Report

The Indian auto components industry comprises 10,000-20,000 home-grown auto components companies. Then there are also about 50,000 low-technology players, which cater to the aftermarket. The auto component manufacturing industry in India is pegged at 3.5 lakh crore in FY2018 and the industry is poised to grow 4x by 2026. However, in the absence of a well-defined road map for the automobile industry, the future of the auto component segment looks bleak with disastrous consequences for many of the players. The industry will not witness growth if it continues to follow a business as usual scenario. The possible transition of the automobile industry towards hybrids and electric vehicles will lead to disruption in the overall automotive market landscape which will also influence the product portfolios of auto component manufacturers. The alignment and the pace of this alignment to the anticipated new automotive landscape will be key for auto component manufacturers to stay relevant, survive disruption and grow over the next multiple years. This alignment will see the rationalization of the product portfolio and even consolidation in different product segments in the auto component manufacturing pace. Recent move of Bosch to hive off its starter and generator division to SEG indicates that the company anticipates pressure on the legacy components in the realm of adoption of new technology and also regulatory push to embrace stringent emission norms in the mobility sector.

Thousands of auto component makers and aftermarket, players risk shutting down in the next 8-10 years as they are ill-prepared for a future where new and disruptive technologies like electric vehicles and autonomous or self-driving cars take over the roads. As new ideas and technologies in the automobile sector come to the fore every day, the $51 billion Indian auto component industry is waiting for the government or one of its agencies to draw up a detailed road map on the future of mobility. Unless there is some clarity on the automakers’ technology play in India and the development of the ecosystem that goes along with it through some well-defined policies and notifications, both the auto and component makers will continue to live in a state of uncertainty. Nearly 50% of the domestic auto component players are either making engine parts or the transmission drive, which will have no place in an electric car, which runs on batteries. There is also a question mark on the kind of batteries that will ultimately survive; whether it will be lithium-ion or something else will depend mostly on the cost of the battery and its safety features.

The CAFÉ norms and BSVI implementation will further push automobile companies to embrace technology that restricts emission and this will pave way for newer technology like ISG and BSG that are likely to replace alternator and generator in automobile. The mandatory requirement to enhance safety feature and premiumization of mass selling cars will also lead to migration of electrical architecture from 12V to 48V. The InfraInsights research report “Growth Strategy for Auto Component Manufacturers in India: Product Portfolio to tide over the anticipated disruption in the Automobile Industry”, aims to provide a perspective on how the automobile industry will shape up in the next 10 years and what should be the product portfolio of auto component manufacturers to stay relevant and grow. The report will provide detailed data, analysis, and insights on the future outlook that will enable auto component manufacturers to redraw their strategy and continue the growth trajectory it has been witnessing till date.