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Time of India
21-05-2025
- Automotive
- Time of India
Automotive component sector likely to clock 7-9% revenue growth in FY26: Crisil
Domestic automotive component sector is expected to clock 7-9 per cent revenue growth this fiscal, mirroring last fiscal, driven by sustained demand momentum from two-wheelers and passenger vehicles segments especially utility vehicles, which account for nearly half of the overall revenue, ratings agency Crisil said on Wednesday. It also said that while a moderate uptick in commercial vehicles and tractors sales (around 17 per cent share) will provide an additional tailwind, the aftermarket segment (15 per cent share in revenue) is seen ticking along steadily at 5-7 per cent. However, weak demand for new vehicles in the US and Europe (around 60 per cent of India's exports), presents headwinds. "Demand from automotive OEMs, contributing two-thirds of total revenue, is expected to grow 8-9 per cent this fiscal, with value outpacing volume on rising safety, emission and electronic content, especially in PVs and 2Ws," said Poonam Upadhyay, Director at Crisil Ratings. The aftermarket segment will log a steady 6-7 per cent growth, supported by an ageing vehicle base, she said, adding export growth, however, will moderate to 7-8 per cent amid weak demand for internal combustion engine vehicles and a deceleration in electric vehicle adoption across the US and Europe. Live Events The US, while contributing just around 5 per cent to total revenue, commands a dominant 28 per cent share of export earnings and is the fastest-growing auto component market, said Crisil. The 25 per cent tariff planned by the US can hurt companies heavily reliant on this geography, as per the ratings agency. According to Crisil, operating margins are seen stable at 12-12.5 per cent, driven by growing share of high-margin components such as ADAS (Advanced Driver Assistance System) modules, infotainment systems and advanced braking. A decline in input cost -- particularly of steel (45-50 per cent share in input costs), aluminium (15-20 per cent), and plastics (10-12 per cent) -- used for structural rigidity, reducing vehicle weight and for interiors will support profitability. But pressure from new tariffs can dent the margins of companies exporting largely to the US, it stated. As per Crisil, continuing high capital spend will be funded primarily by internal accruals. This, along with tight control over working capital, will ensure low dependence on external borrowing, keeping credit profiles stable. "The share of high-margin, technology-intensive components now account for around 27 per cent of the segment's revenue, up from around 18 per cent before Covid-19, driven by premiumisation, and stricter emission norms," said Anil More, Associate Director, Crisil Ratings. This structural shift, along with easing input costs, will help players sustain operating margins at 12-12.5 per cent this fiscal despite the global headwinds. However, companies with high export dependence on the US market may see margins compress 125-150 basis points amid limited ability to pass on tariffs, according to him. The rating agency also said that the sector's credit outlook for this fiscal is stable owing to strong cash flows and minimal debt addition, despite sustained capex of around Rs 22,000 crore for scaling EV capabilities, automation and precision manufacturing - in tune with model launches that increasingly feature EVs. However, with EVs forming just around 4 per cent of PV volume, their revenue contribution remains marginal, keeping returns from this category of vehicles muted in the near term, Crisil said. Economic Times WhatsApp channel )
New Indian Express
21-05-2025
- Automotive
- New Indian Express
Crisil projects 7–9% growth for India's auto component industry in FY25
Operating margins in the sector are projected to remain stable at 12–12.5 percent this fiscal, supported by the increasing share of high-margin components such as automated driver assistance systems (ADAS) modules, infotainment systems, and advanced braking systems. A decline in input costs — particularly of steel (45–50% share in input costs), aluminium (15–20%), and plastics (10–12%) — used for structural rigidity, weight reduction, and interiors, will further support profitability. However, the imposition of new tariffs could erode margins for companies heavily reliant on US exports, Crisil warns. Continued high capital expenditure will be funded primarily through internal accruals. Alongside tight control over working capital, this will limit dependence on external borrowing, keeping credit profiles stable. An analysis by Crisil Ratings, covering automotive component makers that accounted for nearly 35 percent of the sector's total revenue of approximately ₹7.9 lakh crore last fiscal, supports this outlook. However, demand trends are expected to vary across the three key segments served by component manufacturers — original equipment manufacturers (OEMs), the aftermarket, and exports. 'Demand from automotive OEMs, which contribute two-thirds of total revenue, is expected to grow 8–9 percent this fiscal, with value growth outpacing volume growth due to rising safety, emission, and electronic content, especially in PVs and 2Ws,' said Poonam Upadhyay, Director, Crisil Ratings. 'The aftermarket segment will post steady 6–7 percent growth, supported by an ageing vehicle base. Export growth, however, is expected to moderate to 7–8 percent amid weak demand for internal combustion engine vehicles and a slowdown in electric vehicle (EV) adoption across the US and Europe,' she added. While the US contributes only about 5% to total industry revenue, it commands a significant 28 percent share of export earnings and is currently the fastest-growing export market for auto components. The proposed 25% tariff by the US could significantly impact companies with high exposure to that market. According to Anil More, Associate Director, Crisil Ratings, high-margin, technology-intensive components now account for around 27 percent of the segment's revenue, up from about 18 percent before the COVID-19 pandemic — a shift driven by premiumisation and stricter emission norms. 'This structural shift, along with easing input costs, will help players sustain operating margins at 12–12.5 percent this fiscal despite global headwinds. However, companies with heavy export dependence on the US may see margin compression of 125–150 basis points, given limited scope to pass on the impact of tariffs,' said More. The sector's credit outlook remains stable for this fiscal, supported by strong cash flows and minimal debt addition, despite continued capital expenditure of about ₹22,000 crore aimed at enhancing EV capabilities, automation, and precision manufacturing — in line with new model launches featuring more EVs. However, as EVs currently represent only around 4 percent of passenger vehicle volumes, their revenue contribution remains marginal, limiting near-term returns from this segment.
