The automotive component industry is reworking sourcing strategies, logistics routes and production plans as geopolitical disruptions tighten supplies of energy and raw materials, raising costs and threatening exports.
Vinnie Mehta, director feneral of the Automotive Component Manufacturers Association (Acma), described the situation as a multi-headed challenge, with simultaneous pressure on energy, inputs and exports beginning to affect production. “Fuel constraints and logistics bottlenecks are tightening operations,” he said, adding that any disruption to output would hit both domestic supply and exports.
Automakers said they are closely tracking developments, particularly in West Asia, which has implications for freight costs and supply chains. Jyoti Malhotra, managing director at Volvo Car India, said the company is assessing the financial impact and will respond as the situation evolves. “We are evaluating the implications and will take a call on managing rising costs,” she said.
Large manufacturers indicated that operations remain stable for now, supported by mitigation measures. Tata Motors said it is working with suppliers and logistics partners to manage volatility and maintain continuity, while optimising production schedules. It added that fuel availability and supply-chain risks are under constant review. Mahindra said it has not lost production so far this month, with teams actively managing supply-chain risks. “The situation remains fluid, and we are watching it closely,” a spokesperson said.
Luxury carmakers are adopting a calibrated approach. Mercedes-Benz India said it will respond flexibly to market conditions, while BMW India expects limited disruption as most imports are routed through alternative sea lanes.
Rerouting Global Supply Chains
Component manufacturers are accelerating localisation and diversifying sourcing to ensure continuity of supplies to original equipment makers. Aditya Goyal, founder of Modern Automotives, said stronger domestic sourcing and inventory planning have helped reduce exposure to disruptions. “Strategic sourcing and buffers have helped offset volatility so far,” he said.
Companies are also reworking logistics. Carraro India has rerouted European imports via the Cape of Good Hope and is increasing localisation and nearshoring. Managing Director Balaji Gopalan said the company is building inventory buffers for critical inputs and working with OEMs to extend lead-time visibility.
Across the industry, firms are moving away from strict just-in-time practices towards holding higher inventory of key components, using material substitution and, where necessary, deploying air freight to avoid delays. Exporters are also adjusting delivery timelines amid longer shipping cycles and port congestion.
MSME Breaking Point
Energy shortages are adding to operational strain. Ajinkya Firodia, vice chairman and managing director at Kinetic Engineering, said the industry is facing shortages of LPG, furnace oil and lubricants, with suppliers also under cost pressure. “We are optimising processes and using outsourcing to maintain output,” he said.
The impact is more acute for MSMEs, where working capital cycles are tightening. Suryansh Jalan, chief business officer at FarEye, said uneven supplies of coal, coke and alloys are forcing stop-start production, lowering utilisation. “Cash flows are being hit from both ends,” he said.
At the cluster level, stress is visible. Around 7,500 MSMEs in the Pimpri-Chinchwad industrial belt have shut or are at risk due to gas shortages, with more than half the units affected. Sandeep Belsare, president of the Pimpri-Chinchwad Small Industries Association, said many firms are operating below capacity, with high costs constraining a shift to alternative fuels or technologies.
Rating agency Icra said indirect risks could emerge from disruptions in passenger vehicle exports, with 25–30% linked to West Asia. It added that supply-chain disruptions, energy costs, gas availability and currency volatility remain key monitorables.