on a big capacity to produce petrol engined cars, needs to find car markets that favour petrol engined cars in order to fully utilize its car making factories. Unlike India, African buyers favour petrol engined cars. Therefore, Maruti Suzuki’s exports to Africa could also have the strategic angle of selling more petrol cars.

Source MoneyControl

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