EV startups vertically integrated, standalone component maker will continue: ACMA

Chennai, Aug 22 There will be space for stand alone auto component makers in the electric vehicle (EV) manufacturing space even though some manufacturers are vertically integrated, said a top official of Automotive Component Manufacturers Association of India (ACMA).

"Vertical integration will be a cycle. EV startups will begin doing everything in house. When they grow big they will farm out. There will be space for component players," Sunjay Kapur, President of ACMA and Chairman of Sona Comstar told the media on Monday.

"The industry supplied Rs 3,520 crore worth of components to the EV makers which is about one per cent of the sales made to the OEMs (original equipment manufacturer), said Vinnie Mehta, Director General, ACMA.

According to Kapur, though the auto ancillary industry earns a sizeable sum from supplying engine and transmission components for internal combustion engine (ICE), the EV growth will not majorly impact the players.

"Cars, heavy commercial vehicles and stationary engines will continue to exist. It is not that engine manufacturers would suffer because of EV," Kapur said.

Looking back, Mehta said the auto component industry logged a total business of about Rs 4.20 lakh crore ($56.5 billion) last fiscal, up from about Rs 3.40 lakh crore ($45.9 billion).

"Exports grew by 43 per cent to Rs 1.41 lakh crore ($19.0 billion) while imports grew by 33 per cent to Rs 1.36 lakh crore ($ 18.3 billion) leading to a trade surplus of $700 million. The aftermarket, estimated at Rs 74,203 crore, also witnessed a steady growth of 15 per cent. Component sales to OEMs in the domestic market grew by 22 per cent to Rs 3.41 lakh crore," Mehta said.

According to Kapur, the macroeconomic parameters are good and the component makers are seeing demand grow and the industry's overall production capacity utilisation is good.

The two wheeler industry is not doing well and the capacity utilisation there - ancillaries supplying to two wheelers-will be lower, Mehta said.

"Going forward, with a slew of new launches, vehicle sales are expected to gain traction during the festive season. Further, increased focus by the auto industry on deep-localisation and the announcements of the PLI (productivity linked incentive) schemes by the Government on Advanced Chemistry Cell (ACC) batteries and auto components will facilitate the creation of a state-of-the-art automotive value chain and aid in developing India into an attractive alternative source of high-end auto components," Kapur said.

"The component industry is also transforming itself as sales of two-wheeler and three-wheeler EVs gain traction. I am hopeful that the buoyancy in the market will continue through the year and that FY22-23 will witness a healthy performance," he added.

According to him, there is a good opportunity for the players to put up electric charging stations.