New Delhi: The ongoing West Asia conflict could pose near-term risks to India’s automobile sector, potentially impacting production costs and vehicle demand, Society of Indian Automobile Manufacturers President Shailesh Chandra said on Tuesday.
Despite the industry closing FY26 on a strong note, Chandra cautioned that rising geopolitical uncertainties may affect input costs, fuel prices, freight rates and overall supply chains. “These developments need close monitoring as they may indirectly impact demand,” he said.
Supply disruptions have already led to shortages of key inputs such as propane and ethylene, used in manufacturing processes like paint shops and heat treatment. Cost pressures are also emerging across petrochemicals and other essential commodities, while global logistics remain volatile due to rerouted shipments and longer transit times.
Although production has not yet been disrupted, Chandra described the situation as “precarious”, with delays in supply visibility and rising stress across the value chain. Automakers have so far managed by absorbing higher costs and, in some cases, using air freight to avoid disruptions.
He warned that prolonged tensions could lead to further cost escalation, which may eventually translate into vehicle price hikes. “The extent of price increases will depend on how much cost OEMs can absorb and how commodity prices move over the next four to five weeks,” he said.
Higher fuel prices could also dampen consumer demand. While inquiries remain strong, conversion rates—especially in entry-level segments—have shown early signs of slowing.
Chandra added that some companies are shifting from LPG to PNG to manage fuel risks, while labour disruptions remain limited and localised. However, he noted that a sustained rise in fuel prices could boost demand for electric
vehicles.