ACMA, Auto News, ET Auto

0
The automotive components industry is an export competitive industry, exporting over 25% of its production, with the US and EU accounting for 60%.

New Delhi: The performance of India’s auto components industry in FY2020-21 would be a little better than the vehicle manufacturing sector as its growth is estimated at around 10% and 12%, Deepak Jain, the chairman of the Automobile Component Manufacturers Association (ACMA), the supreme body representing auto parts manufacturers, told ETAuto.

“We have not yet prepared the actual numbers, but we expect the auto parts industry to have performed better than the auto industry and to shrink less than the auto industry over the past year. exercise 21, ”Jain said. Overall auto sales fell 14% over the same period.

Even before Covid hit, the auto industry was on a downward trend. In FY20, the components industry declined 12%, from $ 57 billion in 2018-19 to $ 50 billion. Next, ACMA estimated a million job losses and cut a billion dollar investment.

Over the past two years, the auto components industry has shrunk by more than 30% and capacity utilization has remained at 60%, he said.

However, in fiscal year 2019-2020, the auto components maker fared better thanks to strong demand from the tractor industry and good export and aftermarket deals. The situation looks much more complex in a post-second wave as it impacted rural markets unlike the first wave.

The challenge will now be compounded for two reasons: firstly, the recovery in demand will not be as rapid as in the previous year because the impact has been widespread, and secondly, the constraints on the supply side are becoming more complex due to the regional blockages.Deepak Jain, President, Association of Automotive Component Manufacturers (ACMA)

Last year, India exported $ 14.5 billion, or 29% of production, to more than 160 countries. However, the share of the global auto components trade is tiny, only 1.3% of the $ 1.3 trillion, and there is only one Indian company in the world’s top 10 component manufacturers.

The challenge will now be compounded for two reasons: firstly, the recovery in demand will not be as rapid as in the previous year because the impact has been widespread, and secondly, the constraints on the supply side are becoming more complex due to the regional blockages. Labor migration will also continue to hurt the sector, Jain said.

Small businesses and businesses remain vulnerable. The biggest challenge MSMEs face is the lack of manpower and cash flow, according to an ACMA study.

Over 65% of ACMA members are SMEs, while MSMEs would represent 80% of the entire Indian components industry; the majority of which are level 2 and 3 players and they have traditionally been challenged in the areas of access to capital, quality, labor and technology.

During lockdowns, when the production of vehicles stops, they are the most affected, mainly in liquidity.

“We hope that the consolidation will happen, but as the demand decreases, the industry has to collaborate with each other, such as OEMs with level 1, level 1 with level 2 and level 3,” said said Jain.

ACMA has advised all its Tier 1 members to pay membership fees to Tier 2 companies and Tier 2 companies to Tier 3 companies. “This will be very helpful for the industry,” he said. .

We hope that the consolidation will happen, but as the demand eases the industry needs to collaborate with each other like OEMs with Tier 1, Tier 1 with Tier 2 and Tier 3.Deepak Jain, President, Association of Automotive Component Manufacturers (ACMA)

Outlook for fiscal year 22

According to CRISIL, the automotive components industry will see its revenues increase in fiscal year 22 as demand from OEMs and exports increases. The replacement market appears to have better demand. Rising demand from OEMs will spill over into the automotive components industry, which could experience revenue growth of 20-23% over the next fiscal year.

Exports, which contribute more than 25% of turnover, will be supported by sustained demand from the United States and a phased recovery in the European Union, the regions which account for 60% of India’s automotive component exports.

ACMA hopes that the PLI program will allow India’s exports to double to $ 30 billion in the next 5 years and that it will have at least 5-6 Indian players among the world’s top 50 manufacturers of automotive components.

Export opportunities

The automotive components industry is an export competitive industry, exporting over 25% of its production, with the US and EU accounting for 60%.

With a China plus one strategy pursued by many developed countries, there is a slight increase in component sourcing demands in India, particularly in the United States and Europe.

By placing more emphasis on localization by both OEMs and component suppliers, the industry will become more price competitive, improving the global trading position.

In addition, India is committed to adopting UN-ECE standards and complies with Euro VI standard. As the sector gradually conforms to global standards, the capacity and range of product offerings to serve export markets also improves.

“ACMA has also called on the Union government to sign FTAs ​​with Brazil, South Africa and Iran, among others, to help our exports. Finally, the PLI scheme should also make the industry competitive in terms of price through a system of incentives. This will add to our advantage, ”said the spokesperson for ACMA.


Source link

Share.

Leave A Reply