What should be said upon seeing something owned by a non-Muslim (such as a car or a child) that impresses the observer, in order to avoid envy, knowing that it is not permissible to supplicate for a non-Muslim except for their guidance?

It is permissible for a believer to say "Masha Allah, la quwwata illa billah" (What Allah wills, there is no power except with Allah) upon seeing the blessings of disbelievers, as a protection against the evil eye, citing the noble verse: "And if only when you entered your garden, you had said, 'Masha Allah, la quwwata illa billah'" (Qur'an 18:39). Sheikh al-Islam Ibn Taymiyyah also mentioned that this should be said by whoever fears the evil eye on something.

It is permissible to pray for their guidance, as the Prophet (peace be upon him) prayed for the guidance of Daws and Thaqif. He used to say to the Jews when they sneezed, "May Allah guide you and set your affairs aright." However, praying for their mercy and forgiveness is not permissible, due to His Almighty's saying: "It is not for the Prophet and those who have believed to ask forgiveness for the polytheists, even if they were relatives, after it has become clear to them that they are companions of the Hellfire" (Qur'an 9:113).