Time of India
21-05-2025
- Automotive
- Time of India
Auto components sector to grow 7-9% in FY25, driven by 2W and PV demand: Crisil
India's automotive components sector is expected to record 7–9 per cent revenue growth in the current fiscal, similar to the previous year, driven by continued demand from two-wheelers (2Ws) and passenger vehicles (PVs), particularly utility vehicles. These two segments account for nearly half of the sector's overall revenue, according to a Crisil Ratings analysis. A moderate rise in commercial vehicle and tractor sales, which contribute around 17 per cent of revenue, is expected to provide additional support. The aftermarket segment, contributing around 15 per cent to overall revenue, is projected to grow steadily at 5–7 per cent. However, muted demand for new vehicles in the US and Europe — markets that account for approximately 60 per cent of India's auto component exports — poses challenges. Operating margins for the sector are projected to remain stable at 12–12.5 per cent, aided by the increasing share of high-margin products such as ADAS modules, infotainment systems, and braking components. Lower input costs, especially of steel, aluminium and plastics — key materials for structural, weight reduction and interior applications — are expected to support profitability. However, potential tariff increases by the US could impact margins for companies with significant exposure to that market. OEM demand to lead growth 'Demand from automotive OEMs, contributing two-thirds of total revenue, is expected to grow 8–9 per cent this fiscal, with value outpacing volume on rising safety, emission and electronic content, especially in PVs and 2Ws,' said Poonam Upadhyay, Director, Crisil Ratings. 'The aftermarket segment will log a steady 6–7 per cent growth, supported by an ageing vehicle base. Export growth, however, will moderate to 7–8 per cent amid weak demand for internal combustion engine vehicles and a deceleration in electric vehicle adoption across the US and Europe.' Although the US contributes around 5% to total sector revenue, it accounts for 28 per cent of export earnings and remains the fastest-growing market for Indian auto components. A planned 25% tariff on Chinese-origin electric vehicles and components imported into the US could negatively affect Indian exporters dependent on this geography. Anil More, Associate Director, Crisil Ratings, noted, 'The share of high-margin, technology-intensive components now accounts for ~27 per cent of the segment's revenue, up from ~18% before Covid-19, driven by premiumisation and stricter emission norms. This structural shift, along with easing input costs, will help players sustain operating margins at 12–12.5 per cent this fiscal despite the global headwinds. However, companies with high export dependence on the US market may see margins compress 125–150 basis points amid limited ability to pass on tariffs.' Capex and financial position remain steady Capital expenditure in the sector is expected to remain elevated at approximately Rs 22,000 crore, focused on electric vehicle capabilities, automation, and precision manufacturing. This investment aligns with evolving vehicle models, many of which now include EV variants. However, with EVs making up only about 4 per cent of PV volumes, the contribution to revenue remains low. The credit outlook for the sector is stable, underpinned by strong cash flows and limited debt addition. Key financial ratios are expected to remain consistent with last fiscal, with interest coverage and debt-to-EBITDA at around 9 times and 1.3 times, respectively. Domestic OEM demand trends, raw material and freight cost movements, global shifts in vehicle demand, and the impact of reciprocal US tariffs on exports will be factors to watch in the coming quarters.
