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Indian automotive component sector likely to clock 7-9% revenue growth in FY26: Crisil

22 May 2025 Evaluate

Ratings agency Crisil has said that domestic automotive component sector is expected to clock 7-9 per cent revenue growth this fiscal (FY26), mirroring last fiscal, driven by sustained demand momentum from two-wheelers and passenger vehicles segments especially utility vehicles, which account for nearly half of the overall revenue. It also said that while a moderate uptick in commercial vehicles and tractors sales (around 17 per cent share) will provide an additional tailwind, the aftermarket segment (15 per cent share in revenue) is seen ticking along steadily at 5-7 per cent.

However, weak demand for new vehicles in the US and Europe (around 60 per cent of India's exports), presents headwinds. Poonam Upadhyay, Director at Crisil Ratings, said ‘Demand from automotive OEMs, contributing two-thirds of total revenue, is expected to grow 8-9 per cent this fiscal, with value outpacing volume on rising safety, emission and electronic content, especially in PVs and 2Ws.’

The aftermarket segment will log a steady 6-7 per cent growth, supported by an ageing vehicle base, she said, adding export growth, however, will moderate to 7-8 per cent amid weak demand for internal combustion engine vehicles and a deceleration in electric vehicle adoption across the US and Europe. The US, while contributing just around 5 per cent to total revenue, commands a dominant 28 per cent share of export earnings and is the fastest-growing auto component market, said Crisil.

Besides, ratings agency said the 25 per cent tariff planned by the US can hurt companies heavily reliant on this geography. According to it, operating margins are seen stable at 12-12.5 per cent, driven by growing share of high-margin components such as ADAS (Advanced Driver Assistance System) modules, infotainment systems and advanced braking.


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