The Indian automotive industry is expected to reach USD 300 billion by 2026; two-wheelers and passenger cars dominate the industry, accounting for 76 percent and 17.4 percent.
Mar 15, 2024
Future looks promising for the Indian auto component industry, which is looking at an investment of around USD 6.5 to 7 billion over the next five years on capacity expansion and technology upgradation as compared to USD 3.5-4 billion spent in the last five years.
Considering the festive season has gone well with significant sales across most segments of the vehicle industry, the current fiscal year will witness another good performance from the auto components sector.
The facts come straight from Ms. Shradha Suri Marwah, President of the Automotive Component Manufacturers Association of India (ACMA). She says the components industry continues to make investments for the purposes of higher value-addition, technology upgradation, and localisation to stay relevant to both domestic and international customers.
As the vehicle sales across all segments reach pre-pandemic levels, coupled with the 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 FY 2023-24, adds the ACMA chief.
As per experts, the automotive industry of the country, which currently stands at USD 222 billion, is set to become an estimated USD 300 billion industry by 2026. Besides, the automotive sector of the country is set to reach the global number three position by 2030. The industry is dominated by two-wheelers and passenger cars, which account for 76 percent and 17.4 percent of the market share, respectively. In the car segment, small and mid-sized cars lead the passenger car sales.
Riding high on steady demand, the industry registered a 12.6 percent year-on-year revenue growth in the first half (April-September) of the current fiscal at Rs 2.98 lakh crore. It is estimated to continue the double-digit sales growth in the rest of the current fiscal and in the upcoming financial year as well. This was revealed by Mr. Vinnie Mehta, Director General of ACMA.
He said the auto component supplies to all segments of the industry, including OEMs, exports as also the aftermarket remained steadfast. During the period under review, the auto component exports grew by 2.7 percent to USD 10.4 billion (Rs 85.87 lakh crore) while imports grew by 3.6 percent to USD 10.6 billion (Rs 87.42 lakh crore).
As per Mr. Mehta, Asia accounted for 63 percent of imports, with China remaining the largest importing country, followed by Europe and North America, with 27 percent and 9 percent, respectively.
The industry is making conscious efforts to reduce imports and there is enhanced focus on localisation with the active support of the government. For exports, North America and Europe remained the biggest markets accounting for 33 per cent each in the April-September period this year. Besides, the component sales to OEMs in the domestic market grew by 13.9 percent year on year to Rs 2.54 lakh crore in the first half of the current fiscal, he added.
He says the consumption of increased value-added components and the shift in market preference towards larger and more powerful vehicles continues to contribute to the increased turnover of the auto-components sector. The aftermarket, estimated at Rs 45,158 crore, also witnessed a growth of 7.5 percent year on year, he stated.
Mr. Mehta further said that the EV segment continues to grow and there has been an increase in revenue from sales of EV components for the industry in the first half of the fiscal as compared to the same period last fiscal.
ACMA represents over 875 manufacturers, which contribute more than 90 percent of the auto component industry’s turnover in the organised sector.
