Home News ICRA comes out with revised downward growth forecast for auto industry

ICRA comes out with revised downward growth forecast for auto industry

ICRA comes out with revised downward growth forecast for auto industry

agency Icra has revised downwards the revenue growth forecast for the auto
components industry in the current fiscal to 15-17 percent.

cited the impact of the Omicron wave, delayed recovery in semiconductors
shortage and muted two-wheelers demand. It, however, said despite the potential
Omicron impact, the domestic aftermarket demand is expected to grow 8-10 per
cent in FY22 while exports remain a bright spot in the Indian auto component
story with an estimated growth of over 20 per cent this fiscal.

S, Assistant Vice President and Sector Head, Icra, said that, the (revenue)
growth forecast for FY2022 has been revised downward by 200 bps to 15-17 per
cent from the earlier estimates due to the ongoing Omicron wave, delayed
recovery in semi-conductors and muted two-wheelers and bus demand.

Icra expects
the “robust 15-17 per cent revenue growth” in the ongoing fiscal for
the Indian auto component industry to be driven by domestic OEM, replacement,
export volumes and pass-through of commodity prices, she added.

healthy volume growth would, however, come on a low base of FY21, Vinutaa said,
adding there could be a downward bias to Icra’s estimates in case of prolonged
lockdowns or significant demand slowdown because of the Omicron wave.

domestic original equipment sub-segments are expected to register healthy
volume growth in FY2022, albeit, on a low base of the last fiscal, Icra said,
adding pass-through of commodity prices will also inflate revenues by 4-5 per

of COVID 2.0 related lockdown restrictions and improvement in personal
mobility, healthy freight movement and pent-up demand arising from deferment of
purchases last year, supported replacement sales for auto
components in Q2 and Q3 FY2022.

there could be some impact on mobility because of the ongoing COVID wave,
freight movement and deferment of fresh vehicle purchases will result in
healthy replacement demand in Q4 FY2022,” the agency said.

the export front, the rating agency said the Indian auto component suppliers
have reported a healthy improvement in sales volumes to Europe in year-to-date
FY22 and have a strong order book for the next few months, partly aided by the
‘China+1‘ strategy.

third quarter has been relatively dull because of supply-chain issues, it said,
adding the export order book for Indian auto component suppliers would have
been even better if not for the chip shortages.

high infections and prolonged lockdowns in India’s key export markets like
Europe and the US remain a downside risk, it noted.

over the long term, Vinutaa said premiumisation of vehicles and focus on
localisation will translate into relatively stronger growth for auto component

 Image Source: Google Images

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