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Domestic auto components industry likely to grow at around 15% in FY19: ICRA
Jan-18-2019

Despite a slowdown in demand in the automotive sector, credit rating agency, ICRA has remained optimistic over growth of the domestic auto components industry. According to its latest report, the industry is likely to grow at around 15 percent in the current financial year, on the back of healthy volume growth in two-wheelers, commercial vehicles and tractor segment until November last year.

ICRA expects automobile volumes to grow 8-9 percent during the current fiscal, as against 14.8 percent growth during 2017-18. The agency further noted that the aftermarket sales were impacted in FY2018 by GST-related inventory de stocking in the first quarter of FY2018 and initial implementation related uncertainties in the second quarter of FY2018. However, demand picked up in August-September 2018, with a sharp revival from the fourth quarter of 2017-18.

Going further, ICRA is also hoping growth in weighted-average demand for auto components from original equipment manufacturers (OEM) at 10-11 percent in the current fiscal, as compared with 9.5 percent expected in 2017-18, supported by strong commercial vehicle volumes.

However, it pointed that for exports, trade disputes, punitive tariffs, higher fuel prices and rising interest costs are expected to play spoilsport in light vehicle sales in the US, which is the major market for auto components industry other than Europe, over the next 12-18 months.

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