New Delhi: gave Income After a strong performance in fiscal 2024, the Indian auto parts industry is expected to grow between 5 to 7 percent in fiscal 2025, a new report showed on Thursday.

According to rating agency ICRA, operating margins are expected to improve year-on-year in FY25, driven by factors such as better operating leverage and higher value addition.

“Demand from domestic original equipment manufacturers (OEM) accounts for more than 50 percent of the Indian auto component industry’s sales and growth in the sector is expected to moderate in FY 2025,” said Venuta Sriraman, VP & Sector Head – Corporate Ratings said. ICRA LIMITED

“After a relatively weak Q1 in the current financial year, after two to three years of healthy growth, demand growth for alternatives is at 5-7 per cent,” he added.

The report sample includes 46 auto ancillary companies with gross annual revenue of over Rs 3,00,000 crore in FY2024.

Further, the report predicts that the industry will have to invest Rs 20,000-25,000 crore in FY2025 for capacity expansion and technological development.

Capex is expected to hover around 8-10 percent of operating income over the medium term, with PLI also supporting the scheme to accelerate capex towards advanced technology and EV components.

On the export front, new vehicle registrations in Europe and the US are expected to pick up over the next few quarters, buoyed by a weak global economic environment and geopolitical tensions.

Aging vehicles and increasing sales of used vehicles in global markets are also expected to support the export of alternative segment components in foreign markets.

The report further states that electric vehicle (EV) opportunities are linked to vehicle premiumization, focus on localization, and changes in regulatory norms to support steady growth for auto parts suppliers.

By 2030, EVs will account for about 25 percent of domestic two-wheeler sales and 15 percent of passenger vehicle sales.



Source link