IGI Logo

Credit ratings agency ICRA in its latest report has said that the auto components industry is expected to post 20-23 per cent revenue growth during this fiscal (FY22), aided by strong exports and recovery in the domestic market, with all segments (passenger vehicles, two-vehicles and commercial vehicles) likely to report healthy double-digit growth in 2021-22. However, it said prices of key commodities and shortage of semi-conductors remain the key concerns for the industry.

According to the report, the domestic auto component industry has seen a smart recovery during the first quarter of this fiscal, driven by strong exports and revival of domestic demand in June. It also said most domestic automobile segments, especially passenger vehicles (PVs) and tractors, continue to witness strong demand and are almost at pre-COVID-19 levels. Even the M&HCV (medium and heavy commercial vehicle) segment, which was impacted during the April quarter, is also now showing signs of recovery.

The report further said the industry gross margins improved sequentially in the first quarter of 2021-22, but remain lower than the historical trend. The shortage of semi-conductor and an increase in commodity prices remain key challenges for the industry in the near term. However, it said one of the concerns for the industry is the prices of key commodities which continue to remain at elevated levels, despite some moderation in recent months.