Auto Sector Unaffected by Iran-Israel Conflict, Exports Surge

The ongoing conflict between Iran and Israel has had minimal impact on the automobile sector’s export shipments to overseas markets, as companies have adapted by utilizing alternative routes since the Red Sea crisis, according to industry experts. Vinod Aggarwal, President of the Society of Indian Automobile Manufacturers (SIAM), noted that while the longer routes have resulted in increased lead times and transportation costs, exports have not been significantly affected, with exports of two/three-wheelers showing improvement in the last quarter.

The latest data shared by SIAM indicates a notable surge in vehicle exports across categories, rising by 22.5 percent year-on-year in the January-March quarter compared to the same period in the previous fiscal year. Aggarwal, who also serves as the MD and CEO of Volvo Eicher Commercial Vehicles (VECV), attributed the improved export performance to favorable foreign exchange conditions. Rakesh Sharma, Executive Director of Bajaj Auto, echoed similar sentiments, stating that while the Red Sea conflict has complicated logistics management for Westward shipments, exports have continued with delays and increased costs, particularly in routes via the Cape of Good Hope to Latin America. However, Sharma emphasized that the impact on per-unit costs remains manageable, especially in motorcycle shipments where multiple units are loaded into a container.

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