Auto component industry to witness 15-17% revenue growth in FY22

According to a report by Brickwork Ratings, the auto component industry is likely to observe a 15-17% revenue increase in FY22. As per a report by Brickwork Ratings, while the incomes will enhance, the profitability of auto component players is likely to drop during the year on account of high raw material costs. The agency noted that the increased demand and a preference for personal mobility due to safety matters led to the recovery in automobile sales post relaxations in the lockdown. Also, a pick-up in the economic activity performed well for commercial vehicle sales. Additionally, the scrappage policy and strict review of pollution under control (PUC) certificates would strengthen the aftermarket of the auto component industry. Auto component suppliers generally pass on cost increases to original equipment manufacturers (OEMs); but, in the current scenario, it will take some time, and auto component players will have to take a hit on their profitability to protect volume development. As per the firm, the domestic auto components’ revenues is likely to grow by 16-18% in FY2022 and 11-13% in FY2023, supported by increased demand from the automobile industry and a low base. Brickwork Ratings noted that there has been a delay on the supply side, with the shortage of semiconductor chips hindering the production schedule of OEMs, thereby impacting recovery in the overall automotive value chain. Renewed issues around the pandemic will further act as a speed-breaker for recovery in the industry. The agency additionally anticipates the exports of auto parts to enhance. Export for the auto components industry in FY2021 witnessed 4% YoY degrowth. Image Source Also read: Turnover of Indian auto component industry at Rs 1.96 lakh crore Also read: ACMA aims uniform 18% GST for all auto components