The West Asia conflict may strain Indian auto exports with higher freight rates and supply chain issues, says a report. While smaller suppliers face uncertainty, the overall sector is expected to see a strong demand upcycle through 2026.
West Asia Conflict's Impact on Auto Sector
The West Asia conflict may put some pressure on export volumes of the Indian automobile sector, leading to an increase in freight rates, higher commodity costs and potential supply chain disruptions due to logistical uncertainties, according to brokerage firm Antique Stock Broking.
The report says that automobile companies may head towards diversification of energy and calibrate their supply chain due to geopolitical tensions.
The ongoing war in West Asia, involving the US, Israel, and Iran, has invited "incremental uncertainty, especially for the Tier two and Tier three auto component suppliers. The situation also erupts as the companies face challenges in realigning their production process. However, the brokerage said original equipment manufacturers are facing a limited impact due to the geopolitical tensions.
Strong Demand Upcycle Forecasted
Antique broking expects a four to six quarter demand upcycle with strong industry growth sustaining throughout the calendar year 2026 before normalising during 2027 to 2028.
The Automobile sector in India has gone through structural acceleration in the second half of the financial year 2025-26, influencing trends in March to remain strong, according to brokerage.
"Apr-Aug'25 reflected a phase of affordability challenges resulting in subdued demand. Post the Sep'25 GST rationalisation, the sector has entered a sharp, broad-based recovery phase," the brokerage report said.
Domestic Wholesale Volume Growth
"Domestic wholesale volumes grew by ~8-9% YoY in FY26. In Mar'26, Tata Motors, M&M, Maruti, and Hyundai reported YoY growth of 28%, 25%, 11%, and 6%, respectively, in domestic wholesale volumes among listed entities," the brokerage said in its report.
Commercial Vehicle Segment Growth
On the commercial vehicles front, domestic volumes rose 12 to 13 per cent in FY 2025-26 over the corresponding year. In Mar'26, Volvo Eicher CV, Tata Motors, and Ashok Leyland recorded YoY growth of 14%, 18%, and 5.5%, respectively, in domestic CV volumes. (ANI)
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