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Iran war hits auto supplies, dealers brace for delivery delays
New Delhi: Auto dealers across the India are feeling the impact of ongoing Iran war as supply chain disruptions lead to delayed vehicle deliveries and tighter inventories.
Shortages of key materials, especially liquified petroleum gas (LPG) for small suppliers, are slowing production. With waiting periods stretching, customers may face longer delays for popular models across cars, two-wheelers, and commercial vehicles.
Waiting periods at the dealerships are stretching beyond usual timelines. Automakers are struggling with production challenges caused by shortages of essential materials. Industry insiders say this has brought average inventory days at dealerships down to just 27 days, compared with 30–32 days during the post Covid recovery in FY23.
At the heart of the problem is a shortage of liquified petroleum gas (LPG), which many Tier 2 and 3 suppliers rely on for metal cutting, welding, and powder coating. Several smaller component manufacturers have had to scale down operations or temporarily shut down, disrupting the supply of parts to Tier-1 companies.
These Tier-1 firms assemble components for original equipment manufacturers (OEMs) like Bajaj Auto, Tata Motors, and Mahindra & Mahindra. A Pune based Tier-2 supplier said, “There is total uncertainty around gas supply and there’s no alternative fuel. Even if supply returns, restarting production is time consuming and costly.”
A recent Federation of Automobile Dealers Association (FADA) survey highlights the disruption:
.53% of dealers reported supply or dispatch issues linked to the Iran war.
.17% of dealers faced delays of three weeks or more.
While the commercial vehicles have been affected the most, passenger vehicles and two-wheelers are also seeing selective variant-level delays.
Dealers stress that the problem is supply, not demand. Currently, inventories remain stable at 27–28 days, but there’s uncertainty if this will continue. FADA president CS Vigneshwar said, “It is a good time for customers to book a vehicle because we may not have the exact specifications they want if this continues.
Popular models like the Tata Sierra, Tata Nexon, Mahindra Scorpio N, and Maruti Suzuki Ertiga are seeing waiting periods of two to six months. After Covid the auto industry had rebuilt inventory buffers. However, strong retail sales recently have eroded these stocks.
Passenger vehicle retail sales jumped 21% year-on-year in March to over 4.4 lakh units, following a 26% rise in February. A Tier-1 supplier noted, “If the disruption continues beyond this month, it could become a major issue.”
FADA expects April sales to be steady but slightly softer than March due to seasonal factors. The Iran war’s impact on fuel prices, supply continuity and consumer sentiment will be key in the coming weeks.
For now, dealers are balancing healthy demand with supply uncertainty. If disruptions persist, waiting periods for vehicles could grow even longer, making planning and bookings more important for customers.
