Indian auto component industry to grow by 8-10% in FY23: ICRA

Revenue growth is pegged at 13-15% for 2021-22

April 1, 2022

The easing of supply-chain issues and commodity inflation in the second half of the year will help market growth

While sales from January to mid-February was relatively muted because of the Omicron wave, demand has picked up in the last few weeks

Premiumisation of vehicles and focus on localisation will result in healthy growth in the long run

Improvement in personal mobility, healthy freight movement, and delay of new vehicle purchases due to cost inflation has supported the aftermarket segment

Buoyed by the easing of supply-chain issues and commodity inflation in the second half of the year, the Indian auto component industry is expected to record a growth of 8-10% in FY23 as per rating agency ICRA. Driven by domestic original equipment manufacturing (OEM), replacement, export volumes, and pass-through of commodity prices, the industry is expected to grow at 13-15% in 2021-22. While sales from January to mid-February were relatively muted because of the Omicron wave, demand has picked up in the last few weeks.

ICRA also believes that the export growth in FY2022 would have been better if not for the semiconductor shortage. However, the premiumization of vehicles and focus on localisation will result in healthy growth for auto component suppliers in the long run.

Operating margins for auto component makers might get affected in the short term due to high raw material, fuel, and freight prices. Improvement in personal mobility, healthy freight movement, and delay of new vehicle purchases due to cost inflation has supported the aftermarket segment.