Posted On : 23 Nov, 2021
For seeing over a couple of years of decline, India's Automotive components industry is expected to grow 10-15% in the financial year due to an increase in exports, according to Automotive Component Manufacturers Association (ACMA).
Automotive Components companies have also resumed their capital expenditure (Capex) plans with expectations of an increase in new technology vehicles sales and recovery in domestic sales, said ACMA president Sunjay Kapur to ET.
He also added, "We are expecting growth in the components industry because we don't cater only to the domestic industry but export too. We are seeing good opportunities, especially in North America, Europe, even China for that matter."
Kapur said, "Export orders are rising especially due to companies wanting to expand and diversify their sourcing base beyond China."
From its peak point of around INR 4 lakh crore in 2018-19, the automotive components industry's net turnover fell to ?3.4 lakh crore in 2020-2021. Exports account for around a third of the industry's net revenue. In the current time, Industry is facing several challenges like shortage of semiconductor chips, shortage of containers, etc. Due to the increasing cost of raw materials, the automakers are bound to increase the prices of vehicles. And high fuel prices are discouraging new vehicle buyers.
While, the components makers are bullish due to the increase in macroeconomic indicators and demand of exports, as per the ACMA president. He said, “There are headwinds. However, the positive thing is that demand is still there. The demand for passenger cars exists. Additionally, the demand for Commercial vehicles is increasing which is a positive sign."
The CAPEX cycles of Auto components makers are also backed up by the companies investing in new technologies, mainly Electric Vehicles (EVs), said Kapur. "There is a lot of investment taking place in capacity expansion and in R&D, which is very encouraging."