Indian Auto Components Industry Cautiously Optimistic On mid-term Prospects

Automotive Component Manufacturers Association of India (ACMA), the apex body representing India's Auto Component manufacturing have announced the findings of its Industry Performance Review for the first half of fiscal 2020-21.

The turnover of the automotive component industry stood at Rs.1.19 lakh crore (USD 15.9 billion) for the period April 2020 to September 2020, registering a de-growth of 34 per cent over the first half of the previous year.

Commenting on the performance of the auto component industry in India, Vinnie Mehta, Director General, ACMA said, "The auto industry witnessed a downturn in FY2019-20, the situation further aggravated with the outbreak of the pandemic and the lockdown. While the first quarter for FY20-21 was significantly stressed, however with unlocking of the economy, the sales of vehicles witnessed improvement, month-on-month, in the second quarter.

The component industry, in tandem, posted a subdued performance with de-growth of 34 per cent over the first half of the last fiscal, registering a turnover of Rs.1.19 lakh crore (USD 15.9 billion). However, for the first time ever, the industry witnessed a trade surplus with Auto Component exports at Rs.39,003 crore (USD 5.2 billion) and imports at Rs.37,710 crore (USD 5.0 billion); both exports and imports declined by 23.6 per cent and 32.7 per cent respectively.

The After market, estimated at Rs. 31,116 crore, also witnessed de-growth of 15 per cent. Component sales to OEMs in the domestic market contracted the most to Rs.87120 crore (USD 11.6 billion), declining 42 per cent".

Sharing his insights on the performance of the auto component industry, Deepak Jain, President, ACMA said, "In the backdrop of the pandemic and the lockdown, the automotive industry faced unprecedented challenges in the first-half of FY 2020-21. The auto component industry, through agility, flexibility and financial discipline, has displayed remarkable resilience and has comeback strongly with the unlocking of the economy.

I am thankful to the OEMs for their support and for the timely intervention by the Government, especially in addressing the supply side challenges. Going forward, whilst the performance of the industry during the festive season has been heartening, there are indications that the vehicle demand, in the coming months, will be sustained.

This, together with the increased focus by the auto industry on deep-localisation and the recent announcement of PLI schemes for the automotive sector and cell/battery manufacturing by the Government, augur well towards making the auto-component industry a self-reliant one. We are also hopeful that the Government would consider PLI or appropriate manufacturing schemes for auto-electronics and xEV components as well."

Elaborating on the mood of the industry and outlook for the near to mid-term future, Jain mentioned, "According to the recent ACMA-PwC joint survey of ACMA leadership, despite concerns of another wave of pandemic, the industry is cautiously optimistic about the prospects of the Indian economy and the automotive sector for FY2021-22. Companies have mostly recovered and are back to moderate financial health, post the lockdown.

Financially healthy and growth focused companies are also actively focusing on CAPEX and acquisition / merger opportunities. While increased visibility and commitment to new program timelines from OEMs is a key industry expectation, at an organizational level, focus on employee productivity and organization structure consolidation will be the key thrust areas."