The effect of increasing tension between Iran-Israel-America is now directly visible on India’s automobile sector. The rise in crude oil prices, increase in shipping costs and pressure on the supply chain have increased the costs of companies. The first and biggest impact of the war has been on the raw materials for making vehicles. The price of every part of the vehicle like steel, aluminium, rubber, plastic, paint and chemical is increasing.

The world’s oil benchmark Brent crude has reached close to $110 to $120 per barrel. The price of paints and chemicals made from petrochemicals increases first and fastest because they are directly linked to crude. Understand it like this that now every part of the vehicle is becoming expensive and this inflation is reaching the companies.

Pressure on companies to increase prices or reduce margins?

Brokerage firm Elara Securities has said in the report that the Indian auto sector is under pressure from two sides. On one hand, there is the direct loss of stoppage of exports to the Middle East and on the other hand, there is the pressure of expensive raw materials, increased freight rates and broken supply chain. It is also affecting those companies which have less direct business with the Middle East.

• Tata Motors has increased the prices of petrol-diesel-CNG vehicles by an average of 0.5% from April 1, 2026 and up to 1.5% on commercial vehicles.
• JSW MG Motor has increased prices by 2% across the entire range.
• BMW and Mercedes-Benz have also increased by 2%.
• Kia India has also indicated cost increase.

Maruti Suzuki and Mahindra & Mahindra are not increasing the prices at present, but both the companies have clearly said that if the situation continues for a long time then increasing the prices will become a compulsion.

If fuel becomes expensive then demand for EV increases

The fear and uncertainty regarding the prices of petrol and diesel due to the war has started a new trend in the market. People are buying EV considering it as a safe option, because EV running cost is low, there is no risk of fuel price and there is government support too. EV sales across the country increased by more than 25% in February 2026. Mahindra’s EV sales almost doubled.

Overall EV retail sales increased by 44%. This was India’s highest monthly EV retail record till date. Tata Motors and Mahindra are getting the most benefit from this entire change.

Shipping and supply chain is a big hidden danger!

After the near-closure of the Strait of Hormuz, the world’s largest shipping companies have abandoned that route. Due to this, freight has increased, delivery has been delayed and import of parts has become expensive.

According to Elara Securities, for most Indian auto companies, freight cost is 1% to 3% of total revenue. This figure seems small, but in a sector like auto where margins are already very thin, it directly hurts profits. Its impact is not only on big car companies but on the entire auto component sector.

Tire and chemical sectors were hit the hardest

Among tire companies, the auto auxiliary sector is under the most pressure. Raw materials related to rubber and crude are becoming increasingly expensive, but tire companies cannot increase their prices immediately, because their big customers are OEM companies themselves.

The result is that the maximum squeezing of margins is taking place here. Nifty Auto fell 2.6% as news of natural gas shortage in March 2026 arrived. Shares of Bharat Forge, TVS Motor and Tata Motors fell more than 3%.

What next? Now the whole game will depend on war

Constraints in oil and gas supply and rising interest rates can affect the earnings of the auto sector. Experts say that if the war continues for 3 to 6 more months, the situation will become more difficult. The prices of vehicles will increase further, the profits of companies will decrease and the trend towards EV will increase further.

The auto sector is still under pressure. Costs are rising and demand is uncertain. Companies are avoiding increasing prices as much as possible, but the market is slowly changing from petrol-diesel vehicles to EVs. This change will gain momentum the longer the war continues.