Automakers Review Shipments to Gulf as Geopolitical Risks Rise

Escalating geopolitical tensions in Asia are starting to affect India’s automobile export supply chains, with several carmakers reassessing shipments bound for the Middle East and North Africa (MENA) region.

People familiar with the matter told Fortune India that multiple automakers are reviewing shipment schedules for passenger and commercial vehicles headed to the region as geopolitical uncertainty intensifies.

Manufacturers with export exposure to Middle Eastern markets include Maruti Suzuki, Hyundai, Mahindra, Nissan, Renault, Toyota, Skoda Auto Volkswagen India and Kia, among others.

The concerns stem from rising hostilities involving Iran, Israel and the United States. These developments have heightened security worries around the Strait of Hormuz, a critical maritime corridor linking the Persian Gulf with the Arabian Sea and one of the world’s most important routes for energy supplies and global trade.

Vehicle exports have become a major growth driver for India’s automotive industry in recent years. Data show that the country exported around 7.7 lakh passenger vehicles in FY25, the highest on record. Total automobile exports, including two-wheelers, commercial vehicles and three-wheelers, crossed 5.3 million units during the fiscal year.

Vehicles manufactured in India are now exported to more than 100 markets worldwide. Major destinations include South Africa, Saudi Arabia, Mexico, Japan and the United Arab Emirates. The Middle East remains a crucial region, accounting for roughly a quarter of India’s passenger vehicle export value in calendar year 2025.

Industry observers note that automakers can temporarily delay export shipments, typically for two to three weeks, before operational challenges begin to emerge. Storage limitations and working capital cycles could eventually create pressure if disruptions persist longer.

Exposure levels differ significantly among automakers. Industry estimates suggest that nearly half of Hyundai Motor India’s exports from the country are shipped to Gulf markets, making it among the most exposed manufacturers. Japanese automakers also depend heavily on the region, with a significant portion of Toyota’s exports from India headed to Middle Eastern markets. Meanwhile, more than one-third of Nissan Motor India’s export shipments by value are directed to the region.

Apart from possible shipment delays, rising logistics costs are emerging as another concern for automakers. If shipping routes are altered or insurers increase risk premiums for vessels operating in the region, freight expenses could climb sharply.

Typically, logistics costs account for around 1-3% of revenue for the automobile sector. However, this share could rise if vessels are forced to reroute or adjust schedules due to security risks in Gulf waters.

Indian manufacturers largely export affordable hatchbacks, compact sedans and compact SUVs to these markets, benefiting from the country’s cost-competitive manufacturing base. But, prolonged geopolitical tensions could increase freight and insurance costs while also delaying shipments through crucial maritime routes. If the conflict continues, it could weigh on export volumes and profitability for Indian automakers.

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