Premiumisation in Indian auto sector to fuel sustained growth for component suppliers: Report - World News Network

New Delhi [India], April 26 (ANI): As more consumers in India opt for higher-end vehicles and premium features (like sunroofs, ADAS, etc.), the demand for advanced and higher-value auto components will see a sustained growth, said a report by Ambit Capital.
India has seen a premiumisation trend in two-wheelers as the 125 CC and above segment has witnessed an increase of 19 percentage points over the last 10 years.
The share of passenger vehicles priced at Rs 1.5 million and above increased 20 percentage points over the last 10 years, the report observed.
The report says that the sunroof penetration rose sharply from 4 per cent in 2019 to 26 per cent in 2023.
The share of cars sold with automatic transmission increased by 13 percentage points over the past four years, the report added.
Going further, the report added that while EV disruption poses existential risk for the suppliers of ICE-dependent components, it opens up several opportunities for the component suppliers to provide EV components like li-ion batteries, traction motors, controllers, BMS etc. It also brings advanced technologies enabled by Electric Vehicles (EVs) like regen braking, advanced ADAS, smart cockpits etc.
Additionally, the report added that the EVs would drive an increase in content for certain components like wiring harnesses, ECUs, differential assemblies etc.
The report says that the EV penetration is expected to gradually increase in two wheelers (21 per cent by FY29E vs 6.3 per cent in FY25E) and PVs (10.4 per cent in FY29E versus 2.6 per cent in FY25E), but see faster adoption in 3Ws (67.9 per cent in FY29E vs 22.9 per cent in FY25E).
“While many of these EV-specific components have a higher level of imports, considering the large opportunity in these new components, competitive intensity is expected to be much higher in the initial phase,” the report added.
Global trade in auto components exceeds USD 450 billion, yet India accounts for only about 2 per cent of this market.
However, the report adds that the country is well-positioned to increase its share due to several enabling factors.
These include a large domestic market, a well-established supply chain, abundant engineering talent, and lower costs of power and labour. Additionally, India is aligning its emission and safety standards with global norms, enhancing its competitiveness in international markets.
The report adds that India is yet to fully realize its potential to benefit from global supply chain realignment, as reflected in the share of exports in total sales stable at 16 percent over FY19-24.
“This is partly due to Chinese suppliers setting up manufacturing operations in Southeast Asia and the weak demand environment in key global markets,” said the report.(ANI)

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