Auto Component Industry Intends To Invest $7 Billion Over Next 5 Years: ACMA

The industry body head noted that the industry logged a revenue growth of 12.6 per cent in the first half of the current fiscal year on a year-on-year (YoY) basis at Rs 2.98 lakh crore.

ACMA director general, Vinnie Mehta, said that the change in market preference towards larger and more powerful vehicles contributed to the increased turnover of the auto components sector. ( Image Source :Getty )

The auto component industry is planning to invest nearly $6.5 billion to $7 billion in the next five years towards capacity expansion and technology upgradation, as the demand is estimated to remain strong during the period, the Automotive Component Manufacturers Association of India (ACMA) president, Shradha Suri Marwah, said on Wednesday. 

The industry body head noted that the industry logged a revenue growth of 12.6 per cent in the first half of the current fiscal year on a year-on-year (YoY) basis at Rs 2.98 lakh crore, and further anticipated that double-digit growth is set to continue in the remaining half of the 2023-24 fiscal year along with the next financial year as well. 

“The components industry continues to make investments for purposes of higher value-addition, technology upgradation, and localisation to stay relevant to both domestic and international customers,” Marwah stated, reported PTI. She added that the industry is aiming to invest a capex of $6.5 billion to $7 billion in the next five years, compared to $3.5 billion to $4 billion spent in the last five years. 

“Going forward, considering the festive season has gone well with significant sales across most segments of the vehicle industry, I am optimistic that the current fiscal year will witness another good performance from the auto components sector,” the ACMA head noted. 

Marwah further stated that the vehicle sales across all segments touched pre-pandemic levels and with the reduction in supply-side issues seen during the pandemic, the auto components sectors logged consistent growth in both the domestic and global markets in the first six months of the the current fiscal year. 

Elaborating on the industry’s performance, ACMA director general, Vinnie Mehta, said, “With vehicle sales and exports displaying steady performance, the auto component industry demonstrated a growth of 12.6 per cent scaling a turnover of Rs 2.98 lakh crore (USD 36.1 billion) in the first half of FY 2023-24. Auto component supplies to all segments of the industry -- to OEMs, exports as also the aftermarket -- remained steadfast.”

During the reporting period, auto component exports registered growth of 2.7 per cent to touch $10.4 billion, while imports rose 3.6 per cent to clock $10.6 billion. Mehta added that out of the overall imports, Asia contributed to 63 per cent, while China remained the largest importing nation, followed by Europe and North America, at 27 per cent and 9 per cent, respectively. 

The industry is undertaking efforts to lower imports and there is more focus on localisation with the government’s active support, Mehta stated. 

Regarding exports, North America and Europe counted for the biggest markets, accounting for 33 per cent each in the April to September period in the current fiscal year. Additionally, the component sales to OEMs in the domestic market increased 13.9 per cent to Rs 2.54 lakh crore in the H1FY24, on a YoY basis. 

Mehta noted that the change in market preference towards larger and more powerful vehicles contributed to the increased turnover of the auto components sector. He added that the EV segment remains on the growth path and there has been a surge in revenue from sales of EV components for the industry in the first six months of the current fiscal, against the same period a year earlier.

Notably, the ACMA represents more than 875 manufacturers which account for more than 90 per cent of the auto component industry’s turnover in the organised sector.