Auto component industry will continue to make investments on capex, R&D despite slowdown: ACMA President

Shradha Suri Marwah, President, ACMA & CMD, Subros

Despite the downturn in vehicle sales, the auto component industry remains optimistic and is aiming for a 10-15 percent growth in its turnover during FY 2024-25. A senior official of the Auto Component Manufacturers Association (ACMA) said that the domestic auto parts industry continues to make investments for purposes of higher value-addition, technology upgradation and localisation to stay relevant to both local and overseas markets.

“The auto component sector has outlined its capital expenditure plans which are aligned to the OEMs’ (Original Equipment Makers) vehicle rollout plans. We invest two to four years prior to the model launch. So, we are not really seeing any big shrinkage in capital outlay at the component level because the entire auto sector is going to actually double up,” said Shradha Suri Marwah, President, ACMA & CMD, Subros.

Marwah noted that the domestic Passenger Vehicle (PV) market is expected to reach 5 million units per annum by FY26 and 9 to 10 million units per annum by 2030. “This means overall capacities of the OEMs across India are growing and in line with that, the auto component sector is also making its plans. Despite certain temporary blips, we had 7.6 percent CAGR (growth) over the last few years,” added Marwah.

As per industry watchers, the Indian auto component manufacturers are expected to invest between $2.5–3 billion in the financial year 2025, primarily to increase capacity. According to Marwah, there are investments happening in physical infrastructure, design, R&D, people, automation, etc.

“It is not just about indigenisation of components, but also about design and process localization. As we integrate the whole process, from design to SOP (Standard Operating Procedure), the entire sector will transform in a more aggressive manner until 2030,” Marwah further added.

The ACMA president also stated that the association is working aggressively on upskilling its workforce, which is in line with the auto industry’s shift from pureplay ICEVs into those run on alternate fuels as well as electric mobility. “The component count in the car actually pivots from being just mechanical to a combination of mechanical, electronic and electrical,” stated Marwah.

ACMA is also working with the government of India in setting up a National Task Force. Shedding further light on that, she said, “We are working on ways to move global capacities here so that nobody actually gets impacted and suffers. While there are certain parts which are technology agnostic, others are not.”

Despite auto component players going technology-agnostic, ACMA affirmed that its sharpening its focus on EVs. “Please do bear in mind that next year, there are huge model launches happening in the e-mobility space by all OEMs which means that those projects already underway, and those people who've been shortlisted as part suppliers are already working towards it. Now, no one can say what, what's going to sell and what's not it's a game of patience, ” maintained the ACMA president.

Meanwhile, India's automobile components industry saw its turnover grow 11.3 percent to Rs 3.32 lakh crore ($39.6 billion) for the first half of 2024-25 (April-September 2024), compared with Rs 2.98 lakh crore ($36.1 billion) earned in the corresponding period of FY24, as per ACMA’s findings.

When asked to give the outlook for the entire year, Marwah said, “Historically, H2 (of a financial year) is always better than HI and that's the way it is. And the last quarter is usually a bumper quarter. That's because you have the festive season. Jan- March period is generally a very good time for the sector as new launches happen.”

Talking about FY 26, she affirmed, “As we said earlier, capacities are growing, and in line with that, the auto component sector is investing. Please, do bear in mind that India has barely 30 cars per thousand people and the count is going to increase further.”