Being a model targeted at the luxury segment, Lancer is not expected togenerate any significant volumes in the SAARC region. HML has just exportedtwo cars to Sri Lanka, and Bangladesh is another country where some exportsmay take place.

HML has sought clearance from its Japanese partner to permit it to exportLancer to south-east Asia and African countries. Mitsubishi's response isawaited, according to Mr G Shyam Sundar, vice-president, HML. Currently,Mitsubishi services these markets through direct exports, as it does nothave a manufacturing facility in these regions.

The production base at Chennai would be an ideal alternative due to theproximity factor, but it is not clear if Mitsubishi Motors would, in fact,allow HML to do so, as the former has no equity stake in the Indianventure.

Mitsubishi Motors has, however, allowed HML to export Lancer to Brunei, therich oil kingdom. Significant volumes are expected from this market and HMLwill be exporting only diesel models, as these are not being made in theneighbouring facilities in the region.

Hindustan Motors' scope for exports is very much limited, on account of thefact that Mitsubishi has manufacturing bases across the Asian region. It hasfacilities in the Philipines, Thailand, Malaysia (with Proton) apart fromJapan, and each base would be fighting for a share in the export pie.

Export is important for HML, as the capacity utilisation of the facility inChennai is just 50 per cent. Lancer, being a premium model, is unlikely tosee a significant increase in volumes. Hindustan Motors is looking for thesecond model from Mitsubishi's stable, but higher Lancer volumes will enableit to benefit from economies of scale.

Lancer prices to go up
Chennai, Dec 5: A price increase for Lancer models is on the cards. HMLis in the process of working out the quantum of increase, and all that thecompany officials are willing to say is that the hike is `imminent'. Severecost pressure on account of weakening of the rupee vis-a-vis the dollar,compounded further by the adverse yen-dollar equation has shrunk the marginsfor HML rather sharply. In addition, the hike in diesel and other inputcosts domestically have also hurt the bottomline. HML is in talks withMitsubishi Motors on reworking the price of the Lancer CKD kits and iscertain that it will be revised upwards.