Indian auto component industry logs 9.8% growth in topline at $74.1 bn in FY24, EVs’ share rises to 6%

ACMA Director General Vinnie Mehta (L) and President Shradha Suri Marwah (R)

With vehicle sales on an uphill drive, the domestic automobile components industry saw its turnover grow by 9.8 percent to $74.1 billion (Rs 6.14 lakh crore) during last financial year as compared with $69.7 billion (Rs 5.59 lakh crore) earned in the corresponding period of FY23. This is according to the Industry Performance Review for 2023-24, brought out by the Automotive Component Manufacturers Association of India (ACMA).

Shradha Suri Marwah, President, ACMA & CMD, Subros said, “It is pertinent to note that apart from increase in vehicle production, higher value addition from the component sector has led to growth in the auto components sector." She added that the growth in the industry turnover is due to the combination of two factors-growth in auto volumes and higher premiumisation of vehicles.

The auto parts industry body claimed that consumption of increased value-added components, thrust on localisation, and shift in market preference towards larger and more powerful vehicles contributed to the increased turnover of the auto-components sector.

“What is happening is actually that the SUV as a segment has taken off immensely and its share in the entire pie is going up multifold. OEMs will adapt their product lineup to suit the changing consumer preferences. They are not really lowering their production numbers and are building up for the festive season in September.”

Component supply to OEMs in the domestic market increased by 8.9 percent to $62.4 billion (Rs.5.18 lakh crore), with supply to the EV manufacturing industry accounting for six percent of the total component production in the country. The auto parts industry body clarified that EV components includes all parts such as motors, controllers, power electronics, wire harnessing, software, metal parts but excludes batteries.

“As carmakers are increasing working on battery-driven vehicles, the orderbook of EV components also rises further. Once the charging infrastructure becomes more ubiquitous and the range anxiety is taken care of, you'll have better uptake on the cars.  The subsidies offered in the upcoming FAME III policy will give a further shot in the arm to the two-wheeler sales and some of the other entry level commercial vehicles,” said Vinnie Mehta, Director General, ACMA.

Booming exports amidst global disruptions

Exports grew by 5.5 percent to $21.2 billion (Rs 175,960 crore) while imports grew by 3 percent to $20.9 billion (Rs 173,470 crore), thus resulting in a trade surplus of $300 million. Total auto component exports during 2022-23 stood at $20.1 billion (Rs 1,61,483 crore).

North America accounting for 32 percent of exports saw a growth of 4.5 percent. Europe accounted for another 33 percent and Asia for 24 percent, respectively. Exports to Europe grew 12 percent while to Asia it remained flat.

"On the front of trade, whilst overall merchandise exports from India witnessed degrowth in FY24, auto components exports have grown despite geopolitical challenges and increase in logistics costs. That apart, growth in imports has been comparatively lesser, leading to trade surplus, indicating thrust by the industry on front of localisation,” added Marwah.

Business Outlook

Giving a medium-term outlook on the industry, ACMA president maintained that steady growth in the vehicle industry has resulted the industry reaching pre-pandemic levels of performance in FY24 in most segments. She however, noted that the first quarter of FY25 witnessed "slower offtake" in vehicle sales, especially in PVs and CVs, given the high base, due to inclement weather conditions and elections.

"With strong macro-economic indicators, conducive government policies and over 7 percent growth projected for the Indian GDP, we are hopeful that the auto components industry will continue to perform well in FY25,” said Marwah.

ACMA is projecting a 7-10 percent growth during this fiscal. “We are expecting a good uptick in two-wheeler industry. While cars seem to be muted in the first six months than last year, we are adopting a wait-and watch approach for Commercial vehicles (CVs). While tractor sales, which were negative last year, turned slightly positive this year. Exports will remain stable this year.”

Meanwhile, the domestic auto component industry, which had spent $3-4 billion last fiscal, will be investing $2.5-3 billion for capacity enhancement.