Auto component industry to invest $7 billion over next 5 years: ACMA

Pune: With robust demand in place in the automobile sector, the Indian auto component industry is planning to invest around $ 6.5 to 7 billion over the next five years on capacity expansion and technology upgradation, Shradha Suri Marwah, President of Automotive Component Manufacturers Association of India or ACMA said on Wednesday.

The auto component industry, which recorded a 12.6 per cent year-on-year revenue growth in the first half (April-September) of the current fiscal at Rs 2.98 lakh crore, expects double-digit sales growth to continue in the rest of the current fiscal and the upcoming financial year as well.

“The components industry continues to make investments for purposes of higher value-addition, technology upgradation, and localization to stay relevant to both domestic and international customers,” Marwah said.

She said the industry is aiming to invest $ 6.5-7 billion in capex over the next five years as compared to $ 3.5-4 billion spent in the last five years.
 
"With good performance in sales across segments of the vehicle industry in the festive season, I am optimistic that the current fiscal year will witness another good performance from the auto components sector," Marwah noted.

She said with vehicle sales across all segments reaching pre-pandemic levels and with mitigation of supply-side issues witnessed during the pandemic such as availability of semiconductors, high input raw-material costs, and non-availability of containers, the auto components sector witnessed a steady growth in both domestic and the international markets in the first-half of FY2023-24.

ACMA Director General Vinnie Mehta said that with vehicle sales and exports displaying steady performance, the auto component industry demonstrated a growth of 12.6 per cent scaling a turnover of Rs 2.98 lakh crore ($ 36.1 billion) in the first half of FY 2023-24.

He said auto component supplies to all segments of the industry — to OEMs, exports as also the aftermarket — remained steadfast.

Mehta said that during the period under review, auto component exports grew by 2.7 per cent to $ 10.4 billion (Rs 85.87 lakh crore) while imports grew by 3.6 per cent to $ 10.6 billion (Rs 87.42 lakh crore).

He noted that Asia accounted for 63 per cent of imports, with China remaining the largest importing country, followed by Europe and North America, with 27 per cent and 9 per cent, respectively.

Mehta said that the industry is making conscious efforts to reduce imports and there is an enhanced focus on localisation with the active support of the government.

For exports, North America and Europe remained the biggest markets accounting for 33 per cent each in the April-September period this year.

Besides, the component sales to OEMs in the domestic market grew by 13.9 per cent year on year to Rs 2.54 lakh crore in the first half of the current fiscal.

Mehta said consumption of increased value-added components and the shift in market preference towards larger and more powerful vehicles continued to contribute to the increased turnover of the auto-components sector.

He said the aftermarket, estimated at Rs 45,158 crore, also witnessed a growth of 7.5 per cent year on year.

Mehta said the EV segment continues to grow and there has been an increase in revenue from sales of EV components for the industry in the first half of the fiscal as compared to the same period last fiscal.

ACMA represents over 875 manufacturers which contribute more than 90 per cent of the auto component industry's turnover in the organized sector.