The auto component sector plans to invest $6.5 to $7 billion in capacity expansion and technological upgrades over the next five years, with demand forecast to stay strong.
The industry, which had a 12.6% year-on-year revenue increase in the first half of the current fiscal (April-September) at Rs 2.98 lakh crore, expects double-digit sales growth to continue in the remainder of the current fiscal and the future fiscal year as well.
"To stay relevant to both domestic and international customers, the components industry continues to make investments for higher value-addition, technology upgradation, and localisation," Automotive Component Manufacturers Association of India (ACMA) President Shradha Suri Marwah told reporters here. She noted that the industry plans to invest $6.5-7 billion in capex over the next five years, up from $3.5-4 billion in the previous five.
"Going forward, considering the festive season has gone well with significant sales across most segments of the vehicle industry, I am optimistic that the current fiscal year will witness another good performance from the auto components sector," he said.
With vehicle sales in all segments returning to pre-pandemic levels and supply-side issues such as semiconductor availability, high input raw-material costs, and container shortages alleviated, the auto components sector saw steady growth in both domestic and international markets in the first half of FY2023-24, she said. ACMA Director General Vinnie Mehta elaborated on the industry's performance, stating that with consistent vehicle sales and exports, the auto component industry grew by 12.6%, reaching a turnover of Rs 2.98 lakh crore ($36.1 billion) in the first half of FY 2023-24.
He noted that auto component supplies to all segments of the business - OEMs, exports, and the aftermarket - were consistent. During the period under review, auto component exports increased by 2.7% to $10.4 billion (Rs. 85.87 lakh crore), while imports increased by 3.6% to $10.6 billion (Rs87.42 lakh crore).
Mehta reported that Asia accounted for 63% of imports, with China continuing to be the largest importing country, followed by Europe and North America, which accounted for 27% and 9%, respectively. He stated that the industry is making purposeful efforts to limit imports and that there is a greater emphasis on localization, with the government's active backing.
North America and Europe were the largest export markets, accounting for 33% of total shipments in the April-September period this year. Furthermore, he noted, component sales to OEMs in the domestic market increased by 13.9% year on year to Rs2.54 lakh crore in the first half of the current fiscal.
Consumption of higher-value-added components, as well as a movement in consumer demand towards larger and more powerful cars, continues to contribute to the auto-components sector's rising turnover, according to Mehta.
According to him, the aftermarket is worth Rs 45,158 crore and has grown by 7.5% year on year. Mehta stated that the EV segment is expanding and that revenue from EV component sales for the industry increased in the first half of the fiscal year compared to the same period last year. ACMA represents over 875 firms who provide more than 90% of the auto component industry's organized sector turnover.