COVID-19 outbreak leads to 12% decline in Auto Component Industry's turnover in India during FY20

According to a recent report, the automobile component manufacturing companies in India saw a decline of 11.7 per cent to INR 3.49 lakh crore in their total turnover during fiscal 2020, attributing to the COVID-19 impact on the automobile industry.

In the financial year 2019, the revenue of the auto component manufacturing companies was INR 3.95 lakh crore, growing by 14.5 per cent over the year.

The exports of the industry, which account for about 19 per cent of the total industry revenue, declined as well by 3.2 per cent to stand at INR 1.02 lakh crore in FY20 versus INR 1.06 lakh crore in FY19.

Imports also witnessed a downfall of 11.4 per cent to INR 1.09 lakh crore during the year. Asia accounted for 65 percent of imports, followed by Europe and North America 26 per cent and 8 per cent, respectively. Imports from Asia declined by 7 per cent, while that from Europe and North America fell by 22 per cent and 17 per cent, respectively, said ACMA.

Deepak Jain, President of Automotive Component Manufacturers Association of India, pointed out that subdued vehicle demand, investments made for transition from BS-IV to BS-VI, liquidity crunch, lack of clarity on policy for electrification of vehicles, and slowdown in export market were some of the reasons for the adverse impact on the performance of the components sector in India.

Jain elaborated, “The auto component industry has displayed remarkable resilience in wake of the lockdown; the industry faced acute challenges on the front of working capital, production and dysfunctional logistics."

However, the industry is expected to rebound with the increase in vehicle consumption, especially two-wheelers and passenger cars, with the unlocking of economy. But the sales of commercial vehicles are likely to remain challenged, he added.

Jain expects the component industry’s performance to return to pre-COVID levels by the upcoming festive seasons.

"Going forward, to allow for uninterrupted production in the automotive value chain, despite local lockdowns, ACMA has recommended to the Government to accord ‘continuous production industry’ status to the automotive industry," Jain added.