From Mexico City to Pretoria, India’s car exports are running into turbulence

The latest move, if it takes effect, will hurt India’s largest carmaker Maruti Suzuki India Ltd, and Hyundai Motor India Ltd—For Maruti, South Africa is the largest export market, while for Hyundai, it is among the top five. Maruti shares fell 2.39% on the BSE on Wednesday and Hyundai shares fell 0.61%, while the benchmark Sensex rose 0.60%.

South Africa’s Department of Trade, Industry and Competition is reviewing its automobile industry policy, officials informed lawmakers on Tuesday. One of the measures is raising the 25% import duty on cars to 50%, the ceiling set by the World Trade Organization for passenger vehicle imports.

Commerce ministry data showed that Indian automakers exported $1.2 billion worth of passenger vehicles to South Africa in fiscal year 2025 (FY25), a growth of 26% from the previous year. Between April and November this year, exports have crossed $1 billion, an increase of 30%.

Mexico was close behind: India exported $938 million worth of passenger vehicles to Mexico during the year. However, that performance has come under a cloud, with the Mexican Parliament raising tariffs from 15-20% to 50% on 11 December. The new tariffs apply only to countries such as India and China, with which Mexico does not have a free trade agreement.

A South African official said his department’s comments highlighting WTO-permitted tariffs and current import duties were meant to inform lawmakers about the current structure and did not advocate any policy position.

“The session also highlighted that the Department of Trade, Industry and Competition is currently engaged in a review of the auto-industrial policy, where the matter of tariffs will be considered. Nothing has been decided at this stage, nor are we in the middle of any investigation,” Ayabonga Cawe, chief commissioner of International Trade Administration Commission of South Africa, said in an emailed response to a Mint query.

Vehicles sourced from China and India accounted for 53% and 22% of South Africa’s total vehicle imports, respectively, in 2024, Bloomberg reported. Vehicle shipments from China have surged 368% over the past four years, while those from India are up 135%.

Puneet Gupta, director at S&P Global Mobility, said rising global caution toward imports is creating uncertainty for carmakers. “South Africa is a major export market for India, but such signals inevitably prompt automakers to reassess their exposure and growth assumptions in the region. Although a growing domestic market provides a fallback, persistent policy ambiguity undermines confidence.”

Maruti Suzuki and Hyundai Motor India did not respond to emailed queries.

However, Rahul Bharti, senior executive officer-corporate affairs at Maruti Suzuki, told analysts during an earnings call on Wednesday that the company will assess what is on the South African government’s agenda. “The best thing is to be broad-based across a wide portfolio of countries, and we have 100 plus of them. So, we’ll try to de-risk to the maximum extent possible, but still, we are exposed to all kinds of global trade and tariff related issues,” Bharti said.

The two other large Indian automakers may be spared—Tata Motors and Mahindra and Mahindra. Both maintain a small presence in South Africa, with exports constituting less than 5% in their overall sales mix. Tata Motors sells a few hundred units through a local distributor, while Mahindra’s presence is limited to its pick-up trucks. Also, the impact on makers of automobile parts and two-wheelers may be limited, as they do not count South Africa as a large market.

The developments could slow the growth plans of Maruti and Hyundai, which expect faster sales growth overseas than at home.

According to Maruti Suzuki’s FY25 annual report, South Africa was the largest destination for its exports with dispatches of 95,597 cars. This was nearly a third of its total exports of 332,585 in FY25.

While Hyundai doesn’t report country-wise export figures, it has repeatedly acknowledged in the past that it counts South Africa as one of its top five markets, along with Mexico. In FY25, Hyundai saw 0.1% growth in exports to 163,386 units.

“HMI cars maintain a formidable position in their respective segments, in the Kingdom of Saudi Arabia, South Africa, Peru and Mexico,” the company’s FY25 annual report said.

Both companies have termed exports as a key growth pillar for FY26. In April 2025, Maruti Suzuki chairman R.C. Bhargava credited exports for the company’s resilience despite fluctuations in the domestic market.

“We are growing better because exports have been very buoyant. In the coming year, exports are expected to grow by 20%. This is going to be the main driver for our production, sales, and profits,” Bhargava had said.

Hyundai has plans to export three out of every 10 cars it makes in India by 2030. Export will be a key part of the company’s aspiration to maintain double-digit Ebitda margin in the country, according to the company’s management during investor day on 15 October. It reported an Ebitda margin of 12.94% in FY25, which was 14 basis points lower than the preceding year.