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Major auto component firms likely to invest Rs 15,000-20,000 crore in FY25: ICRA
Feb-21-2025

Credit rating agency ICRA in its latest report has said that major auto component firms are likely to invest Rs 15,000-20,000 crore in FY25 and another Rs 25,000-30,000 crore in FY26. It said the incremental investments would be made towards new products, product development for committed platforms and development of advanced technology and electric vehicle (EV) components, apart from capex for capacity enhancements and upcoming regulatory changes. 

The rating agency expects the revenue growth of the Indian auto component industry (represented by a sample of 46 auto ancillaries with aggregate annual revenues of over Rs 3 lakh crore in FY24) to ease to 7-9 per cent in the ongoing fiscal (FY25) and 8-10 per cent in the next financial year (FY26), from the highs of 14 per cent in FY24. It noted that demand from domestic Original Equipment Manufacturers (OEMs), which constitutes over half of the industry revenues, is estimated to grow by 7-9 per cent in FY25 and 8-10per cent in FY26. It added that part of the growth would stem from premiumisation of components and higher value addition.

The report said growth in replacement demand is pegged at 5-7 per cent in FY25 and 7-9 per cent in FY26, driven by an increase in vehicle parc, higher average age of vehicles/used car purchases, preventive maintenance and growth in organised spare parts, among other reasons. It said exports, which account for close to 30 per cent of the industry's revenues, are likely to be impacted by subdued vehicle registration growth in the target markets. However, it said factors like rising supplies to new platforms because of vendor diversification initiatives by global OEMs/Tier-I and higher value addition, partly stemming from an increase in outsourcing, augur well for Indian auto component suppliers.


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