Icra predicts strong growth in domestic auto components industry

The domestic auto components industry is expected to grow at around 15 per cent in the next financial year despite a slowdown in demand in the automotive sector, according to rating agency Icra. The growth is supported by healthy volume growth in two-wheelers, commercial vehicles and tractor segment until November last year. The rating agency also expects automobile volumes to grow 8-9 per cent during 2019-20, as against 14.8 per cent growth during 2018-19.

"Weighted-average demand for auto components from OEMs (original equipment manufacturers) is expected to grow by 10-11 per cent in the next fiscal, as compared with 9.5 per cent expected in FY2018, supported by strong commercial vehicle volumes," Icra said. 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, it added.