India auto component industry revenues to expand 8-10% in 2025-26: ICRA

NEW DELHI: Revenue in the Indian auto component industry is predicted to expand by 8-10 per cent in the upcoming monetary 12 months 2025-26, in accordance to ranking company ICRA.
The ranking in a observe Thursday asserted the home auto component industry income will fall to 7-9 per cent in the present monetary 12 months 2024-25, in opposition to the highs of 14 per cent in 2023-24,
Operating margins are anticipated to stay range-bound and hover at 11-12 per cent in 2024-25 and 2025-26, supported by advantages from working leverage, increased content material per automobile and worth addition.
The disruption alongside the Red Sea route has resulted in a surge in ocean freight charges by 2-3 instances in 2024 in contrast to 2023.
ICRA asserted that any additional sharp and sustained enhance in ocean freight charges may even have a bearing on margins for auto component suppliers having vital exports or imports.
ICRA estimates the auto component industry to incur a capex of Rs 25,000-30,000 crore in 2025-26 in direction of capability growth, localisation or functionality improvement and technological development (together with EVs), amongst others.
At current, solely 30-40 per cent of the EV provide chain is localised.
There has been substantial localisation in traction motors, management items and battery administration methods over time, whereas battery cells, which represent 35-40 per cent of car value, are nonetheless solely imported.
“The relatively low localisation level gives rise to manufacturing opportunities for domestic auto component suppliers,” ICRA famous.
Vinutaa S, Vice President and Sector Head – Corporate Ratings, ICRA Limited, stated the home auto component industry is in a transitory section with the automotive gamers more and more specializing in sustainability, innovation and international competitiveness.
“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 2024-25 and 8-10 per cent in 2025-26. Part of the growth would stem from premiumisation of components and higher value addition. Growth in replacement demand is pegged at 5-7 per cent in 2024-25 and 7-9 per cent in 2025-26, driven by increase in vehicle parc, higher average age of vehicles/used car purchases, preventive maintenance and growth in organised spare parts, among other reasons,” Vinutaa S added.
Further, ICRA sees alternatives for Indian gamers in steel castings and forgings due to closure of crops in the European Union (EU) due to viability points. Ageing of autos and sale of extra used autos in international markets would help in exports for the alternative phase.
The affect of any import tariffs on Indian auto component exports stays monitorable, it stated in a cautionary observe.