Red Sea crisis will hit car deliveries in Q4, says Audi

AUDI INDIA HAS become one of the first carmakers to have been impacted by the Red Sea crisis. Balbir Singh Dhillon, head of Audi India, told FE car deliveries in the January-March 2024 quarter are likely to be delayed as there has been an average of two-week increase in shipping time of car parts from the Americas and Europe to India.

- VIKRAM CHAUDHARY

Audi India assembles most of its models at its Aurangabad plant in Maharashtra, and Dhillon said that even if a single part in a car is missing, it can't be sold.

According to news reports, persistent attacks by Iran-backed Houthi rebels - who control large parts of Yemen - on cargo ships transiting through the Red Sea are having an impact on Indian maritime trade and commerce. In fact, navies from 10 countries, including India, have come together to address security challenges in southern Red Sea.

"The alternative route from Europe and the Americas to India is via the Cape of Good Hope through the south of Africa, and that substantially increases transportation costs," Dhillon said. "However, as of now, we will absorb any increase in costs, and there will be no impact on customers," he added.

Industry reports say there is already over 30% increase in freight rates due to the Red Sea crisis.

"We've just come out of the semiconductor shortage crisis, and now this has happened," Dhillon said.