Tata Motors, Mahindra Confirm Indonesia Export Deal Remains Intact Amid Disruption Reports

Tata Motors and Mahindra and Mahindra Reiterate Commitment to Indonesian Export Orders

Summary

In response to recent reports of a potential suspension of their largest export orders to Indonesia, Tata Motors Ltd and Mahindra and Mahindra Ltd have issued statements denying any communication from the Indonesian government regarding a hold on the deal. The Mumbai-based companies have expressed their commitment to delivering the vehicles, with Mahindra and Mahindra stating that an advance payment for the order has already been made.

Background

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In February, Mahindra and Mahindra won its largest ever export order for 35,000 light commercial vehicles, while Tata Motors secured an order for 70,000 trucks as part of an Indonesian Federal government programme. The programme aims to establish over 80,000 community cooperatives across the archipelago nation.

Recent Developments

Contrary to reports suggesting that the deal will be put on hold, Tata Motors stated that the order and advance payment remain programme-driven, and the company intends to begin supplies soon. Mahindra and Mahindra also confirmed that it has not received any communication from Indonesia regarding the suspension of the order.

Impact on Share Prices

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Shares of both Tata Motors and Mahindra and Mahindra fell on Monday, with declines of 1.42% and 2.14%, respectively, as against a 2.2% fall in Nifty Auto.

Export Environment

The export environment for Indian automobile companies has been tightening, with steep hikes in tariffs on imports of passenger vehicles and two-wheelers in Mexico, and potential increases in import duties on passenger vehicles in South Africa. The auto ancillary sector has also faced steep tariffs in the US, one of the largest markets for exports of automobile components from India.