Mumbai, Maharashtra
The domestic auto components industry may see a revenue growth of 15-17 % this fiscal and 10-12% in the next financial year on the back of recovery in automobile sales, according to a Brickwork Ratings report. The reported added that the pent-up demand and a preference for personal mobility due to safety concerns led the recovery in automobile sales post relaxations in the lockdown.
The industry may again see double-digit growth in FY23, given that the impact of the Omicron variant is limited and that there is no further risk of new variants, it added. The industry is facing challenges such as an unprecedented shortage of semiconductor chips, high costs as well as the unavailability of raw materials and logistical issues related to exports.
In the first half of the current fiscal, automobile sales recovered strongly on account of pent-up demand and a preference for personal mobility. This led to an increase in demand for auto components during the same period, it said.
However, there has been a setback on the supply side, with the shortage of semiconductor chips hampering the production schedule of OEMs, thereby restricting recovery in the overall automotive value chain.
Also, renewed concerns around the pandemic will further act as a speed-breaker for recovery in the industry, the report said. In the long term, the rating agency expects growth to increase as with the new investment under the Production Linked Incentives (PLI) scheme, the supply chain of the Indian automotive industry would improve.
The Indian auto components industry is active in three major regions -- the western region (Mumbai, Pune, Nashik and Aurangabad), southern region (Chennai, Bangalore and Hosur) and northern region (Delhi and Gurgaon).
The report also stated that while the shortage of chips is the major concern for the industry, other auto components made of natural rubbers are facing a raw material crisis. Apart from tires, natural rubbers are used in the production of air bags, rubber floor mats, rubber seal, rubber bumper and dust cover.
Source: zeebiz.com
Image Source: Google Images
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