New Delhi, Feb. 10 -- India's top two-wheeler makers, Bajaj Auto Ltd, TVS Motor Company Ltd and Hero MotoCorp Ltd, say deeper localization and flexible manufacturing will help them blunt the impact of higher tariffs in Mexico, India's largest two-wheeler export market by value. Senior management at the three listed companies assured investors that exports to Mexico would not face material disruption, citing local assembly arrangements and the ability to shift production across geographies if required. Mexico imposed a tariff hike in December on imports from countries without a free trade agreement (FTA), including India. The duty on imported two-wheelers has risen to around 35%, from an earlier range of 15-20%, with the higher levies coming into effect from 1 January. In FY25, Mexico was India's largest two-wheeler export destination by value at $390 million, a year-on-year growth of 39%, accounting for 12% of the country's total $3.2 billion two-wheeler exports. However, the trend reversed in the first half of the current financial year, with exports to Mexico falling 30% to $147 million, as demand slowed even before the tariffs took effect. To mitigate tariff exposure, companies can export completely knocked down (CKD) kits, which are then assembled locally. Investment in local assembly can attract significantly lower duties-around 5% in Bajaj Auto's case-compared with tariffs on fully built imports. Industry executives say this 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 South Africa. While Mexico has already imposed duties of up to 50%, South Africa is evaluating a similar rate as it reviews its auto policy. Hero MotoCorp told analysts that its diversified manufacturing footprint and localization strategy would help offset any tariff impact. "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. 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. 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 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 KN Radhakrishnan, director and chief executive at TVS Motor, during an earnings call on 28 January. Bajaj Auto, India's largest two-wheeler exporter, 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. While doubling down on localization, companies are also banking on geographic diversification to smooth volatility in individual markets....