How surprising is that! At a time when the Indian Automakers are witnessing a prolonged decline in sales across segments, the auto component industry has recorded a revenue growth of 14.5 per cent at Rs. 3.95 lakh crore in FY2019. Exports, Imports and Aftermarket are three broad classifications for the component industry and it has recorded growth in all the three categories. At Rs.1.06 lakh crore, exports were up by 17.1 per cent and at Rs. 1.24 lakh crore, imports were up by 16 per cent. Aftermarket business which contributes about 35 per cent to sales was up by 9.6 per cent at Rs. 67,491 crore.
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Having said that, the growth in the component industry across segments has been slower compared to what was recorded a year ago which has worried ACMA. In FY2018, exports were up by 23.90 per cent at Rs. 90,571 crore while imports increased by 17.80 per cent at Rs.1.07 lakh crore. The Aftermarket business recorded a growth of 9.8 per cent at Rs. 61,601 crore and the total turnover stood at Rs. 3.46 lakh crore which is a growth of 18.30 per cent. Automotive Component Manufacturers Association (ACMA) says that the prolonged slowdown in the auto industry is gradually taking a toll even on the component industry which is mainly due to the lack of demand in the industry.
The downturn also resulted into production cuts at OEM level which in-turn have had aftereffects even on the component industry as it has witnessed 15-20 per cent decline in demand, according to Vinnie Mehta, Director General- ACMA. The situation can get even worse if the slowdown continues and may result into job losses, specially of contractual workers who account to 70 per cent of the labour strength. Mehta added that the industry is not in the position of hiring and further slip in demand will lead to lay offs.
The industry too has invested heavily for the upcoming safety, emission and fuel efficiency norms and any further slowdown will further hamper revenues and the return on investment. That said, the upcoming norms also ensures business for the component industry and it will have to supply updated parts for new vehicles. Moreover, the festive season sales and prebuying on the advent of emission norms are also expected to be favorable for both industries- auto industry and component industry.
