Similarly, the situation in the Red Sea is creating supply chain issues for German luxury carmaker Audi, impacting car deliveries to customers in India in the first quarter but recovery is expected in the coming months, according to a senior company official.
Maruti Suzuki may see some increase in costs due to the rerouting of vessels amid the ongoing Red Sea crisis, according to a senior company official.
The auto major, which exported around 2.7 lakh cars last calendar year, however, noted that it does not expect the issue to have a very big impact on the company’s overseas shipments.
“We are seeing some logistical challenges because of the Red Sea issue. And there may be some increase in costs because of risk or because of rerouting of vessels but it should not be significant,” MSI Executive Officer (Corporate Affairs) Rahul Bharti said in an analyst call.
Similarly, the situation in the Red Sea is creating supply chain issues for German luxury carmaker Audi, impacting car deliveries to customers in India in the first quarter but recovery is expected in the coming months, according to Audi India Head Balbir Singh Dhillon.
“We are also challenged from time to time by various factors. Very recently because of the Red Sea situation there is a supply chain constraint that we’re facing in the quarter one of 2024. It is challenging for us in the first quarter but we expect to recover in the coming months,” he said.
The lead time of Maruti’s dispatches might change, and there may be some uncertainty in vessels coming and picking up their consignments, among others, he noted. That is a small issue, which is quite common in the export business, Bharti said.
Red Sea strait is crucial for 30 per cent of global container traffic and 12 per cent of global trade. About 80 per cent of India’s merchandise trade with Europe passes through this route. The situation around the Bab-el-Mandeb Strait, a crucial shipping route for traders connecting the Red Sea and the Mediterranean Sea to the Indian Ocean, has escalated due to attacks by Yemen-based Houthi militants since December 2023.
Because of this, the shipping costs have jumped, and the consignments are taking more time to reach Europe and the US, as the ships are taking the Cape of Good Hope route, encircling Africa. Maruti Suzuki has set an aim to export at least 7.5 lakh units by the end of this decade, Bharti said.
Africa is turning out to be a good market, and for several reasons, the Middle East region has picked up quite well recently, he noted. The government is also signing some FTAs, where the company might get some relief in duty, Bharti said.
He noted that the automaker is also gearing up to commence production of battery electric vehicles (BEV) this year.
With electrification on its primary agenda, the company is also evaluating the possibility of assembling electric cars in India, said Dhillon.
Dhillon was responding to a query on outlook and challenges in 2024. Deliveries to customers for certain models at present have been delayed by a few weeks, he noted. Container vessels have been facing attacks in the Red Sea, one of the most important trade routes in the world, since November last year following Israel’s war against Hamas. When asked about the traction of electric vehicles in India, Dhillon said,”
As of now, it is at a very nascent stage but this is like a marathon, we have to run for a long period of time.” Penetration of EVs in the luxury space is about 6-7 per cent, he said, adding “our penetration is 3 per cent but most of our products in the luxury space in electric cars is over Rs 1.2 crore today.
” Going forward, Audi globally is going to launch many new products and some of them will also make it to India, Dhillon added. On plans for locally assembling EVs, he said,
“We’re also evaluating at some point in time we need to assemble these cars also in India. It is not decided yet when and how but I think more information will come in the future but we are moving towards that plan. We are very clear that the future for us is petrol and electric…”
At present, Audi’s EV portfolio comprises the Q8 50 e-tron, Q8 55 e-tron, Q8 Sportback 50 e-tron, Q8 Sportback 55 e-tron, e-tron GT, and RS e-tron GT.