“We are having troubles in finding what can go wrong for the Indian auto component industry,” said Sunjay Kapur, President, ACMA and Chairman, Sona Comstar has said.
At the event to announce the findings of its Industry Performance Review for the fiscal year 2022-23, he said, unlike previous years, the industry might not face any difficulty in the ongoing fiscal. As reported by ACMA, the headwinds for FY24 in the auto component industry are Russia-Ukraine War, recessionary trends in Europe and the USA and high GST rates on auto components.
During FY23, the Indian auto component industry clocked sales of INR 5.60 lakh crore ($69.7 billion) with a growth rate of 32.8% over the previous year. During the year, the industry sold components worth INR 4.76 lakh crore ($59.3 billion) to OEMs, representing 39.5% growth compared to the previous year.
ACMA noted that the auto component industry grew in FY23 due to pent-up demand driving vehicle sales, easing supply shortages, and sales mix favouring larger vehicles.
Exports of auto components witnessed growth of 5.2% to INR 1.61 lakh crore ($ 20.1 billion) in FY23 against INR 1.41 lakh crore ($ 19.0 billion) in FY22. North America accounting for 32% of exports, saw a growth of 8%. Europe accounting for 31%, and Asia for 26% grew 3% and 4% respectively. The key export items included drive transmission and steering, engine components, body/chassis, suspension and braking, among others.
Traction in the domestic market is also reflected in imports of components into India. Component imports grew 10.9% in FY23 to INR 1.63 lakh crore ($ 20.3 billion) from INR 1.36 lakh crore ($ 18.3 billion) in FY22.
Asia accounted for 66% of imports, followed by Europe and North America at 26% and 6%, respectively. Imports from Asia grew 12%, while those from Europe increased by 6% and North America by 23%.
Kapur said that it is pertinent to note that apart from growth in vehicle sales, significant higher value addition from the component sector has led to its noteworthy performance in FY23.
On the trade front, it is appreciable that there has been steady growth in exports despite recessionary trends in Europe and the US, which are key export destinations for the auto components industry. A strong rebound in vehicle sales in the domestic market also led to a sharper rise in imports that has translated into a trade deficit this year.
Whilst the automotive value chain faced significant disruptions in the wake of the pandemic, vehicle sales, especially in the PVs, CVs and tractor segments have now reached pre-pandemic levels. Even the two-wheeler industry has recovered well. With significant mitigation in the supply-side issues of availability of semiconductors, input raw-material costs and logistics, the vehicle industry is expected to continue to perform well in FY24, which augurs well for the auto components sector. That apart, exports and growth in domestic aftermarket continue to be robust, he added.
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