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The dip in the sales of cars has not only impacted the overall scenario of the automobile industry, but at the same time has also started affecting the component manufacturing companies. Anyhow, now going through the implementation of new safety norms from July this year and new BS-VI norms from April 2020, it is believed that the automobile component manufacturing companies will succeed in finding some suitable to come out of the situation.

 

Commenting on the situation Hetal Gandhi – Director, CRISIL, said, “In Q4 FY19, due to the existing high dealer inventory levels, players undertook production cuts which cascaded to the auto component manufacturers. We expect muted production to continue up until H1FY20. The only silver lining for auto component manufacturers is the safety norms which will be implemented in July and October, which will increase the component intensity of vehicles. Hence despite the slow volume growth, the value growth for the component sector is expected to be slightly better.” 

 

 

Moving ahead, she said that using these components in the vehicles is mandatory to comply with the new safety norms. These components include airbags, reverse parking sensors, antilock braking system, speed limit reminders, manual override switch for central locking system and sensors for seat belts. The same thoughts were shared by Vinnie Mehta, Director General, Automotive Component Manufacturers Associating of India, which is an apex body working in the interest of auto component manufacturing industry. According Vinnie Mehta, the components manufacturing industry is undergoing the crisis due to slow growth in the automobile industry. Moving ahead Mehta affirmed that with the implementation of the new safety norms, it is believed that the sector will get momentum and soon return back on its track.

 

In the light of growth, the component manufacturing industry might also get disappointed due to discontinuation of manufacturing the small diesel cars by major car makers.