Auto component sector seeks long-term roadmap from govt

The Automotive Component Manufacturers Association of India (ACMA) has called for a long-term stable and technology agnostic roadmap to allow localisation of technologies, saying it is critical for the survival and competitiveness of the industry amid declining vehicle sales.

Speaking at the 61st annual convention of the components industry body here on Thursday, Deepak Jain, President, ACMA, said factors such as high domestic taxation, increasing fuel costs, steep rise in commodity prices are adversely impacting affordability of vehicles, and in turn the viability of the component sector.

Covid challenges

“The last two years have been extremely challenging for the industry with two lockdowns in the wake of the pandemic that threatened to derail our economy and industry. The year 2020-21 witnessed the second successive year of contraction in vehicle sales in India and overall vehicle sales fell by over 13.6 per cent. The component industry also witnessed a de-growth of 3 per cent,” he said.

Jain said with the second wave of pandemic, the revival of auto components industry has again been put to test.

“High domestic taxation, increasing fuel costs, steep rise in commodity prices, among others is adversely impacting affordability of vehicles, and in turn the viability of the component sector,” he said adding that a long-term stable and technology agnostic roadmap that allows sufficient time for localisation of technologies would be critical for survival and competitiveness of the industry.

Given the volatility in the environment, Jain said it was for the industry to find answers on how to “strive to survive, piece ourselves together to revive and explore the opportunities for growth”.

“If volatility is the new normal, then how can we sustain ourselves, ensure business continuity and stay relevant to our customers with uncertainty in the business and regulatory environment...," he said.

Combined with fast changing trends and mobility, Jain said, “what would be the most apt business model for us? Will one size fit all? What strategic interventions, we need to make internal and external, technological, and human as individuals and as a community to become globally competitive.”

More investments needed

In his keynote address, RC Bhargava, Chairman, Maruti Suzuki India, said there is a need of more investments by the components industry in developing engineering and R&D capabilities for that should come from their internal resources.

“Internal resources need to be maximised...I have been saying this for sometime that the secret of success of building strong companies for developing technology for growth is to generate more and more internal resources...I would strongly suggest to component manufacturers that they need to look at entire management culture and management style and see how more funds remain within the company and less funds are used for other purposes including lifestyle of senior management personnel,” he said.

He suggested that the money which remains in the company, can be and will be used for strengthening the company. “Money which is taken out of the companies leads to comfortable/ luxurious life, it does nothing to the growth of the company,” he said.

He added that the tier-I vendors should also make sure that not only them, but the tier-II and III suppliers are also globally competitive so that

“Focus of companies has to remain on constantly improving the quality — not only in tier-I — but quality in tier-II and III vendors who in many cases are the weak points of the industry. Both government and industry need to work together but primarily the responsibility is of the tier-I vendor to ensure that the steps are required to be taken to come up to global competitive standards and there is no compromise in doing that,” he added.

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