As a consequence of the year-long slowdown in sales of automobiles across the country, the total turnover of the automotive component manufacturing industry declined by 10% year-on-year to ₹1.79 lakh crore in the first half of the fiscal ending March 2020, according to the data released by Automotive Component Manufacturers Association of India (ACMA).
Sales of automobiles in the domestic market have been on a precipitous decline since the September quarter of 2018-19 due to overall slowdown in consumption in the economy and liquidity crisis in financial institutions after the collapse of Infrastructure Leasing and Financial Services Ltd (IL&FS).
Subdued vehicle demand, recent investments made for transition from BS 4 to BS 6, liquidity crunch, lack of clarity on policy for electrification of vehicles, among others, have also had an adverse impact on the expansion plans of the auto component sector, ACMA said in a press release.
“The automotive industry is facing a prolonged slowdown. The vehicle sales in all segments have continued to plummet for the last one year. Considering the auto component industry grows on the back of the vehicle industry, a current 15% to 20% cut in vehicle production has inter-alia adversely impacted the auto components industry performance and investments," said, ACMA President Deepak Jain said.
The exports of automotive components during April-September increased by just 2.7% year-on-year to ₹51,397 crore.
“The second-half of 2018-19 saw a significant slump in vehicles sales that continued well into the first half of 2019-20. The component industry, in tandem, posted a somewhat subdued performance with decline of 10.1% over the first half of the last fiscal, registering a turnover of Rs.1.79 lakh crore (USD 26.2 billion)," ACMA Director General Vinnie Mehta said.