Iran Conflict Raises Supply Concerns For Auto Dealers; FY Sales Hit Record

India’s automobile dealers on April 6 highlighted possible supply and dispatch disruptions amid rising input costs linked to the West Asia conflict, according to a statement by the Federation of Automobile Dealers Associations (FADA). 

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FADA said the broader operating environment has been impacted by the conflict, which has led to an increase in oil and gas prices. This has raised fuel and logistics costs across the automobile supply chain. Prices of key raw materials such as aluminium, copper, and steel have also increased, affecting vehicle manufacturing costs.

Dealers Report Supply Delays And Demand Impact

According to a FADA survey, over 50% of dealers reported some level of supply or dispatch disruption linked to the ongoing conflict. Among them, 17.1% indicated significant delays of three weeks or more.

On the demand side, 36.5% of dealers stated that rising fuel prices are moderately to significantly affecting customer purchase decisions, as per FADA data.

The impact was most visible in the commercial vehicle segment, while passenger vehicle and two-wheeler dealers also reported selective delays depending on vehicle variants.

Auto Retail Sales Record Strong Growth In March

Despite supply-side concerns, India’s retail auto sales rose 25.28% YoY in March, according to FADA. Passenger vehicle sales increased 21.48% YoY, while two-wheeler sales grew 28.68% YoY. Commercial vehicle sales rose 15.12% YoY during the month.

For the full financial year, total retail auto sales increased 13.3%, as per FADA data.

Inventory Levels Decline

FADA also reported a decline in passenger vehicle inventory levels. The average inventory holding period fell to 28 days in March, compared to 52 days in March last year, marking the sixth consecutive month of decline.

The data reflects simultaneous growth in vehicle sales and emerging supply challenges linked to global developments, as reported by the industry body.

The Nifty Auto index closed 1.08% higher on April 6th at 24,350.40.