Automobile exports under stress in FY24, dip 5.5%, ET Auto

New Delhi: Overall exports remained under stress during the last financial year with sizeable drop in commercial vehicles, two-wheelers and three-wheelers, though passenger vehicles grew marginally, said Vinod Aggarwal, President, Society of Indian Automobile Manufacturers (SIAM) on Friday.“The decline is owing to the ongoing geopolitical issues including the Russia-Ukraine and Israel-Gaza conflicts and some countries where we are very strong in two wheeler and commercial vehicle exports are facing foreign exchange (forex) issues,” he told ETAuto.

However during the last quarter (January- March), a good recovery was seen in exports especially for two-wheelers, indicating better potential for the current year. We are hopeful that the situation will improve, Aggarwal added.

The biggest auto export markets from India include Latin America, Southeast Asia, Africa and the Middle East. However, some PV makers export to Europe and a few developed markets as well.

Talking about the impact of the red sea crisis, he said that the issue is currently resolved as OEMs are avoiding that route and taking an alternate longer route. Depending on where the shipment is due, the alternate route between Europe and Asia through the Cape of Good Hope takes up 10 weeks, compared to 8 weeks earlier. Owing to this, the lead time has gone up and the cost would also have gone up a little bit. With that, the situation has been resolved, Aggarwal said.

The Red Sea crisis began in mid-November 19, 2023, with the Iran-backed Houthis in Yemen attacking the commercial shipping vessel Galaxy Leader. About 12% of global trade passes through the Red Sea, including 30% of global container traffic.

For India, the Red Sea and Suez Canal area is a crucial shipping route because goods between Europe, Asia and East Africa move through them. As much as 20-25% of India’s foreign trade is routed through the Suez Canal, with key products such as crude oil, auto & auto ancillaries, chemicals, textiles and iron & steel being affected.

Top 5 Exporters in PVs

Country’s largest car exporter Maruti Suzuki ships 18 models to about 100 countries. The company’s key export markets include Africa, Latin America, Asia and the Middle East.

Hyundai Motor India ships its vehicles to over 85 markets, including left-hand drive (LHD) and right-hand drive (RHD) countries. It exports from its plant at Sriperumbudur in Tamil Nadu. The maker of Creta SUV has its biggest export market in South Africa, Kingdom of Saudi Arabia, Chile, Mexico and Peru.

Top 5 Exporters in 2Ws

Bajaj Auto shipments during the year dropped almost 10% to 14.77 lakh. Africa accounts for half of Bajaj’s total exports from India. Within Africa, Nigeria takes up about half of the company’s total exports.

Credit ratings agency India Ratings and Research (Ind-Ra) recently stated that it maintains a neutral outlook for the auto sector for FY25, forecasting a moderate domestic sales volume growth rate of 6%-9% as against 12%-14% growth in the previous fiscal.