West Asia War May Hit Auto Demand, Raise Vehicle Prices in India: SIAM
Within the car segment, utility vehicles continued to drive growth, rising to 31,05,025 units during the year, up 11 per cent year-on-year.
Pune: The Society of Indian Automobile Manufacturers or Siam on Tuesday flagged concerns on the possible adverse impact of the West Asia war on automotive production, input and fuel prices, and freight rates even as car sales jumped 7.9 per cent year-on-year at 46.43 lakh units in FY25-26.
Siam President Shailesh Chandra told reporters that the ongoing conflict in the Middle East is expected to pose short-term challenges for the auto industry, including affecting production and costs.
"The evolving geopolitical situation may have adverse implications for automotive production, input and commodity prices, fuel prices and freight rates, which could pose near-term challenges for the industry and may also indirectly impact the demand requirement,” he noted.
Chandra said that the supply disruptions have led to shortages of propane and ethylene, critical inputs for manufacturing operations such as paint shops and heat treatment processes.
"Pressures are emerging from shortages and cost escalation across select petrochemical and other key commodities,” he noted, adding that global logistics conditions have become more volatile, with rising shipping costs due to route diversions and longer transit times.
"So, it is a bit stressed, and we'll have to really see how things will pan out," Chandra said, adding that the industry remains "in very close touch with the government" to address the issues and assess next steps.
He said that while costs are rising, companies have so far managed supplies, with some even resorting to air freight to avoid disruptions.
"But we will have to watch how things pan out from here...If things worsen from where they are today, that is something which we can only right now closely monitor what is going to happen," Chandra added.
Within the car segment, utility vehicles continued to drive growth, rising to 31,05,025 units during the year, up 11 per cent year-on-year.
In the two-wheeler segment, scooters grew to 81,17,945 units, up 18.5 per cent y-o-y, outpacing motorcycles, which rose to 1,30,64,789 units, up 6.6 per cent y-o-y.
Looking ahead, Siam expects growth to continue across all vehicle categories in FY27, supported by strong domestic demand and macroeconomic fundamentals.
"Looking ahead, domestic demand and macroeconomic fundamentals remain robust as we step into FY27, which should aid steady growth for the industry,” Chandra said.
However, uncertainties arising from the West Asia conflict need to be closely monitored, as it may have impacts on production, commodity prices, fuel prices, freight rates and the overall economy, he noted.
