India’s top two-wheeler exporters are looking to increase local assembly of their motorcycles and scooters in Mexico to blunt the impact from the country’s high tariffs on Indian exports imposed last December, and effective 1 January.
The move by Bajaj Auto Ltd, Hero MotoCorp Ltd, and TVS Motor Company Ltd comes in the backdrop of exports to Mexico — India’s biggest two-wheeler export market — having slowed 30% this fiscal even before the tariffs were announced.
Senior management at the three listed companies assured investors in earnings calls over the past couple of weeks that exports to Mexico would not face material disruption, citing local assembly arrangements and the ability to shift production across geographies if required. In other words, they may export more from other countries that attract lower tariffs in Mexico.
Currently, Bajaj Auto and Hero MotoCorp have assembly operations in place in Mexico, while TVS is gearing up to build a presence.
Tariff backdrop
On 10 December 2025, Mexico imposed a tariff hike on imports from countries with which it has no free trade agreement (FTA), including India.
The duty on imported two-wheelers — also called completely built units or CBUs — has risen to around 35%, from an earlier range of 15–20%.
However, completely knocked down (CKD) kits attract significantly lower duties, an advantage Indian companies are looking to leverage. CKD kits are stripped-down vehicles with all parts in one place, which are imported as a unit and assembled in specialised factories.
Advantage Bajaj and Hero
Bajaj Auto, India’s No. 1 two-wheeler exporter, and Hero MotoCorp, which already have assembly operations in place in Mexico, face 5% duties. Bajaj Auto’s executives said its investments in local assembly shield it from the tariff changes.
“For us, Mexico is amongst the top three markets and along with our partners there, we have put up manufacturing over there as a result of which these levies don’t apply to us,” Rakesh Sharma, executive director at Bajaj Auto, told reporters on 30 January during a post-results media call.
Meanwhile, Hero MotoCorp told analysts that its diversified manufacturing footprint and localization strategy would help offset any tariff impact. Hero works with Grupo Salinas in Mexico, which handles distribution and also operates Italika, a subsidiary with assembly facilities in the country. The company also has a manufacturing unit in Colombia, which benefits from an FTA with Mexico.
“There is no impact as we have a localization plan…Our approach has been more local for local through localization partnerships. We do have that in place in Mexico, so there is no impact,” Harshavardhana Chitale, chief executive at Hero MotoCorp, told analysts and investors on 6 February during a post-results earnings call, adding that the company doesn’t rely on exporting from one place.
Industry experts say tariffs tend to speed up localization plans in markets where volumes justify local assembly.
“It is natural that assembly will be localized as volumes increase. Tariffs just accelerate the process,” said Subhabrata Sengupta, partner at Avalon Consulting, adding that such efforts gain momentum when markets are sufficiently large.
TVS plans
TVS Motor Company is also exploring localization as it looks to expand its footprint in North America.
“We are not seeing a serious impact at this point of time because the volumes are low, and we are also trying to increase our local content. So possibly, it may take about a couple of months' time,” said K.N. Radhakrishnan, director and chief executive at TVS Motor, during an earnings call on 28 January.
Export numbers
Before slowing down this fiscal, exports to Mexico grew 39% year-on-year to $390 million in FY25, and accounted for 12% of India’s overall $3.2 billion two-wheeler exports that year, data from the commerce ministry showed.
According to data from the Society of Indian Automobile Manufacturers (Siam) for April–September, Bajaj Auto reported 17% growth in exports to 891,858 units. TVS Motor saw a 34% surge to 680,888 units, while Hero MotoCorp posted a 54% jump to 176,000 units.
Beyond Mexico
While doubling down on localization, companies are also banking on geographic diversification to smooth volatility in individual markets.
“For us who are in international business in emerging markets, we are working in markets like Argentina, Nigeria, and the Philippines. There's so many markets where there's either a ban or a devaluation so disruption is a way of life for us. Something is doing well, something is not doing. This is par for the course,” Sharma said.
What about cars?
Industry executives say the local-assembly playbook is not limited to two-wheelers. It could also gain traction among carmakers facing the prospect of sharply higher tariffs in key export markets such as Mexico and, potentially, South Africa.
Mexico’s tariff move has hit cars as well — car CBUs now attract up to 50% tariff rate from the earlier 20%. In the financial year 2025, Indian car exports to Mexico stood at $938 million, data from the commerce ministry showed. Companies like Hyundai and Maruti Suzuki count the market as one of the largest export hubs of cars manufactured in India.
South Africa, too, is evaluating a similar rate as it reviews its auto policy, according to parliamentary discussions in the country in January.