Auto components companies have also resumed their capital expenditure (capex) plans with expectations of growth in new technology vehicles sales and a recovery in domestic sales, ACMA president Sunjay Kapur told ET.
“We are expecting growth in the components industry because we don’t cater only to the domestic industry but export too. We are seeing good opportunities, especially in North America, Europe, even China for that matter,” said Kapur.
Export orders are going up, especially due to companies wanting to expand and diversify their sourcing base beyond China, he said.
The automotive components industry’s net turnover declined to ₹3.4 lakh crore in 2020-21 from its peak of almost ₹4 lakh crore in 2018-19. About a third of the industry’s net revenue comes from exports. The industry is facing challenges on multiple fronts, from a shortage of semiconductor chips, which is impacting vehicle production, to a shortage of containers, which is impacting global trade. High raw material prices have forced automakers to increase prices. Coupled with high fuel prices, it has become a deterrent to new vehicle buyers.
However, component makers are bullish due to good macroeconomic indicators and export demand, according to the ACMA president. “There are headwinds. However, the good thing is that demand exists. Passenger car demand is there. Commercial vehicles demand is coming back, which is a good thing,” he said.
The capex cycles of auto component makers are also back up, as companies are investing in new technologies, especially electric vehicles (EVs), said Kapur. “There is a lot of investment taking place in capacity expansion and in R&D (research and development), which is very encouraging,” he said.
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