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Auto component industry likely to end FY20 on pessimistic note: ACMA President

30 Dec 2019 Evaluate

Automotive Component Manufacturers Association (ACMA) President Deepak Jain has said that the automobile component industry is likely to end the current financial year (FY20) on a pessimistic note as it would be difficult for the sector to make a recovery in the second half after registering a de-growth of 10 percent in the first six months. He also expects the first half of the next financial year (H1FY21) to remain challenging for the industry, but things to become relatively better in the second half of the next financial year (H2FY21).

Jain further said, 'So, the outlook would be that we would be basically going into negative. I am hopeful that the negative would not be double digit but single digit, as the second half performance should be better as compared with the first half.' Besides, he noted that the expected launches of BS-VI compliant models during the fourth quarter of FY20 would help the automobile companies generate better sales. He said “Better volumes for them would mean better sales for us as well. Secondly, BS-VI vehicles mean there would be more value addition by component makers. So, it might not give you the volume impact but it will definitely give you the value impact.”

Talking on outlook for the next financial year, ACMA President said the industry will have to adopt a wait-and-watch policy. But, he said “looking at the market situation, it seems that first half would be challenging. We will closely monitor and align ourselves with our customers.' Further, he noted that the auto component industry's turnover witnessed worst-ever decline during April-September of FY20, leading to a job loss of around 1 lakh temporary workers till July this year. The industry’s turnover during the period fell by 10.1 percent to Rs 1.79 lakh crore as compared to Rs 1.99 lakh crore in the year-ago period.

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