The Mexican storm about to slam India’s $2bn automobile exports
The move directly threatens nearly $2 billion in annual shipments to one of India’s most important overseas markets and risks diminishing the strong export momentum that automakers have built in Latin American countries such as Mexico, Colombia and Chile, and even African countries such as Nigeria and South Africa.
While commerce ministry data shows Indian auto accounting for $2 billion of total exports of $31.4 billion in FY25 (cars $7.2 billion, two-wheelers $3.2 billion, components $21 billion), the wave of Mexican tariffs threatens to exacerbate the headwinds hampering Indian auto.
On the one hand, the US has increased tariffs on Indian auto parts to 50%. On the other hand, Chinese automakers are rapidly expanding their presence in regions such as America and Africa; Experts predict that the Chinese will have high market shares in these regions in the near future.
In particular, the Mexican Parliament on Wednesday approved a decision to increase customs duties on automobile products by up to 50% for passenger vehicles and two-wheelers, from 15-20% previously and 0-35% previously. auto parts manufacturers. The tariff proposal was first discussed by the Mexican government in September.
Companies such as Maruti Suzuki, Hyundai, Bajaj Auto, Hero MotoCorp and TVS see the country as a major export hub. Among auto parts manufacturers, companies such as Sona Comstar and Samvardhana Motherson have a presence in the country, including a manufacturing facility.
mint A request for comment on the matter remained unanswered. But, Bajaj Auto had earlier said that it had received exemption from the Mexican government.
Rakesh Sharma, managing director of Bajaj Auto, said in its earnings call on Nov. 7 that Mexico remains the company’s largest Latin American market and noted that even though tariffs were increased to 35%, only two manufacturers, including Bajaj, were eligible for a concessional rate.
“Our tariff will be 5 percent instead of 35 percent. Moreover, since there is ministerial approval etc., our plan will continue with 5 percent, the others will increase to 35 percent,” he said.
Experts such as Ashim Sharma, senior partner and group president at Nomura Research Institute, said the export outlook for both auto parts makers and vehicle manufacturers is blurred by developments in Mexico and the US.
“But what will really matter is how the attention of these automakers will shift to some of the new opportunities that are emerging in countries like Japan and the United Kingdom (UK),” said Sharma.
It is certain that investors in the sector are not deterred by the imposition of duties, with Nifty Auto growing at 1.11% during Thursday’s trade against 0.55% growth in the benchmark Nifty index.
The winds are increasing
Except for tariffs from the US and now Mexico. The Indian industry has to contend with the rise of Chinese automakers with their increasing footprint, especially in the African and South American markets, contributing greatly to the business of Indian auto companies.
Chinese automakers are expected to have a 13% market share in the global auto market by 2030, up from 3% in 2024, according to a June 2024 report from consulting firm AlixPartners. Chinese automakers are expected to come from regions such as the Middle East, Africa, Central and South America.
Chinese automakers’ share of Central and South American markets is expected to increase from 7% in 2024 to 28% by 2030. Market share in the Middle East and Africa markets is expected to increase cumulatively from 8% in 2024 to 39% by 2030.
What does the data show?
According to trade data from the commerce ministry, India’s automobile exports to Mexico rose 7.37% year-on-year to $938 million in FY25, while two-wheeler exports rose 39% year-on-year to $390 million.
However, in the first half of this financial year (FY26), the story turned; While automobile exports to Mexico increased by 17% annually, reaching $612 million, two-wheeler exports decreased by 30% to $147 million.
As for components, auto parts manufacturers exported $193 million worth of goods in the first half of FY26, down 30% from the previous year. According to trade data from the government, auto parts exports to the country in FY25 stood at $507 million, up 20% year-on-year.
But estimates from the industry lobby put the Automotive Component Manufacturers Association (ACMA) higher, with parts exports to Mexico at $834 million in FY25 and $370 million in the first half of FY26.
In terms of companies, Bajaj Auto’s exports increased by 17% to 891,858 units during April-September, while TVS Motor Company saw a 35% increase in exports to 680,888 units during the same period. Hero saw its exports rise 54% to 176,000 units in the April-September period.
According to Society of Indian Automobile Manufacturers (Siam) data, among automobile manufacturers, Maruti Suzuki’s exports increased by 40% to 205,763 units in the April-September period, while Hyundai’s exports increased by 17% to 99,640 units.
