Iran War Could Hit India’s Car Production, Auto Body Says

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April 14 (Reuters) – India’s auto industry body on Tuesday flagged concerns on the possible adverse impact of the Middle East war on automotive production, input and fuel prices, and freight rates.

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Concerns Over West Asia Conflict

Shailesh Chandra, president of the Society of Indian Automobile Manufacturers (SIAM), stated that the West Asia conflict is expected to pose short-term challenges for the auto industry. The industry body highlighted that uncertainties arising from the West Asia conflict, particularly prices of crude oil and commodities, higher exchange rates, and disruptions in shipping routes, remain a significant concern for the auto sector.

Export Volumes and Supply Chain Diversification

Analysts at Antique Stock Broking noted that in the near term, the ongoing conflict may weigh on export volumes. They emphasized that the evolving situation reinforces the need for calibrated supply chains and diversification of energy inputs to mitigate potential risks.

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Domestic Market Dynamics

Entry-Level Segment Challenges

In the entry-level segment, buyer enquiries have remained strong in April so far, according to SIAM president Shailesh Chandra. However, he observed that converting these enquiries into actual sales is taking longer than usual.

Overall Car Sales Growth

Car sales by manufacturers to dealers in India, the world’s third-largest car market, rose 7.9% to 4.6 million units in the financial year 2026, industry data showed. This marks an improvement compared to the previous fiscal year’s 2% growth, largely attributed to improved consumer sentiment bolstered by tax cuts.

Tax Cuts Boosting Demand

In September 2025, India implemented significant tax reductions. Taxes on larger SUVs were slashed to 40% as an additional levy was dropped, while taxes on small cars and two-wheelers were reduced to 18% from 28%. These measures helped support demand across various segments of the market.

Two-Wheeler Sales Performance

Total domestic two-wheeler sales in the financial year 2026 rose 10.7% on-year, according to industry data. This indicates an acceleration from the 9.1% growth recorded in the previous financial year.

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