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Automotive Product Finder Magazine | Automotive cables industry to grow with stable copper prices
Automotive cables industry to grow with stable copper prices
If vehicles sales continue to decline, it may impact retail market
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The Indian auto industry is one of the largest in the world. The industry accounts for 7.1 per cent of the country’s GDP. The two wheelers segment with 80 per cent market share is the leader of the Indian automobile market owing to a growing middle class and a young population. Moreover, the growing interest of the companies in exploring the rural markets further aided the growth of the sector. The overall passenger vehicle (PV) segment has 14 per cent market share. This article discusses automotive cables and how its raw material, copper will play a role in future.
The cables being one of the most imperative components of the automotive industry, enjoys large share of consumption by two-wheeler segment. Cables have applications in the two wheelers like motorcycles, scooters, electric bikes and mopeds. For the three wheeler its applications are those of load carriers and passenger carriers, passenger car, tractor, commercial vehicle, and for light commercial vehicles, buses and trucks, snowmobile, earth moving and material handling equipment. These cables are known to be used for control of mechanical movements in variety of machines/ systems. But maximum quantity is consumed by two wheeler segment in automobile sector.
Cable being one the essential component for any automotive, the demand promises definite growth in the time to come. “EV will see positive growth by 2021 due to charging infrastructure and other policy changes like BS VI will have been taken place. Industry can then plan and move ahead. From there, growth is expected in the cables too as EV, hybrid and commercial vehicles may drive demand in future,” believes Puneet Singh, Business Director, Silco Cables, Delhi.
Singh adds, “Control cables in a vehicle are different than other applications and to develop such processes in-house would require huge capital expenditure. Hence, the wire manufacturing would be done by manufacturers in cables & wires industry.”
According to a report from Yes Secturities, estimates suggest that the size of the wires and cables industry in India is Rs 53,000 Crore.
“The cables and wires space is expected to double over FY18 to FY23 (estimate) to Rs 1.03 lakh Crore amid a likely strong automotive sector green mobility developments,” believes Ajinkya Powale, New Business Development, Metrix Cables.
India has seen growing adoption of two wheelers on an extensive scale since 2011 to 2018. Post 2018, automotive industry is experiencing a massive slowdown and is thereby affecting all allied sectors that are dependent over the automotives. Deepesh Gurnani, Director, Premier Auto Cables, says, “All automotive businesses into accessories have been affected. Export market has provided a very little help. Two wheeler industries which never experienced such a drop have been quite sluggish. OEM demands are low. Many have stopped some production units and lines.”
Volume in sales for EV would help
With the recent buzz around to adopt green energy fuels, industry is keen on launching electric vehicles (EVs), backed by the government push. The rise of EVs is expected to open a new line of business for component manufacturers in the accessory market. But the cables market will only benefit if the volumes of EVs show growth considerably. “There is no much difference in the cost of EVs and conventional auto cables but the number of cables per vehicle will be the major difference. The EVs require considerably less number of cables per vehicle,” adds Gurnani.
“Better volume in sales shall help manufacturers to gain from the market. Otherwise situation will turn difficult. As we serve other markets like aviation and marine that are cable intensive sectors, we are able to withstand the slowdown, but not for too long,” rues Gurnani.
Copper Prices crucial
EVs will be one of the factors contributing to the increase in demand for copper. Copper will also be required for EVs in greater volumes than petroleum cars. The demand is high when we look at the market and dynamics of EV.
EVs demands safe transfer of power in the vehicle without losing on power as the power is stored in the battery. Copper being best conductor of electricity and being available across the globe, will always be preferred.
As of now the business for EVs is less. But with growth in volumes, it will lead to staunch rise in demand for copper. “Copper being the major constituent of the wires or cables, its market will be crucial to watch across the globe,” adds Singh.
If the copper prices remain stable between 2020 and 2025, it will support the EV cable manufacturers to grow. “The number of cables per EV being less, the number of units manufactured needs to shoot up to see regular growth. Meanwhile hybrid vehicles are expected to tow demand for cables,” states Powale.
“EVs are still developing. Focus is on the conventional vehicles as it dominates the demand. It will be interesting to see how conventional automotives grow after 2020 BS VI norms,” states Powale.
Control cables in a vehicle are different and to develop such processes in-house would require huge capital expenditure. Hence, the wire manufacturing would be done by manufacturers in cables & wires industry. Puneet Singh, Business Director, Silco Cables
The cables and wires space is expected to double over FY18 to FY23 (estimate) to Rs 1.03 lakh Crore amid a likely strong automotive sector green mobility developments. Ajinkya Powale, New Business Development, Metrix Cables
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