West Asia Conflict Could Impose Pressure on Indian Auto Demand, Leading to Increased Vehicle Prices: SIAM

Indian Automotive Industry Faces Near-Term Challenges Due to West Asia Conflict

The ongoing conflict in West Asia may have adverse implications for the Indian automotive industry and could pose near-term challenges, potentially impacting vehicle demand, according to Society of Indian Automobile Manufacturers (SIAM) President Shailesh Chandra. Despite the industry ending 2025-26 on a strong footing, emerging geopolitical risks could affect production and costs.

Recent uncertainties arising from the West Asia conflict need to be closely monitored. 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.

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. Global logistics conditions have become more volatile, with rising shipping costs due to route diversions and longer transit times.

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While costs are rising, companies have so far managed supplies, with some even resorting to air freight to avoid disruptions. However, if things worsen, the industry will have to closely monitor the situation and assess next steps. The SIAM President has cautioned that if the conflict prolongs, inevitable price hikes may lead to a sustained rise in fuel prices, which could also impact demand.

A sustained rise in fuel prices could also impact demand, and the SIAM President has noted that several companies have shifted from LPG to PNG and are exploring more efficient usage of gases. On labour availability, he said that while it is not a big issue as of now, there are certain pockets where labour shortages have been seen. He also noted that electric vehicle demand could see an uptick if fuel prices rise.