India’s Auto Exports To US Safe From Tariffs But Component Trade Faces Headwinds: VECV CEO

The recent 25% tariffs imposed by US President Donald Trump on automobile imports are unlikely to significantly affect India’s automobile sector, but the component trade could face challenges, according to Vinod Aggarwal, chief executive officer and managing director of Volvo Eicher Commercial Vehicles.

“We are still assessing the impact of these tariffs. As far as automobiles are concerned, there are very negligible exports of cars, trucks, or any such things to the US. Therefore, this imposition of 25% (tariffs) on automobiles, as such, will not have much impact as far as the finished products are concerned."

However, the components — on which the 25% duty has also been imposed — are going to see some impact. "We are exporting around $6 billion to $7 billion of components to the US as a country,” Aggarwal told NDTV Profit.

VECV, a joint venture between the Volvo Group and Eicher Motors, has been operational since 2008. Its portfolio includes Eicher trucks and buses, Volvo buses, and the exclusive distribution of Volvo trucks in India.

The overall impact on India might be cushioned by the fact that these tariffs are not targeted at India alone, Aggarwal pointed out. “There will be some realignments because this impact is not only on us. This impact is also on imports from China, Canada, Mexico, and all other countries. And Indian components, I think, account for a very negligible portion of the overall imports into the US,” he said.

“Since it is going to be relative and it is going to impact every other country as well, I think it can lead to renegotiations of prices, and there may be some impact due to the bilateral trade agreement currently under discussion. So let’s see how it pans out in the next one or two months,” he added.

Broader impact on India’s economy could be limited due to its strong domestic fundamentals. “My assessment is, of course, it will have some impact, but it will not have a very large impact because we are also largely dependent on our large domestic consumption,” the top executive mentioned.

Looking back at the performance of the commercial vehicle industry in FY25, Aggarwal said it was in line with expectations, with marginal growth overall. “If you break down this growth, it is largely dependent on the growth of 16% in buses. The bus market has grown significantly. It is now 95,000 for the three-and-a-half ton and above category, against 82,000 last year,” he said.

In contrast, sales of heavy-duty trucks dropped 3% to 4%, with volumes down to about 2,46,000–2,47,000 units from 2,56,000 in the previous year. Light and medium-duty truck sales also declined by around 3%, falling to 1,04,000–1,05,000 units, compared to 1,11,000 earlier, he said.

Despite the decline in unit numbers, real freight movement may be higher, Aggarwal explained. “There is also migration happening towards higher tonnage trucks, so when you convert it to the payloads, the drop in numbers may not be true, because the actual payload may be a little higher than last year.”

Looking at fiscal 2026, Aggarwal expressed confidence in the continued strength of the bus segment. “We are seeing more and more growth coming from state transport undertakings because they have not replaced their fleet for so many years. Last year, for the first time, we saw good action there, and that is going to become more aggressive going forward,” he said.

There is strong and growing demand from schools and staffing segments. “More and more schools in category B and C towns are adopting proper buses for safer transportation of children. The demand from the school segment is very high,” he said.

In addition, companies returning to office-based work are contributing to rising demand in the staffing segment. “Work from home is coming down, and therefore, demand is going up. Intercity coach demand is also rising due to better infrastructure and growing comfort with road travel.”

“With demand coming from all segments—schools, staffing, intercity, and state transport undertakings—my expectation is that this bus segment will continue to remain strong,” Aggarwal concluded.