Sun. May 26th, 2024
Geopolitical Tensions Drag Down Two-Wheeler, Three-Wheeler, and CVs Exports In FY 24Image: Pixabay

The fiscal of 2023-24 recorded a fall in exports of two-wheelers, three-wheelers, and commercial vehicles (CVs) due to several factors, including a sluggish global economy, standoffs between Russia-Ukraine and Israel-Gaza, and the foreign exchange crisis in some key markets, the Society of Indian Automobile Manufacturers (SIAM) said on Friday.

In two-wheelers segments, exports were 3.458 million units in 2023-24, a slump of 5.3 percent year-on-year ( YoY). As for the three-wheelers, exported units stood at 18 percent YoY lower at 300,000. Commercial vehicle exports also plummeted 16.3% to 65,800 units. 

However, exports of passenger vehicles (PVs) were a tad higher in 2023-24. India exported approximately 672,000 units of PVs, up 1.4 percent year-on-year (Y-o-Y).

Wholesale passenger vehicles touched a milestone of 4.2 million units in FY24, clocking a year-on-year growth of 8.4 percent, all thanks to vigorous demand for utility vehicles.

“There are geopolitical factors behind the drop in exports. There is a war going on. The global situation is also not so good. Some countries where we are very strong in two-wheeler and commercial vehicle exports are facing foreign exchange issues. These are the main factors. However, in the January-March quarter, we have seen a good recovery in exports. Therefore, we are hopeful that the situation will improve,” Vinod Aggarwal, president of SIAM, said.

Two-wheeler exports in the last quarter witnessed a robust growth of about 30 percent.

Also Read: BMW Group India Registers Strong Sales, Delivers 3680 Cars In Q1 2024

Red Sea Crisis & Indian Exports: 

Aggarwal commented on how the Red Sea crisis impacts exports.

“As far as the Red Sea crisis is concerned, I think we have worked around that issue. The ships are taking a slightly longer route than the usual one. Based on that, the lead times have gone up by 15-20 percent. Earlier, it was eight weeks. Now, it is about 10 weeks. Lead time has gone up. And due to that, the cost would have gone up a little bit. With that, the situation has been resolved,” he said.

PV Sales Report: 

Aggarwal, on the outlook of Indian PV sales growth in 2024-25, exhibited optimism. 

He said, “We are very positive on the growth outlook based on the fundamentals. We are expecting good growth in the economy. We are hoping for a good monsoon…The growth could be in the higher single digit.”.

2024 General Elections:

On the correlation between general elections and auto sales, he said, there will be a temporal impact on auto sales because the governments shift their focus on winning the mandate of the people.

“During the election season, various projects generally slow down in their execution, because the decision makers or the government machinery is busy with the electoral process. Therefore, we are expecting there will be a huge pent-up demand after the new government is formed in the first week of June. Therefore, there would be a temporary impact. Overall, the situation will be good after the elections,” he added.

Global Trade:

As per the Global Trade Research Initiative (GTRI), an economic think tank, the Red Sea crisis will dent global trade, and its impact on trade volumes will be tangible in FY25.

The springing up of shipping and insurance costs and delayed arrival of shipments will hamper the global value chains, squeeze margins, and turn exports of low-margin products fruitless, with countries in Asia, Africa, and Europe bearing the most brunt of it. 

“With escalating daily attacks and no end in sight, the Red Sea crisis will adversely impact trade volumes in substantial ways in 2024,” the report published in March this year noted.

The Red Sea crisis started in October 2023, when Iran-backed Houthis in Yemen launched their first attack on civilian-operated cargo ships near the Yemeni coast.

Also Read: Red Sea attacks; Rubymar, a UK-owned cargo ship sinks in the Red Sea after a Houthi attack


By Harshita Sharma

I bring to you updates from business, policy and economy spectrum.

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