The global automotive industry despite the multiple disruptions over the course of last two years has demonstrated great resilience. Be it the pandemic, the war in Ukraine, supply chain or the slowdown global sales that had set in before Covid. However, despite near-term supply disruptions, the long-term prospects for the industry remain strong says a report by ACMA-McKinsey.
Despite the push for electrification which will see different level of adoption depending on the segment and geography, the global demand for IC-engine space will present upto $50 billion (Rs 3,97,500 crore) opportunity by 2030. And the continuous improvement and expansion in traditional ICE play within India the opportunity will be $35 billion to $45 billion (Rs 2,76,990 crore to Rs 3,56,130 crore) opportunity by 2030.
The report expects the global sales of passenger vehicles to rebound to peak levels by the middle of this decade. The demand will be led by emerging markets such as India, along with China.
However, it says while there is cause for optimism, the. push for clean mobility and corresponding growth in the adoption of electric vehicles (EVs) could disrupt the automotive landscape over the course of this decade. Europe and China are expected to be frontrunners in this shift, with the rest of the world following suit eventually.
In India’s case, the total cost of ownership is likely to be more attractive for electric two- and three-wheelers than for passenger or heavy commercial vehicles. Sales of new electric two- and three-wheelers could grow to 50 percent and 70 percent respectively by 2030. On the other hand, Internal combustion engines (ICE) will continue to dominate the Indian PV and HCV landscape, with slower electrification.
Electric PVs and HCVs are expected to account for about 10 to 15 percent and 5 to 10 percent of new vehicle sales respectively by 2030.
Furthermore, it says that the transition to EVs could impact upto 50 percent of ICE bill of material (BOM) components, which also presents an opportunity for Indian auto component manufacturers to adapt to these shifts and take advantage of new opportunities created due to multiple whitespaces in the EV BOM needed and generated to serve markets outside India in both ICE component categories.
The report suggests three broad strategy frameworks for suppliers they could customise to their unique starting points, capabilities and challenges.
Firstly, they can broaden opportunities within the automotive space for instance two- and three-wheeler suppliers who will face the electrification disruption early on could pivot into segments that will gradually electrify.
Secondly, they can capture opportunities in adjacent sectors – construction & mining, rolling stocks for railways/metros, defence sector, etc. – all of which are growing and have a sizable market.
Lastly, expand exports on the strength of shifting supply chains, as companies seek greater resilience by diversifying beyond traditional geographies. Indian companies could capture opportunities in areas where the country has traditional advantages and exports are growing faster than competing suppliers from other geographies. These include categories such as forgings, castings, gear box parts, suspension parts, axles and wheel rims among others.