The auto component industry intends to invest around $7 billion over the next five years, although there are headwinds like geo-political uncertainties, recessionary trends in Europe and the US, and high GST rates in the immediate future, Auto Component Manufacturers Association (ACMA) said on Wednesday.
However, there are also some positive factors like high estimated GDP growth for FY2024, emphasis on infrastructure development, stable international demand/ exports and new entrants in the mobility space, it said.
Also read: Steel ministry seeks to tighten import control
“Going forward, considering the festive season has gone well with significant sales across most segments of the vehicle industry, I am optimistic that the current fiscal will witness another good performance from the auto components sector,” Shradha Suri Marwah, President, ACMA, told reporters here.
Marwah, who is also the Chairman and Managing Director of Subros, said that the components industry continues to make investments for purposes of higher value-addition, technology upgradation, and localisation to stay relevant to both domestic and international customers.
H1 performance
The industry body announced the findings of its Industry Performance Review for the first half of FY2023-24 and said that the component industry’s turnover stood at ₹2.98-lakh crore ($36.1 billion) for the period April-September 2023, registering a growth of 12.6 per cent over the first half of the previous year.
“With vehicle sales across all segments, reaching pre-pandemic levels and with mitigation of supply-side issues witnessed during the pandemic such as availability of semiconductors, high input raw-material costs and non-availability of containers, the auto components sector witnessed a steady growth in both domestic and the international markets in the first-half of FY2023-24,” Marwah said.
She said the auto component sales to original equipment manufacturers (OEMs), in the domestic market grew 13.9 per cent to ₹2.54-lakh crore compared with ₹2.23-lakh crore in the first half of the previous year. Consumption of increased value-added components and the shift in market preference towards larger and more powerful vehicles continued to contribute to the increased turnover of the auto-components sector, she said.
Also read: Demand for entry level cars to dip more
Exports also grew 8.7 per cent to ₹85,870 crore (₹79,033 crore) in the first half of the current fiscal (H1 2023-24). North America accounting for 33 per cent of exports and Europe for another 33 per cent, saw an increase of 2 per cent, and 12 per cent respectively, while Asia, accounting for 24 per cent, witnessed a decline of 4 per cent.
Imports of auto components grew 9.5 per cent to ₹87,425 crore (79,815 crore) in H1 2023-24. China accounted for the highest imports with 28 per cent, followed by Germany at 12 per cent, South Korea 10 per cent and Japan 9 per cent.
In the aftermarket, it witnessed a growth of 7.5 per cent to ₹45,158 crore (₹42,007 crore) in H1 2023-24.