Indian automakers delay MENA exports as Strait of Hormuz tensions disrupt shipping: Report

Rerouting vessels around the southern tip of Africa would significantly increase transit times and freight costs, prompting automakers to temporarily pause cargo shipments to the region.

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Several Indian automakers have begun delaying shipments to the Middle East and North Africa (MENA) as escalating geopolitical tensions in West Asia disrupt key maritime routes and push up freight costs.Companies including Tata Motors, Maruti Suzuki India, Hyundai Motor India, and the local unit of the Volkswagen Group have deferred the dispatch of passenger and commercial vehicles to the region, people familiar with the matter told news agency Bloomberg.The move comes as the conflict involving the US and Israel against Iran entered its sixth day, creating uncertainty across major shipping corridors. Automakers are holding back shipments to avoid emergency shipping surcharges that could reach $2,000 per container, along with rising war-risk insurance premiums, as container availability tightens.Concerns for exporters
One of the biggest concerns for exporters is the situation around the Strait of Hormuz — a narrow but critical waterway that carries a large share of global energy and trade flows. Iran recently warned that vessels attempting to pass through the route could face potential attacks, making the corridor effectively unsafe for shipping.Rerouting vessels around the southern tip of Africa would significantly increase transit times and freight costs, prompting automakers to temporarily pause cargo shipments to the region.

Industry executives indicated that manufacturers can typically hold export shipments for two to three weeks before storage capacity and working capital pressures begin to build. However, prolonged disruptions could hurt export volumes, as the MENA region remains an important overseas market for Indian vehicle makers.

Two-wheeler manufacturer Bajaj Auto has already halted shipments to Gulf countries, according to a person familiar with the development. The Gulf accounts for roughly 3 per cent of the company’s exports. Shipments to parts of Africa have also been affected by container shortages and difficulties berthing vessels.

Cautious outlook ahead
Automakers have so far remained cautious in their public responses. Representatives of Hyundai Motor India, Maruti Suzuki India, Tata Motors and Bajaj Auto did not immediately respond to requests for comment, while a spokesperson for Volkswagen Group said the company is monitoring the situation and assessing potential impacts.According to Jay Kale, Executive Vice President at Elara Capital, the MENA region accounts for between 8 per cent and 40 per cent of export volumes for several Indian original equipment manufacturers (OEMs), making the disruption a potential sales risk if shipments remain delayed.

Maruti Suzuki previously stated during a media interaction on March 1 that the Middle East accounted for about 12.5 per cent of its exports in the financial year ended March 31. For Hyundai Motor India, the MENA region accounts for nearly 40 per cent of its overseas shipments, according to Kale.

The bigger concern for the industry lies in the potential rise in costs. Freight expenses, which typically account for 1–3 per cent of revenue for most automakers, are expected to increase due to longer shipping routes and higher insurance premiums.

Component suppliers may also face pressure. Tyre manufacturers, in particular, remain exposed to rising crude oil prices due to their reliance on petrochemical-based raw materials.

Investor sentiment has already reflected these concerns. The NSE Nifty Auto Index has declined about 3.9 per cent since the conflict escalated over the weekend, amid worries that prolonged disruptions could affect export volumes and profitability across the sector.