Hans India
21-05-2025
- Automotive
- Hans India
India's auto parts sector to clock 9 pc growth in 2025-26: Report
New Delhi: India's automotive component sector is expected to clock 7-9 per cent revenue growth during the financial year 2025-26, driven by sustained demand momentum from the two-wheeler (2W) and passenger vehicle (PV) segments, which account for nearly half of the overall revenue, according to a Crisil report released on Wednesday. A moderate uptick in commercial vehicles and tractor sales, which have a 17 per cent share, will provide an additional tailwind. The aftermarket segment, which accounts for a 15 per cent share in revenue, is seen growing steadily at 5-7 per cent, the report states. However, weak demand for new vehicles in the US and Europe, which constitute around 60 per cent of India's exports, presents headwinds. Operating margins are seen stable at 12-12.5 per cent, driven by the growing share of high-margin components such as ADAS1 modules, infotainment systems, and advanced braking. A decline in input cost -- particularly of steel (45-50 per cent share in input costs), aluminium (15-20 per cent), and plastics (10-12 per cent) -- used for structural rigidity, reducing vehicle weight, and for interiors will support profitability. But pressure from new tariffs can dent the margins of companies exporting largely to the US, the report says. Continuing high capital spend will be funded primarily by internal accruals. This, along with tight control over working capital, will ensure low dependence on external borrowing, keeping credit profiles stable, according to the report. The Crisil Ratings analysis is based on automotive component manufacturers, accounting for nearly 35 per cent of the sector revenue of around Rs 7.9 lakh crore last fiscal. The report also states that demand trends are expected to vary amongst the three key segments that automotive component players cater to, i.e., original equipment manufacturers (OEMs), aftermarket, and export segments. Crisil Ratings director Poonam Upadhyay said, 'Demand from automotive OEMs, contributing two-thirds of total revenue, is expected to grow 8-9 per cent this fiscal, with value outpacing volume on rising safety, emission and electronic content, especially in PVs and 2Ws. The aftermarket segment will log a steady 6-7 per cent growth, supported by an ageing vehicle base. Export growth, however, will moderate to 7-8 per cent amid weak demand for internal combustion engine vehicles and a deceleration in electric vehicle (EV) adoption across the US and Europe.' The US, while contributing just 5 per cent to total revenue, commands a dominant 28 per cent share of export earnings and is the fastest-growing auto component market. The 25 per cent tariff planned by the U.S. can hurt companies heavily reliant on this geography, the report points out. The report further highlights that the sector's credit outlook for this fiscal is stable owing to strong cash flows and minimal debt addition, despite sustained capex of around Rs 22,000 crore for scaling EV capabilities, automation, and precision manufacturing -- in tune with model launches that increasingly feature EVs. However, with EVs forming just 4 per cent of PV volume, their revenue contribution remains marginal, keeping returns from this category of vehicles muted in the near term. Key debt metrics are expected to remain healthy for automotive component players this fiscal, with interest coverage and debt-to-EBITDA at 9 times and 1.3 times, respectively, broadly in line with last fiscal, the report added.
Time of India
26-04-2025
- Automotive
- Time of India
India's passenger vehicle volume to scale fresh high in FY26, utility cars to lead: Report
India's passenger vehicle (PV) industry is set to scale a fresh high this fiscal with domestic and export volume cumulatively crossing 5 million units even as the annual growth rate slows to 2-4 per cent, a report showed on Friday. A Crisil Ratings report said that this marks the fourth consecutive year of record sales, although momentum has significantly eased from the 25 per cent surge in fiscal 2023 after the pandemic. According to the report, utility vehicles (UVs) will drive volume growth this fiscal, aided by new launches, easing interest rates, rising compressed natural gas (CNG) adoption and rural tailwinds. 'PV growth will moderate to 2-4 per cent this fiscal, but UVs will continue to cruise with 10 per cent growth, supported by new launches. With UVs contributing 68-70 per cent of volumes and bulk of upcoming models, the shift toward premiumisation is structural,' said Anuj Sethi, Senior Director, Crisil Ratings. Rural recovery, expected from likely above-normal monsoon and reduction in interest rates, should improve demand for entry-level cars, he added. Healthy cash flows and robust cash surplus will enable original equipment manufacturers (OEMs) to fund their high capex comfortably, while keeping their balance sheets strong and credit profiles stable. The domestic market accounted for 85 per cent of total volume last fiscal, with exports accounting for the rest. Fuel mix is also evolving rapidly. CNG-powered PVs are gathering pace, with their share likely reaching 15 per cent this fiscal owing to low running costs and a fast-expanding network of 7,000+ refuelling stations. 'OEMs can pivot to alternative markets such as Mexico, the Gulf countries, South Africa, and east Asia though ongoing geopolitical tensions could weigh on exports' momentum,' the report suggested. 'PV capex is expected to stay elevated at Rs 30,000 crore this fiscal as OEMs ramp up capacity, accelerate EV investments, and push localisation and digital upgrades. However, this high capex remains sustainable, backed by strong internal accruals and cash surplus, with capex-to-Ebitda steady at 0.5x,' said Poonam Upadhyay, Director, Crisil Ratings. The entry of global premium EV models, including Tesla would intensify competition in the premium segment, which accounts for less than 10 per cent of the overall volume, and will likely reset consumer expectations across categories, pushing Indian OEMs to accelerate technology upgrades. That said, the current high tariffs will limit imports.
