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Auto component makers face double whammy of demand, supply shocks

India covid-19 outbreak 2020 shock
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For India’s auto component manufacturers, things are going from bad to worse. On the one hand, there is a demand shock both in domestic and overseas markets for component exporters.

On the other, disruptions in supply are expected to continue, given factory lockdowns globally. In a study comprising 50 Indian auto parts makers, Icra Ltd forecast a 15% year-on-year revenue decline in FY20 (ex-tyres).

FY21 will see a 8-10% revenue drop on this lower base, said the rating agency. Of course, to be fair, these are preliminary estimates and there will be revisions depending on how the covid-19 outbreak pans out globally.

The pessimism is justified. India’s auto components industry has both import and export linkages with the global auto industry.

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