New Delhi [India]February 20 (ANI): According to the rating agency ICRA, the Indian auto component industry is expected to increase by 8–10 percent in the upcoming financial year 2025-26 in the industry.
In a note on Thursday, the rating said that the domestic auto constituent revenue would fall by 7-9 percent in the current financial year 2024-25, compared to 14 percent height in 2023-24,
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The operating margin is expected to be range-bound and hover in 2024–25 and 2025–26, which is supported by benefits from the operating leverage, high content and price joints per vehicle.
The disintegration along the Red Sea route resulted in an increase in the rate of 2-3 times ocean goods in 2024 compared to 2023.
The ICRA stated that any other rapid and continuous increase in the freight rates of the ocean can also affect the significant export or importing margin to auto components.
ICRA estimates that 2025–26 estimates the auto component industry to provoke capacity expansion, localization or capacity development and technological progress (including EVS) of Rs 25,000-30,000 crore.
Currently, only 30–40 percent of the EV supply chain is localized.
The years have enough localization in traction motors, control units and battery management systems, while battery cells, which are 35–40 percent of the vehicle cost, are still fully imported.
“The relatively low localization level domestic auto component gives rise to manufacturing opportunities for suppliers,” the ICRA said.
Vinuta S, Vice President and Sector Head – Corporate Rating, ICRA Limited, said that the domestic auto constituent industry is in a fleeting stage, focusing on stability, innovation and global competition with motor vehicle players.
“Demand for domestic original equipment manufacturers (OEMS), which forms more than half of the industry’s revenue, is estimated to increase 7-9 percent in 2024–25 and 8–10 percent in 2025–26. A part of the development will be grown from the premium and high value of components. Increase in replacement demand is 5-7 percent in 2024-25 and 7-9 percent in 2025-26, vehicle increase in PARC, high average age/used car purchases, preventive maintenance and increased increase in vehicles. Spare parts, “Vinuta said for other reasons.
In addition, ICRA sees opportunities for Indian players in metal casting and forging due to the closure of plants in the European Union (EU) due to issues of viability. Vehicle aging and more used vehicles in global markets will assist in exports to the replacement segment.
The impact of any import tariff on Indian auto component exports is monitored, it is said in a precaution note. (AI)
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