Auto component industry to invest US$ 7 billion over next five years

The investment will be utilised for capacity expansion and technological upgrades, anticipating sustained strong demand during this period

December 21, 2023

In the first half (April-September) of the current fiscal, the industry achieved a 12.6% year-on-year revenue growth

The industry is proactively investing in higher value-addition, technology upgrades, and localisation

The investment is a significant increase from the US$ 3.5-4 billion spent in the preceding five years

The auto component industry achieved a 12.6% growth, generating a turnover of Rs 2.98 trillion (US$ 36.1 billion) in the first half of FY 2023-24

The automotive component industry is gearing up to invest approximately US$ 6.5 to 7 billion in the next five years for capacity expansion and technological upgrades, anticipating sustained strong demand during this period, according to the Automotive Component Manufacturers Association of India (ACMA).

The investment significantly increased from the US$ 3.5-4 billion spent in the preceding five years. Encouraged by robust sales across various vehicle segments during the festive season, they expressed optimism about another strong performance from the auto components sector in the current fiscal year.

In the first half (April-September) of the current fiscal, the industry achieved a remarkable 12.6% year-on-year revenue growth, amounting to INR 2.98 trillion. Foreseeing continued double-digit sales growth in the remainder of the current fiscal year and the upcoming financial year, the industry is proactively investing in higher value-addition, technology upgrades, and localisation to cater to domestic and international customers.

The industry experienced steady growth in domestic and international markets during the first half of FY2023-24, with vehicle sales reaching pre-pandemic levels and supply-side challenges like semiconductor availability, high raw-material costs, and container shortages mitigated.

The experts highlighted that the auto component industry achieved a 12.6% growth, generating a turnover of Rs 2.98 trillion (US$ 36.1 billion) in the first half of FY 2023-24. Component supplies to Original Equipment Manufacturers (OEM), exports, and the aftermarket remained robust, with a 2.7% growth in exports to US$  10.4 billion and a 3.6% growth in imports to US$ 10.6 billion.

Efforts to reduce imports and focus on localisation, supported by the government, are underway, with Asia, led by China, being the largest importing region. North America and Europe are key export markets, each accounting for 33% in April-September.

They noted a 13.9% year-on-year growth in component sales to OEMs in the domestic market, reaching INR 2.54 trillion in the first half. The aftermarket also saw a 7.5% year-on-year growth, estimated at INR 45,158 crore.

The electric vehicle (EV) segment is on the rise, contributing to increased revenue from EV component sales in the first half of the fiscal year compared to last year. ACMA, representing over 875 manufacturers, plays a significant role, contributing over 90% of the auto component industry’s turnover in the organised sector.

Source: Economic Times

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