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Auto parts makers have set their eyes on the revival of commercial vehicles segment to achieve a double digit growth for the industry.
Also, a revival in commercial vehicles segment is believed to improve the capacity utilisation for the original equipment makers (OEMs), who currently operate at around 65 per cent utilisation.
“The reports on the economy have been encouraging and all segments of vehicles are showing signs of growth, especially the commercial vehicle segment, which had been under the pressure last year due to economic weakness. We see growth happening for the past three months,” said Vinnie Mehta Director General, Automotive Component Manufacturers Association of India (ACMA).
Since 2011-12, the auto component industry’s growth has been dwindling on year-on-year basis from 35.9 per cent in 2010-11 to 8.7 per cent in 2011-12, 5.6 per cent in 2012-13 and in 2013-14 it reported de-growth of 2 per cent.
This was also reflected in the capacity utilisation of the producers and thereby fresh investment for capacity addition.
Slow revival“The industry witnessed robust growth during 2009-10. So units had invested heavily for capacity addition. But due to subsequent slackness in the market, the capacity utilisation dropped,” added Mehta. He further maintained that because of the idle capacity, fresh investment towards heavy capacity addition may be slow.
According to the ACMA data, maximum investment for capacity addition took place during 2010-11 at around ₹10,000 crore, which subsequently fell to around ₹3,200-4,400 crore last year.
To the total turnover of the industry of around ₹2.11 lakh crore for the year 2013-14, passenger vehicle segment has 40-45 per cent share, while commercial and two/three-wheeler segments have 20 per cent each, and the remaining 10 per cent share is of the tractors and construction vehicles. ACMA expects to take country’s auto parts manufacturing to $100 billion by 2020 with exports of about $30-40 billion.
Currently, India’s auto component manufacturing is about $35 billion (approx ₹2.11 lakh crore) with exports to the tune of $10 billion (approx ₹61,400 crore).
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