Mexico’s choice to lift tariffs on India is about to impression $1 billion automobile exports from the world’s third largest automobile market, together with these by Volkswagen Group AG and Hyundai Motor Co., regardless of the business lobbying towards such a transfer.
In a letter to India’s commerce ministry in November, the Society of Indian Vehicle Producers had urged the federal government to press Mexico to “preserve established order” on tariffs for autos shipped from India.
“The proposed tariff hike is anticipated to have a direct impression on Indian car exports to Mexico…we search Authorities of India’s assist to kindly interact with the Mexican authorities,” the business physique stated in its letter to the commerce ministry earlier than the tariff was finalised.
Reuters has seen a duplicate of the letter. It was not instantly clear what steps the carmakers, SIAM and the govenrment will take subsequent.
On Wednesday, Mexico accredited as much as 50% tariff on tons of of things from international locations it would not have commerce agreements with, together with India and China, to guard native jobs and manufacturing. The transfer additionally comes amid US strain on Mexico to curtail enterprise with China, regardless of opposition from native enterprise teams warning that increased tariffs will increase prices.
Influence of Mexico tariff on India Auto
Mexico is India’s third largest automobile export market after South Africa and Saudi Arabia The tariff hike will improve the import responsibility on vehicles to 50% from 20%, dealing a major blow to Volkswagen, Hyundai, Nissan and Maruti Suzuki, forcing them to re-evaluate technique on exports.
Carmakers in India have relied on exports to make sure manufacturing is maximised and there are economies of scale. Some additionally depend on exports to cushion slower home gross sales or enhance margins—a enterprise technique that will should be redrawn.
In conferences with authorities officers final month, carmakers stated the vast majority of shipments from India to Mexico are compact vehicles with an engine dimension of lower than one litre, that are designed for the Mexican market and never for additional export to the US, one of many sources stated.
India shipped items price $5.3 billion to Mexico in FY24, of which vehicles made up near $1 billion, in accordance with the letter and customs knowledge.
India automobile exports to Mexico
Carmakers additionally instructed authorities officers that of the 1.5 million passenger autos offered in Mexico annually, about two-thirds are imported and India’s shipments make up “nearly 6.7 %” of the whole gross sales, in accordance with sources and the letter.
Skoda Auto accounts for almost 50% of India’s complete automobile shipments to Mexico. Hyundai shipped vehicles price $200 million, Nissan’s exports stood at $140 million and Suzuki’s at $120 million, the customs knowledge confirmed.
“Indian-origin autos are usually not a menace to Mexican native business as Indian autos don’t cater to high-end segments manufactured by Mexico for serving the North American market,” SIAM stated in its letter.
India’s commerce ministry, SIAM and the Mexican authorities didn’t reply to requests for remark. Hyundai and Maruti Suzuki didn’t reply to requests for remark, whereas Nissan declined to remark.
Piyush Arora, the chief of VW’s Indian unit, stated that India has been a powerful export base for a few years and the corporate ships to greater than 40 international locations from right here. “Mexico has persistently been certainly one of our essential export markets, given the rising demand there and the traction of our India-made fashions,” Arora stated earlier than the tariffs have been accredited.
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