Archive · 2 Feb 2026
AI Data Centre Boom Squeezes Auto Sector Margins
The big growth in artificial intelligence (AI) is causing problems for car companies.
AI needs lots of materials like copper and aluminium to build data centres.
This is making these materials more expensive.
Car companies like Maruti Suzuki and Hyundai are feeling the pinch because they also need these materials to make cars.
The prices of these materials have gone up a lot, which is making it harder for car companies to make money.
They are having to deal with higher costs and might even face shortages of important parts like memory chips.
This is all because of the huge demand from AI data centres.
Maruti Suzuki's operating profit margins declined to 8.1% in Q3 FY2026 due to rising commodity prices, with 60 basis points attributed to adverse movements in PGMs, aluminium, and copper.
Hyundai Motor India cited rising input costs, including precious metals and other commodities, as the reason for a minor price increase across its model range from January 1, 2026.
AI data centres are driving up demand for copper and aluminium, leading to record high prices in India (Rs 361.25 per kg for aluminium and Rs 1,480.3 per kg for copper).
The surge in AI infrastructure is causing a potential bottleneck in DRAM chips, which could disrupt vehicle production as early as Q2 2026, similar to the chip shortage during the Covid-19 pandemic.
Global electricity demand is projected to increase by nearly 50% by 2040, with significant growth in the US, China, and India, further driving demand for copper and aluminium.
- Who
- Maruti Suzuki India, Hyundai Motor India Ltd, AI data centre operators, global commodity markets
- What
- Rising commodity prices due to AI infrastructure demand impacting auto sector margins
- When
- Third quarter of fiscal year 2026, January 2026
- Where
- India, Global
- Why
- Increased demand for copper and aluminium in AI data centres, higher costs of precious metals and other commodities
- Companies Affected
- Maruti Suzuki India, Hyundai Motor India Ltd
- Commodities Impacted
- Aluminium, Copper, Platinum Group Metals (PGMs)
- Price Increases
- Aluminium: Rs 361.25 per kg, Copper: Rs 1,480.3 per kg
- Operating Profit Margins (Maruti Suzuki)
- 8.1% (Q3 FY2026) down from 8.4% (Previous Quarter)
- Margin Compression
- 60 basis points due to commodity price movements
- AI Infrastructure Impact
- Increased demand for copper and aluminium in data centres
- DRAM Chip Supply
- Potential disruption in vehicle production by Q2 2026
- Global Electricity Demand Growth
- Nearly 50% increase by 2040 (S&P Global)