Cheap steel boon for Indian automakers unlikely to last

India is exploring the levy of a safeguard duty on steel imports after complaints from domestic steelmakers

- Nehal Chaliawala

Lower steel prices helped automakers trim costs and raise margins in the December quarter. However, experts said lower input costs were not sustainable, and the industry remains exposed to geopolitics, which has a bearing on steel prices. Steel accounts for about a third of the material cost for carmakers. Automakers must find more sustainable cost savings to maintain margins in the face of slowing demand growth, experts said.

"In Q3 FY25, at an aggregate level, the EBITDA margin improvement in the Indian auto sector was primarily driven by a favourable product mix, operational efficiencies, strong market demand, and lower commodity costs with government incentives," Nirav Karkera, head of research at Fisdom, a wealth management platform. "Among these, the benefits accrued on account of lower commodity costs may not be very sustainable considering upside risks to input prices," Karkera said.