Maruti Suzuki Reports Margin Pressure Due to Rising Commodity Costs Linked to AI Data Centre Growth
Maruti Suzuki India reported a decline in operating profit margins to 8.1% for Q3 FY 2026, primarily due to rising commodity costs linked to increased demand from AI infrastructure, particularly for aluminium and copper. This trend is also affecting Hyundai Motor India, which announced price hikes starting January 1 due to higher input costs. Analysts warn that the surge in AI data centers may disrupt vehicle production by prioritizing DRAM chip contracts, exacerbating supply challenges in the automotive sector.
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The artificial intelligence (AI) demand for infrastructure is impacting the automotive sector's profit margins, with Maruti Suzuki India reporting a decline in operating profit margins to 8.1% for Q3 FY 2026, down from 8.4% the previous quarter. The company attributed 60 basis points of this decline to rising commodity prices, particularly aluminium and copper, driven by competition from AI-driven demand.
Hyundai Motor India cited increased input costs leading to a price rise in its model range starting January 1. The surge in AI infrastructure is intensifying the demand for copper and aluminium, which are essential for vehicle manufacturing and electrification.
UBS analysts warned that AI data centres could disrupt vehicle production due to a shortage of dynamic random-access memory (DRAM) chips, as manufacturers prioritize AI contracts. Global electricity demand is projected to increase by nearly 50% by 2040, with significant growth anticipated in India and China.
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