As financial headwinds are buffeting economies throughout the globe, India’s two-wheeler and three-wheeler exports are skidding.India, one of many greatest two-wheeler exporters globally, noticed exports fall to 34.06 lakh models in April 2022-February 2023 from 40.9 lakh in April 2021-February 2022, a 16% drop, in response to the Society of Indian Automobile Manufacturers (SIAM). In the case of three-wheelers, exports fell to three.46 lakh models in April 2022-February 2023 from 4.61 lakh models in April 2021-February 2022, a 24% decline.

The motive is the financial crises in a few of India’s greatest export markets for these automobiles. “The higher level of inflation is impacting consumption patterns in these countries, which has led to a pause in the demand of products such as two- and three-wheelers. Moreover, currency devaluation and falling affordability have led to postponement of purchases,” says Mitul Shah, head of analysis, Reliance Securities.

For most car firms, their abroad market footprint is in rising and growing economies. India’s high markets for two-wheeler exports are Columbia, Nigeria, Philippines, Mexico and Nepal, whereas Nigeria, Somalia, UAE, Iraq and Mexico are among the many high locations for three-wheeler exports. Some of those nations are reeling from financial crises. If double-digit inflation, now spiralling previous 20%, hit the Nigerian financial system after the Covid-19 pandemic, demonetisation of the naira forex has dealt a physique blow to it. Nepal had imposed a 10-month ban on imports, which in flip hit India’s auto exports. Ethiopia is in the course of a drought and a brutal civil battle, battling inflation of over 30% and dealing with overseas change shortages whereas Bangladesh has seen a depreciation of taka and a precipitation of financial woes.
Demand has turn out to be muted in these nations as imports have turn out to be costlier due to a weaker forex. Adding to that could be a scarcity of {dollars}, which has dragged down India’s exports from the file highs two- and three-wheeler exports scaled in 2021.

“Exports account for almost 50% of the two-wheeler and three-wheeler sales of Bajaj Auto, which exports to over 90 countries,” says Rakesh Sharma, ED, Bajaj Auto. “While customers are adjusting to new and higher prices, availability of US dollars is still restricted for trading in many of these markets. It might take three-four months for some kind of equilibrium to be reached.”

Chennai-based T VS Motor Company recorded 7.54 lakh models of two-wheeler exports within the 9 months ending December 2022, a fall of seven% y-o-y. Says Rahul Nayak, vice-president, worldwide enterprise, TVS Motor Company: “Despite this short-term degrowth, we remain optimistic about the long-term potential of these markets and are confident that normalcy will return in the coming months.” In January, two-wheeler exports of the corporate fell by 44% y-o-y to 48,239 models.
Vinod Aggarwal, president of SIAM, says some overseas banks are placing restrictions like a 100% money margin for opening letters of credit score (LoC) for auto imports, which is affecting India’s exports.

Atsushi Ogata, MD of Honda Motorcycle & Scooter India (HMSI), says whereas there was a major decline in its exports previously six-eight months when cargo to nations like Bangladesh and Nepal dropped by virtually 8-10% every, the corporate might tide over the disaster due to its stronghold within the Latin American market, the place the Navi is the best-selling mannequin, adopted by Dio and XBlade. So it exported 332,304 models in FY22 in contrast with 2,09,789 models in FY21. HMSI exports 18 fashions to months, some sort of normalcy will prevail. We have management positions in markets like Nigeria. We have been fast to pare our shares however we stay engaged with clients. When these markets return to normalcy, we count on to wrest a higher share of the restoration,” says Sharma.

TVS Motor exports merchandise such because the HLX bike, the Apache collection of bikes and the TVS King three-wheeler to 80 nations. And Africa is its greatest export market.

Both Bajaj Auto and TVS Motor have captured the two-wheeler market share in Africa over the previous few years on the expense of Chinese firms, say consultants. Now many main markets in Africa are limiting the imports of automobiles and are focusing as an alternative on the import of important objects though the demand for automobiles exists, says Rajesh Menon, director-general, SIAM.

Many two-wheeler firms are being compelled to transform export methods and enter newer markets reminiscent of New Zealand, Australia, Columbia and the Philippines.

TVS Motors can also be exploring new alternatives and avenues for development. “We believe that our strong focus on innovation, technology and quality will help us navigate through these challenges,” says Nayak.

Meanwhile, passenger automobiles are unaffected. In fact, their exports had been 6.93 lakh models in April 2022-February 2023, a development of 14% over April 2021-February 2022. Passenger car exports, consultants say, are usually not impacted as their markets are extra extensively dispersed and as they’ve a unique buyer profile.

Arun Malhotra, a Delhi-based automotive marketing consultant, presents a method out of the disaster for two-wheeler firms. “The main motorcycle market will continue to perform poorly in many countries because of the economic crises there. However, the premium motorcycle segment is less impacted by that. The Indian two-wheeler companies need to focus on the upper end of the market,” he says.

SIA M is within the means of figuring out just a few markets to broaden the footprint of car exports from India. It has began participating with key stakeholders in these markets, together with the respective Indian missions and related authorities departments.

Given t he macroeconomic uncertainties in just a few markets, firms have lowered shares with distributors. However, enterprise rides on hope. The auto firms are optimistic that they’ll quickly wheel out automobiles for export.