Raw material cost hike to impact PV industry profit in March quarter: CMIE

A sharp rise in commodity prices, particularly aluminium and copper, is likely to exert pressure on the Passenger Vehicles (PV) industry’s margins and impact the profitability of PV companies during the March 2026 quarter, the Centre for Monitoring Indian Economy (CMIE) said in a report.

“However, the industry’s revenue is expected to grow at a double-digit pace backed by a steady growth in sales volumes,” it said.

Stating that the PV industry has been facing higher input costs for nearly a year now, it said the impact of this was quite evident on the industry’s margins. 

“The industry reported a sequential and year-on-year contraction in profit margins in each of the four quarters ending with the December 2025 quarter. We expect the industry to continue to report margin contraction in the March 2026 quarter,” CMIE said in the report.

Prices of commodities used in the manufacturing of vehicles have been on the rise in the year 2025. Domestic aluminium prices have been rising since May 2025 and touched record-high levels in January 2026. Prices of copper also showed a similar trend and surged to an all-time high in January 2026. Domestic prices of steel, which have been trending lower in 2025, have started to increase in January 2026.

Moreover, the increase in prices of semiconductors amidst a surge in demand from AI-led data centres also impacted the profitability of manufacturers. Components such as memory chips (DRAM) saw their prices increase by up to 300% in 2025. 

These chips are essential throughout the modern vehicle, powering Engine Control Units (ECUs) for fuel efficiency, Advanced Driver Assistance Systems (ADAS) like lane-keeping and emergency braking, infotainment touchscreens, and critical power electronics for battery management in electric vehicles.

Following the surge in input costs, several PV original equipment manufacturers (OEMs) increased their vehicle prices in 2026.

The hike in prices ranged from 0.6% to 6% across OEMs, which may not be enough to offset the rise in input costs. As a result, we expect around 50-100 basis points y-o-y contraction in the industry’s profit margins in the March 2026 quarter.