India auto dealers say Iran war to hit supplies

India’s auto dealers on Monday warned of possible supply or dispatch disruptions in the near term as the West Asia conflict drove up raw material costs, even as the fiscal year's total sales hit a record high.

The broader operating environment is clouded by the conflict, the Federation of Automobile Dealers Associations (FADA) said in a statement.

The war has pushed up oil and gas prices, raising fuel and logistics costs across the auto supply chain, while also driving up prices of key metals such as aluminium, copper and steel used in vehicle manufacturing.

Last week, India's top carmaker, Maruti Suzuki, said that it will likely raise prices as the war pushed up commodity prices.

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A FADA survey showed that more than half of the dealers experienced some form of supply or dispatch disruption linked to the ongoing conflict, with 17.1% reporting significant delays of three or more weeks.

On the fuel-price front, 36.5% of dealers reported that rising fuel prices are moderately to significantly affecting customer purchase decisions, it added.

While the impact was most pronounced in the commercial vehicle segment, passenger vehicle and two-wheeler dealers have also flagged selective delays based on different variants.

Indian retail auto sales rose 25.28% in March, the association said.

Passenger vehicle sales rose 21.48% year-over-year in March, while two-wheeler sales rose 28.68% and commercial vehicle sales rose 15.12%, closing the financial year on a strong note on sustained momentum from tax cuts that improved affordability, FADA said.

The total retail sales for the financial year rose 13.3%.

FADA also said passenger vehicle inventory, or the average time a car remained on the showroom floor, fell for a sixth consecutive month, to about 28 days in March, compared to 52 days in March last year.