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Auto-component industry to post revenue of 10-12% between FY2018 and FY2022: ICRA

15 Feb 2019 Evaluate

The rating agency ICRA in its latest report has said that a supportive framework for electric vehicle transition and incentives for taking up research and development investments was imperative. It also noted that a clear roadmap and continuation of faster adoption and manufacture of hybrid and electric vehicle scheme would help the industry firm up its own electric powertrain investment plans.

According to the report, Indian auto parts industry is expected to post revenue of 10-12 percent between FY18 and FY22, driven by higher net realisation and increased content per vehicle. It also said that average industry operating margin was expected to be around 13.5 percent to 14.5 percent over the near term.  It added that the auto-component industry grew at a compounded annual growth rate (CAGR) of about 8.3 percent during the FY14-FY18.

The rating agency further said that OEM (original equipment manufacturers) demand for components would be supported by increasing localisation by OEMs, and higher component content per vehicle. Noting that there was significant gap between auto-component makers and with their global players, the report said that as Indian emission and safety requirements tighten sharply in the coming years, this gap should gradually reduce. It pointed out that capital expenditure by auto-component industry was likely to be at 7-8 percent over the next three years compared to 4-6 percent for global majors.

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