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Auto components in distress

Turnover of auto component industry is down 10 % to Rs 1.79 lakh cr in April-September period

By PTI in New Delhi
  • Published 7.12.19, 1:44 AM
  • Updated 7.12.19, 1:44 AM
  • 2 mins read
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Newly manufactured Maruti Suzuki cars are seen parked inside the company factory in Manesar near Gurugram, on Wednesday, Sept 4, 2019 PTI

The auto component industry’s turnover witnessed the worst decline in the first half of the current fiscal, leading to a job loss of around 1 lakh temporary workers till July this year, industry association Acma said on Friday.

The turnover of the industry dropped to Rs 1.79 lakh crore in the April-September period, down 10.1 per cent from Rs 1.99 lakh crore in the year-ago period, the Automotive Component Manufacturers Association (Acma) said.

The industry body said the slowdown has also resulted in an investment loss of up to $2 billion during the period. Exports, however, registered a marginal growth of 2.7 per cent to Rs 51,397 crore ($7.5 billion) during the period, while the after-market segment grew 4 per cent to Rs 35,096 crore ($5.1 billion).

Import of components declined 6.7 per cent to Rs 57,574 crore ($8.4 billion), Acma said.

”The automotive industry is facing a prolonged slowdown. The vehicles sales in all segments have continued to plummet for the last one year,” Acma president Deepak Jain told reporters here.

Considering that the auto components industry is dependant on the vehicle industry, a current 15-20 per cent cut in vehicle production has adversely impacted the component segment, he added.

The last time when the auto components industry witnessed a decline in turnover was in 2013-14 when it dipped 2 per cent, Acma said.

Job losses

Jain said retrenchment in the sector has taken place from October last year till July 2019. “Primarily, it is the temporary employees who have lost jobs during the period,” Jain said. Component makers were adjusting production to demand during the period.

He said a 10 per cent growth would have added $6 billion of revenue, for which the corresponding investment could have been around $2 billion.

“Therefore, the investment loss because of the slowdown would be around $1.5-2 billion,” he added.

At present, the components industry’s capacity utilisation has come down to 50 per cent from around 80 per cent when growth was at its peak.

Acma said subdued demand, recent investments made for the transition to BS-VI from BS-IV, liquidity crunch and lack of clarity on policy for electrification of vehicles had an adverse impact on the expansion plans for the component sector.

Maruti recall

Maruti Suzuki India on Friday said it was recalling 63,493 units of the petrol smart hybrid (SHVS) variants of the Ciaz, Ertiga and the XL6 models to rectify a faulty motor generator unit (MGU).

A possible defect may have occurred in the MGU during manufacturing by an overseas global parts supplier, it added.

The vehicles were manufactured between January 1, 2019 to November 21, 2019.

“In the interest of its customers, the company has decided to recall the vehicles for inspection and those found ok will be released immediately,” MSI said.