India’s auto component (ACM) sector is likely to register robust growth. The business research and market intelligence firm PGA Labs has released a report that reveals the industry is on a growth trajectory amidst the growing middle class, working population and surge in the electrification of vehicles.
“The ACM industry in India has traditionally been a substantial contributor to the GDP and employs over 5 million people. The industry’s revenue is estimated to rise from $49 billion in FY20 to $67 billion in FY25. The passenger vehicle (PV) segment receives 45% of the ACM supply, while two-wheelers get 20%,” the report, called “India’s Auto Component Industry”, noted.
“The overall industry accounts for 7.1% of the GDP and contributes 49% to the manufacturing GDP of India. The market is gearing towards more localisation, and players are looking to increase their presence in used cars, aftermarket and export segments.”
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Abhishek Maiti, director of PGA Labs, added that companies in the ACM sector are trying to expand their position in the used-car and aftermarket segments. “We are also witnessing that tech-focused partnerships are influencing the auto component industry,” Maiti said.
The report noted that recent policy-level initiatives have presented an opportunity to the ACM sector. “Government policies are supporting the sector with 100% FDI allowed under the automatic route; PLI scheme for the ACM sector, initiatives like Make in India and NEMMP 2020 will boost the local ACM industry in the coming few years; EVs and SUVs will lead the growth of PVs in India and the focus will be on R&D to boost early adoption of new technologies; CASE (connected, autonomous, shared and electrification) is gaining traction in India; and tech innovations and partnerships are shaping the components market,” the report said.
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The major component segments in the ACM sector are suspension & braking, electronics and electrical, and engine or engine parts, with 70% of the top 20 players’ business coming from these three segments. The report added that new offerings like automatic transmission systems are witnessing growing demand, and electronics and electrical parts will witness increasing demand on the back of growing demand for SUVs and EVs.
