Auto industry faces margin pressure as West Asia conflict pushes up raw material prices

are facing renewed as the pushes up prices of , with higher expected to squeeze margins and weigh on demand in the coming quarters, according to the latest data from the (SIAM).

Steel, metals and plastics—core components in vehicle manufacturing—have seen sharp price increases since March, driven by supply disruptions and global commodity volatility linked to the ongoing geopolitical tensions.

Steel, a critical input for the auto industry, rose about 10% year-on-year to around ₹60,000 per tonne in March 2026. Stainless steel climbed 16% to over ₹2 lakh per tonne, increasing costs for body panels and structural components. The pressure was further amplified by a 31% surge in coking coal prices, a key raw material in steel production, reported TOI.

Non-ferrous metals also recorded strong gains, with aluminium and copper rising 27% and 28%, respectively.

In the plastics segment, which is widely used in interiors and other components, price increases were even steeper. Thermoplastics such as polypropylene rose as much as 34% to ₹136.2 per kg in March 2026 from ₹102 a year earlier, while polycarbonate increased 9% to ₹227 per kg, according to the industry body.

Precious metals used in emission control systems saw particularly sharp spikes in March. Platinum surged 124% to ₹6,196 per gram, rhodium rose 121% to over ₹33,000 per gram, and palladium gained 74% to ₹4,712 per gram, significantly raising the cost of emission control devices in vehicles.

Industry experts said the broad-based rise in input costs may not immediately dent demand, but prolonged pressure could eventually slow purchases across vehicle segments.

“Rising costs for metals, polymers and precious metals are squeezing carmakers. Coupled with a weakening rupee, these pressures will force price hikes to protect margins,” said Gaurav Vangaal of S&P Global Mobility.

Automakers also noted that the impact is being felt across the value chain, with steel alone accounting for 50% to 60% of total vehicle input costs.
“The pressure is very real,” an executive said.

With inputs from TOI