Instilling a positive sentiment

As consumer sentiment remained subdued amid a slowdown in the economy, the Indian auto industry recorded its worst-ever annual sales fall in two decades in 2019. According to the Society of Indian Automobile Manufacturers (SIAM), vehicle makers sold over 23 million units across categories in 2019, a decline of 13.77 per cent from over 26.7 million vehicles sold in 2018. Prior to 2019, the industry had witnessed a decline in annual sales only twice since SIAM started recording the data in 1997 - in 2007 when overall sales fell 1.44 per cent, and in 2008 when the sales declined by 1.11 percent.

The continued and broad-based contraction in auto sales has affected the performance of the auto component industry. In fact the slid started in FY2019 when auto comp turnover slowed down and witnessed a growth of about 10.4 per cent compared to 17.6 per cent during FY18.

According to CARE Ratings, with the adoption of new BS VI emission norms, a range of updated as well as new auto components is expected to enter the market driving the demand in 2020. At the same time, capex on technology advancement and product capabilities may continue to exert high pressure on companies’ cashflow.

Component makers supplying products across segments and having diverse revenue source from aftermarkets, exports besides OEMs are likely to be in the best position to weather the current slowdown better than players with concentrated product or geographic profile. Experts believe that margins will continue to remain under pressure on back of weak demand from the OEMs. However, lower metal (steel and aluminium) prices are expected to marginally restrict this contraction.

Despite the challenging market scenario, Auto Expo 2020-Components has booked 25 per cent more exhibitors than the previous edition, thus reflecting the resilience and determination of the auto components industry.

Performance of auto component segment is crucial for the revival of manufacturing sector. Currently, the auto component industry, with the turnover of $ 57 billion, contributes 2.3 per cent to India’s GDP. It is expected that the auto component sector will contribute around $ 200 billion to the GDP by 2025, playing a significant role in achieving the $ 1 trillion manufacturing economy goal of the Government. With the theme of ‘Technovation: Discover Innovations for Future’, the Expo is expected to steer the industry forward, instil a positive sentiment, and showcase the best technological prowess while providing more opportunities for growth.

For the first time, large number of Chinese firms will be exhibiting their products in the expo. But, the outbreak of coronavirus could play a dampener on their participation.

All in all, one can expect this edition of Auto Expo to be monumental in shaping the future trajectory of the industry by focusing on its collective strength and capabilities.

Do visit APF stall (Hall 11, Stall No. 111) at Auto Expo 2020-Components to share your views & experience.

See you at Auto Expo 2020!