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Auto component sector to grow 9-11% in FY18: ICRA

08 Dec 2017 Evaluate

Predicting a long term growth rate of 10-12 percent CAGR for Indian auto component industry, credit rating agency, ICRA in its latest report has said in the current financial year, the industry is expected to grow by 9-11 per cent and noted that the domestic passenger vehicle (PV) and two-wheeler (2W) segments will be the main drivers for growth in FY18.

The report said that the auto components industry may will grow relatively higher than underlying automotive industry in the medium to long term on the back of technological advancement and regulatory measures. The rating agency also expects healthy growth in domestic original equipment manufacturers (OEMs) segment, especially in 2W and PV industry, during FY18.

The report further said that sub-segments like light commercial vehicles, motorcycles and tractors will benefit form expected recovery in rural income. Besides, the report found that most of the auto ancillaries have witnessed improvement in their revenue growth during Q2 FY2018, driven by higher realization in the backdrop of steady increase in commodity prices. Further, in view of rising prices of commodity, the agency noted that this is putting pressure on the profitability of companies and tyre manufacturers were the worst hit due to sharp volatility in rubber prices.

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