Maruti flags mounting shipping disruptions in West Asia, but exports resilient

India’s largest carmaker, Maruti Suzuki India Ltd., has flagged worsening shipping disruptions in West Asia, with even the alternative routes it has been using to export vehicles coming under strain. Yet, demand in the affected markets remains intact, prompting the carmaker to find new channels to reach customers, a senior executive said.

The challenges come even as Maruti’s exports jumped 59.3% in October, suggesting room for further growth once the conflict eases.

"The Middle East situation has actually slightly worsened. We were using an alternate route, even that alternate route has a bit of a problem," Rahul Bharti, senior executive officer for corporate affairs, said at a press conference on Sunday.

"So, this number (export growth) is despite the increased challenges in the Middle East. Imagine when the war gets over or when the conflict gets over, where would exports be," he said.

The comments mark the first comment by a senior executive of an Indian automaker on the worsening shipping scenario in West Asia and its implications for vehicle exports. The war broke out late February after a joint US and Israel operation in Iran, which has remained on the boil since, with disruptions on key trade routes such as the Strait of Hormuz.

Maruti exported 49,872 vehicles in October, up 59.3% from a year ago. The carmaker accounts for more than half of India's passenger vehicle exports.

Trade routes passing through the West Asia channels are a key gateway to Europe and North Africa which can be affected if they are disrupted. Carmakers such as Hyundai Motor India, Volkswagen and Nissan, among others, are among the major vehicle exporters from their Indian factories.

Two-wheeler manufacturers such as Bajaj Auto, TVS Motor and Hero Motocorp also export to several countries and have faced disruptions in trade routes and rising logistic costs.

Owing to logistics hurdles and rising commodity prices due to the West Asia war-led disruptions, Maruti reported a decline of 26% in its profit to ₹2,466 crore, while Hyundai Motor India also saw a 24% decline to ₹1,196 crore in the September quarter.

Maruti exports vehicles to around 120 countries in a bid to diversify its exposure. Its total shipments were also dragged by Mexico, that saw import duty raised from 20% to 50%. "The current exports that you see are despite a very steep fall in Mexico," said Bharti.

The company has been expanding its presence in the developed markets through electric vehicle (EV) exports to make up for the loss in exports in other regions. Its e-Vitara is being shipped to markets including Europe and Japan, expanding its geographical reach.

Bharti cautioned that export performance would continue to vary across markets, with some countries recording strong growth, while others see shipments decline or stop altogether.

"Exports are always a mixed bag, it is very difficult to predict. But certainly, yes, it should be positive if the conflict gets over," he said.

Ayaan Kartik is a Delhi-based journalist tracking the ever-growing world of automobiles and their components. With an experience of five years ranging from short-form news at Inshorts to longform journalism at Outlook Business magazine, he has dabbled into different storytelling formats. At Mint, he tries to regularly mix story styles, from longforms to crisp news stories. He has completed his graduation from Delhi University where he developed a liking for reading and writing about the world we live in today. Apart from automobiles, Ayaan likes to read up on geopolitics which has increasingly affected various sectors of the economy. Of all the promises journalism holds, he likes the fact that it allows a person to simply explain to readers about what is happening in the world. And what better sector than automobiles, which everyone since growing up has seen and felt connected to. Whether it is China's increasing grip on automobiles to growing affection for EVs in the country, Ayaan likes to connect his love for geopolitics and data to his stories as readers become more demanding on the types of stories they want.

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