Monday, Jul 13, 2020 | Last Update : 05:42 PM IST

111th Day Of Lockdown

Maharashtra25442714032510289 Tamil Nadu138470895321966 Delhi112494899683371 Gujarat41906291982046 Karnataka3884315411686 Uttar Pradesh3647623334934 Telangana3467122482356 West Bengal3001318581932 Andhra Pradesh2916815412328 Rajasthan2439218103510 Haryana2124015983301 Madhya Pradesh1763212876653 Assam168071089541 Bihar1630511953125 Odisha13737875091 Jammu and Kashmir105135979179 Kerala7874409532 Punjab78215392199 Chhatisgarh4081315319 Jharkhand3760230831 Uttarakhand3537278647 Goa2453120714 Tripura206714212 Manipur16098960 Puducherry141873918 Himachal Pradesh121391610 Nagaland8453270 Chandigarh5594178 Arunachal Pradesh3601382 Meghalaya295452 Mizoram2311500 Sikkim164810
  Business   Autos  13 May 2020  Auto component industry likely to witness double-digit degrowth in FY21

Auto component industry likely to witness double-digit degrowth in FY21

PTI
Published : May 13, 2020, 1:24 pm IST
Updated : May 13, 2020, 1:24 pm IST

India exports around 12 percent of the total auto components to economies with reliance on crude oil such as Africa and Latin America

 Auto component industry likely to witness double-digit degrowth in FY21. (PTI Photo)
  Auto component industry likely to witness double-digit degrowth in FY21. (PTI Photo)

Mumbai: The Auto component industry is likely to witness a second consecutive year of double-digit degrowth this fiscal mainly on account of disruption in operations due to coronavirus pandemic and the subsequent lockdown, according to a report.

The counter measures are likely to lead to lower-income levels, weaker consumer sentiments, production disruptions, decreased industrial output as well as the lesser movement of vehicles, resulting in a decline in global automobile demand and therefore, lower revenue and profitability for auto ancillaries in FY21, India Ratings (Ind-Ra) said in the report on Tuesday.

"Ind-Ra expects that the auto ancillaries industry on an average could record at least 100bp EBITDA margin decline in FY21 and the profitability decline for export-focused auto ancillaries could be steeper as exports earn higher margins. The lower commodity prices could aid the profitability for the sector, though only to a limited extent, due to pass-through agreements with OEMs and OEMs' higher bargaining power.

"Also, some benefit may accrue to companies with overseas manufacturing units, as certain economies have announced support measures to meet part of the fixed costs during the shutdown period. A depreciated rupee rate could partly offset the decline in sales volumes; however, the benefit is not expected to be significant," it said.

However, the revenue and profitability of auto ancillaries focused on domestic markets are likely to fare better due to higher content per vehicle on the back of evolving regulatory norms including BS-VI applicable from 1 April, 2020, as per the report.

Entities with a large reliance on overseas markets are expected to face a higher demand risk as the key markets of the US and Europe have been the most impacted by the virus, which could lead to uncertain business conditions, it said.

The US, Germany and the UK are the largest export markets for auto components globally.

Besides, India also exports around 12 percent of the total auto components to economies with reliance on crude oil such as Africa and Latin America.

Tags: auto component, auto component industry, auto components, auto industry, automobiles, coronavirus, coronavirus outbreak, coronavirus pandemic, covid-19, india ratings, lockdown, nationwide lockdown, shutdown
Location: India, Maharashtra, Mumbai (Bombay)