New Delhi, 20 February (IANS). The revenue of the Indian Auto Component Industry is estimated to increase by 8–10 percent in the financial year 2025-26. This information was given in a report on Thursday.
Credit rating agency ICRA hopes that the operating margin in the financial year 2024-25 and 2025-26 will be around 11-12 percent in a limited range. One of the main reasons behind this is the operating liveres, more content and value edition per vehicle. However, he has said that it can also have a negative effect in the event of any major adverse changes in commodity prices and foreign exchange rates.
As a result of disruption on the Red Sea route, the cargo freight rates have increased by two-three times in the year 2024 as compared to the calendar year 2023.
If more rapid and continuous increase in marine freight rates will also affect the auto component suppliers whose imports or exports are high.
The ICRA estimates that in the financial year 2025-26, the auto component industry will have to spend a capital of Rs 25-30 thousand crore for capacity expansion, localization/capacity development and technical advancement (including EV).
Currently, only 30–40 percent of the EV supply chain is localized. In the last few years, there has been adequate localization in traction motors, control units and battery management systems, while the battery cells, which are 35–40 percent of the vehicle cost, are still completely dependent on imports.
Relatively low localization level means a glut of manufacturing opportunities for domestic auto component suppliers.
Vice President of ICRA Limited and Sector Head-Coriature Rating, Vinuta S. Said, “The domestic auto component industry is in a period of change, in which the attention of automotive players remains on sustainability, innovation and global competition.”
The demand for domestic OEM, which is more than half of the revenue of the industry, is estimated to increase 7-9 percent in FY 2024-25 and 8–10 percent in FY 2025-26.
In addition, there will be opportunities for Indian companies in metal casting and forging due to the closure of the plant in the European Union (EU).
Electric vehicle opportunities, premiumization of vehicles, focus on localization and changes in regulatory criteria are factors that will help in development for auto component suppliers over the medium to long periods.
-IANS
SKT/Ekde
