MHI Flags Fuel Risks to Auto Sector, Urges Production Optimisation Amid Iran War: Reuters Report

The Ministry of Heavy Industries (MHI) has asked automakers and component suppliers to tighten production schedules and conserve fuel, as concerns mount over potential disruptions to oil and gas supplies from the Gulf due to the ongoing Iran conflict, according to a Reuters report.

The March 25 advisory, reviewed by Reuters, signals a more cautious stance from the government as energy supply risks begin to build. Companies have been urged to reduce idle fuel consumption and, where possible, shift factory operations away from oil-based fuels towards electricity.

The ministry has also asked the industry to explore the use of recycled aluminium and alternative materials for non-critical applications, in a bid to ease pressure on raw material demand as costs begin to inch up.

The backdrop is already turning tighter. Gas supplies to industry have reportedly been cut to about 80 percent of normal levels, with priority being given to household consumption. Within the automotive ecosystem, some suppliers are beginning to feel the pinch.

As per the Reuters report, component makers supplying to OEMs such as Maruti Suzuki, Tata Motors and Mahindra & Mahindra have started reporting constraints in gas availability for running operations, even as vehicle demand remains strong.
MHI’s note makes it clear that incremental efficiency gains will be key in the near term.

“Wherever technically feasible, a transition from oil-based fuels to electricity may be considered. Further, production schedules may be optimised to minimise idle and standby fuel consumption,” the advisory said, according to Reuters.
There are also early signs of strain beyond autos.

The report notes that sectors such as brewing are already facing material shortages, underlining the broader supply-side pressure building across manufacturing.

Industry executives acknowledge the challenge, but also point to practical limits. One senior executive told Reuters that while immediate changes on the shop floor may be constrained, the larger signal is clear that the disruption could be prolonged and companies will need to plan accordingly.

For the auto industry, the message is straightforward: demand may be holding up, but managing energy and input risks is fast becoming just as critical.