Experts believe that there may be a slight recession in the export of auto parts i.e. vehicle parts from India. The reason for this is to impose 25 % fee of US President Donald Trump, which can increase the prices of cars for buyers by 8 to 25 percent. As a result, demand will be affected.
In its order of 26 March, the Trump administration imposed 25 per cent tariffs under Section 232 on automobiles, auto parts and steel and aluminum products. However, a detailed list of vehicles affected by 25 percent import duty is awaited. But internal sources in the industry said that a balanced solution can be removed from bilateral talks.
On the other hand, global vehicle heads believe that a possible free trade agreement can create a better situation for both Indian and international companies due to Trump tariff. The US imported about 80 million cars in 2024 with a business price of around $ 240 billion. According to the financial services firm Vedbash Securities, the US cars have about 40 per cent imported parts. According to a recent estimate of the Consultancy Anderson Economic Group, which works for major vehicle manufacturers, the move could increase the price per car prices per car prices by $ 4,000 to $ 12,500.
According to the Global Trade Research Initiative, India’s passenger car exports to the US in 2024 were $ 89 million, which is just 0.13 per cent of the total car export of $ 6.98 billion. It was about 3 percent for commercial vehicles.
BMW India President Vikram Pava said, “We have always said that free trade is something that we support.” I think any type of free trade agreement always helps to create a better situation for all. This helps in arrival of new technologies and access to other countries. The German giant currently imports 5 % of its car sales in India.
Institute Equity analyst at the Ashika Group, Sanket Keluskar said it is likely to have an indirect effect on Tata Motors as the group company Jaguar Land Rover (JLR) had 32 per cent sales quantity in the US (in 9 months of FY 2025). He said that luxury car manufacturer may have to resort to measures to increase prices or cost cuts to keep margin. Another Indian OEM Royal Enfield, which has a lot of business in the US market, is an 8 per cent share in the middle motorcycle market in the US. The firm’s super metiore 650 ($ 7,999) is still cheaper than the Harley-Davidson Iron 883 ($ 9,999) that gives relief in the price. But tariffs may slow down export growth to the US.
On the other hand, India’s vehicle to the US is a third of the total industry exports, which is $ 21.2 billion. But India accounts for only 2 per cent of the total American imports of the vehicles, Mexico (39 per cent), Canada (13 per cent) and China (12 per cent).
The Automotive Component Manufacturers Association of India (Ekma) has hoped that the ongoing bilateral dialogue between India and the US will lead to a balanced solution that would benefit both economies. Shraddha Suri Marwah, President of Ekma and Chairman and Managing Director of Subros Limited, said, we believe that strong trade relations between India and the US, especially in the vehicle Palpiza region, will encourage continuous talks to reduce the impact of these measures. Ekma is ready to negotiate with all stakeholders to ensure the long -term interests of the Indian vehicle Palpaza industry.
Keluskar said, the vehicle may have a tariff from May 3. But this has not been confirmed yet. If the tariff is imposed, it may affect major Indian suppliers like enrichment mother -in -law, gold BLW and Bharat Forge. The wages in the manufacturing sector in the US are about 10 times higher than India, making it difficult to fully move production. Therefore, there is a possibility of amendment in tariffs.
DR Choksi Research Managing Director Deven Choksi said that JLR will not directly affect Tata Motors as it has transferred 80 per cent stake in JLR to Tata AutoMP Systems Limited (TACO), a subsidiary of Tata Sons. However, JLR still remains in the Ecosystem of the Tata Group. But it is no longer a subsidiary of Tata Motors.
He said, “This transfer seems part of Tata Motors’ strength of streamlining its operations, adapting its auxiliary structure and focusing on the main automotive manufacturing and innovation, especially when JLR is working on its’ remazine ‘strategy towards electrification and leadership in the luxury market.” For Tata Motors, the step reduces the direct risk in the operation of JLR, which contributed about Rs 3,182 crore to its revenue in the last financial year, about 0.98 per cent of the joint revenue of Tata Motors.
First Published – April 3, 2025 | 11:44 pm IST
Related post
-
-
-
-
