Auto component aftermarket scales to Rs 56,096 crore growing 25.6%, while exports grew by 3.1% to Rs 73,128 crore, says ACMA annual review.
The Indian auto components industry recorded a turnover of Rs 2.92 lakh crore ($ 43.5 billion) for the period April 2016 to March 2017, registering a growth of 14.3% over the previous year and a CAGR of 7% over the last six years, according to the Industry Performance Review of Automotive Component Manufacturers Association of India (ACMA), the apex body representing India’s auto component manufacturing industry.
This data represents the entire supply from the auto components industry to the on-road and off-road vehicle manufacturers and the aftermarket in India as well as exports. The data also includes component supplies captive to the OEMs.
“Despite the challenges of demonetisation and uncertainty in implementation of GST, the vehicle production remained buoyant. In this backdrop, the auto component industry as well posted an encouraging performance; the industry grew by 14.3% over the previous year, scaling Rs 29,2184 crore ($43.5 billion). Further exports, grew by 3.1% in FY 2016-17 to Rs 73,128 crore ($10.9 billion) registering a CAGR of 11% over a period of six years. The aftermarket was, however, a silver lining, that grew by 25.6% to Rs 56,096 crore ($ 8.4 billion),” said Rattan Kapur, the then President of ACMA.
Commenting on the future prospects of the industry, he added, “We believe that a technological transformation of the automotive industry is imminent, which calls upon the component industry to invest in R&D, create IP, acquire and develop relevant technologies at a much faster pace to remain relevant for future needs.”
In terms of auto components supply distribution to automobile manufacturers, ACMA said 49% was to passenger vehicles, 22% to two-wheelers, 11% to medium and heavy commercial vehicles, 8% to light commercial vehicles, 6% to tractors, 2% to three-wheelers and another 2% to backhoe loaders.
India’s automobile industry is going through a transition phase as the government has notified norms on emissions, safety and fuel economy. In addition, there is growing emphasis from the government to go for electric vehicles. All these are posing challenges for component suppliers.
“Undoubtedly, the auto component industry will need to prepare for transformation to e-mobility, but our hands at this juncture are also full in graduating from BS-IV to BS-VI, which by no means is a small change. Leapfrogging a generation of technology in just three years not only calls for sizeable investments for technology acquisition and absorption, but also for skilling of people,” said Vinnie Mehta, Director General, ACMA.
Performance of Indian auto components industry (Figures in INR’ 00 crores)
Exports of auto components grew by 3.1% to Rs 73,128 crore from Rs 70,916 crore in 2015-16, registering a CAGR of 11% over a period of six years. Europe accounted for 35% of exports followed by Asia and North America, with 27% and 26% respectively. Exports to Asia increased by 4.6% followed by Europe with 2.6% whereas, exports to North America decreased by 3.8% as exporters catered to regions with rising export demand. The key export items included engine parts, transmission parts, steering parts, chassis, bumpers, rubber products etc.
On the other hand, imports of auto components decreased by 0.1 per cent from Rs 90,662 crore in 2016-2017 to Rs 90,571 crore in 2016-2017. The imports from Asia increased by 2.4% but decreased from North America and Europe by 14.6% and 7.3%, respectively. Technological collaboration of Indian players with global majors, OEMs’ focus on localisation to improve cost competitiveness are some of the factors for reducing imports trend.
With increasing vehicle parc in the country, the aftermarket in 2016-17 grew by 25.6% to Rs 56,096 crore from Rs 44,660 in the previous fiscal. According to a study by ACMA, the Indian automotive component aftermarket segment is expected to grow at 10.5% and reach Rs 75,705 crore ($13 billion) by 2019-20. Under the AMP 2026, the auto component aftermarket is estimated to reach a size of Rs 1.79-2 lakh crore.