Driving Forward: Diversification and Premiumisation Power India's Auto Ancillary Boom

A report by Equirus Securities highlights that diversification and vehicle premiumisation have tripled revenues in India's auto ancillary sector over the past decade. Companies leveraging multiple growth levers and focusing on premium features outperformed competitors, while electric vehicles are expected to offer new growth opportunities.

In an insightful report by Equirus Securities, diversification strategies and the trend of vehicle premiumisation have been spotlighted as pivotal factors driving the substantial growth in India's auto ancillary sector over the past decade.

The report reveals that the industry has witnessed a threefold increase in revenues, achieving an impressive compound annual growth rate (CAGR) of 11 percent between FY16 and FY26, swelling to approximately Rs 5 trillion. Despite varied performance among different segments, diversification repeatedly emerged as a winning strategy over sheer volume growth.

Notably, auto ancillary companies that embraced growth through acquisitions, new product lines, expanding geographies, and cultivating additional customer bases consistently surpassed industry averages. The surge in premiumisation further propelled growth, marked by increases in emission-led content and vehicle electronics, enhancing revenue per vehicle. Prominent segments like Electricals and Lighting led the growth parade, while Batteries trailed. As the industry eyes the future, electric vehicles present new lucrative opportunities, particularly in previously non-existent areas such as battery management and digital clusters.