ACMA optimism over long-term prospects
The Automotive Component Manufacturers Association of India (ACMA) has just announced the findings of its industry performance review for 2011-12.
The turnover of the auto component industry stood at Rs. 210,400 crores ($43.4 billion) for the period April 2011 to March 2012, registering a growth of 15.7 per cent over the previous year and a CAGR of 19 per cent over the last five years.
This data represents the entire supplies from the auto component industry to the on-road and off-road vehicle manufacturers and the aftermarket in India and overseas from the ACMA member and non-member companies, including component suppliers captive to the OEMs and the unorganized and smaller players.
Vehicle sales in India moderated in 2011-12 impacting the performance of the auto component industry. While the uncertainty in the domestic market continues, ACMA is optimistic that the medium and long-term prospects of the component industry are intact. However, in the current fiscal 2012-13, the industry is expected to grow in the range of 8-10 per cent.
Commenting on the performance of the auto component industry, the ACMA President, Mr. Surinder Kanwar, said: “The sector grew to $43.4 billion in 2011-12. Ambiguity in the fuel price regime, high cost of capital, high interest rates, and slowing down of investment in infrastructure is adversely impacting the growth of the automotive industry. Today, there is need for greater collaboration between the component manufacturers, OEMs, machine tool suppliers and the raw material industry. Our aim would be to gradually make a transition from transactional relationships to those that are synergistic in nature. We need to partner in design, development and testing and develop affordable and innovative solutions. Further, the component industry also needs to actively consider diversifying into adjacent markets, including Defence, aerospace, railways, farm implements, etc., to sustain the growth momentum.”
Expressing his views on the current policy environment and the need for supporting auto component manufacturing in the country, the ACMA Vice President, Mr. Harish Lakshman, said: “The Indian auto component industry is confident of scaling the target of $115 billion by 2020. To achieve this, we urge the Government for long-term stable policies and export incentives that are critical for sustaining the industry in these times of global slowdown. The Government continues to push for more multilateral and bilateral trade agreements, increasing the threat of imports due to a non-level playing field. In contrast many of the competitor nations are imposing non-tariff barriers on imports. The Government policies pertaining to tax regimes, FTAs and infrastructure development need to be relooked for the overall growth of the auto component industry.”
Sharing his thoughts on the need for a conducive ecosystem for the auto component industry in India, the ACMA Executive Director Vinnie Mehta, observed: “While the road to becoming the preferred destination for sourcing of components for global supply is still long and arduous, the leadership team in ACMA has been working together to address the several pertinent concerns of the component industry. India is already emerging as one of the largest global manufacturing hubs for small cars and commercial vehicles. To take advantage of affordable R&D and develop India as an integrated hub, OEMs and suppliers need to increase collaboration for mutual benefit.”
Observations of the ACMA Industry Performance Review 2011-12:
- Exports of auto components grew to $6.9 billion from $5.2 billion in 2010-11, up 32.7 per cent. Europe accounted for 36 per cent of exports, followed by Asia at 28 per cent and North America at 23 per cent. Exports to Europe increased by 32 per cent as compared to the previous fiscal, with America and Asia registering increase in exports to 27 per cent and 28 per cent respectively. The key export items include engine parts, transmission parts, brake systems & components, body parts, exhaust systems, turbochargers, etc.
- Imports of auto components also grew by 25 per cent to $10.6 billion in 2011-12 from $8.5 billion in 2010-11. Almost 85 per cent of the imports were accounted for by the OEMs, the rest 15 per cent by the aftermarket. Asia and Europe contributed to over 57 per cent and over 35 per cent of the imports respectively. Within Asia, China, South Korea and Thailand contributed to the maximum imports, while from Europe, the key contributors were Germany, Italy and the Czech Republic. The quantum of imports has also increased due to several FTAs and other trade agreements signed by the Government.
- For 2011-12 an estimated investment of around $1.6-1.9 billion was made in the auto component sector. Due to moderation in vehicle sales and depressed market sentiments, the investment in 2011-12 declined compared to the previous year. Capex in 2010-11 stood at around $2-2.5 billion. The cumulative investment in the auto component sector in India over the last five years stood at over $7 billion.