NEW DELHI: Contraction in automobile sales across Europe and the US has put brakes on the growth of exports of auto components from India that have
ended near flat in fiscal 2008-09 after witnessing an over 20% CAGR since 2003.
Vishnu Mathur, executive director of Automotive Component Manufacturers Association (ACMA), said with the key markets drying up, Indian component exporters had difficult time in overseas sales, something that had been shaping up firmly over the last few years.
"While the domestic market is on a recovery path, there has been trouble on the export front. Both Europe and the US have been horribly down," Mathur told TOI. Component exports from India, that touched $3.6 billion in 2007-08, are estimated to be near flat in 2008-09, witnessing a minor growth on the back of appreciation of the rupee that helped get higher realisations, he added.
With situation on the export front remaining grim, he refused to guess on when there would be a revival. "It is difficult to say anything now. There are no real indicators to suggest when there would be recovery," Mathur said.
Companies have been bearing the brunt of the slowdown. Amtek Auto, that gets as much as 50% of its sales from abroad, has seen foreign market shrink majorly. "Overseas sales for us was down as much as 30-40% last fiscal following the slowdown in Europe. While we had done around $650 million in 2007-08, the number came down to around $450 million last fiscal," said Santosh Singhi, CFO of Amtek.
Worse, the company that supplies to nearly all major manufacturers including Aston Martin, Jaguar, Land Rover, Cummins, BMW and Toyota expects the market to remain sluggish for some more time. "There is not much visibility going forward. There would be a turnaround only around January next year," Singhi said.
Kiran Deshmukh, deputy managing director of Sona Koyo Steerings Systems, also said sales in overseas markets have been a laggard. "It has been more or less flat and there has not been much improvement in the situation," he said. Deshmukh said demand in export markets was likely to remain subdued in the coming time. "Revival seems to take longer to come back," he added. The company is a supplier of steering systems to cars and off-highway vehicles.
Arvind Kapur, MD of Rico Auto Industries that makes components for engines, also said the situtaion had not been satisfactory. "Our exports dipped by around 7% last fiscal as US and Europe shrank," he said. Rico supplies to companies like Ford, GM, Caterpillar, BMW and Cummins and Kapur said the situation in the current financial year also remained uncertain.
AK Taneja, President of Shriram Pistons & Rings, also said overseas markets remained sluggish. "While we could still manage a growth of about 20% in exports, this was way below our targets. The problem is that while we have created new capacities, the volumes are not realised. Even in the after-market, there is now a reluctance as people expect prices to drop after the fall in prices of commodities," Taneja said.
He said the fall in car sales would mean surplus capacity in the market. "This can be devastating. Also, this will see a lot more pain in the market as the question will be what to do with the surplus capacity for which investments have been made," he said.
While Europe accounts for nearly 44% of auto component exports, North America's share is 22% which is followed by Asia with 15%. And while Middle East and Africa account for around 7% each of the component exports, South America accounts for 4%.
http://timesofindia.indiatimes.com/Business/Auto-parts-exporters-feel-heat/articleshow/4628832.cms
ended near flat in fiscal 2008-09 after witnessing an over 20% CAGR since 2003.
Vishnu Mathur, executive director of Automotive Component Manufacturers Association (ACMA), said with the key markets drying up, Indian component exporters had difficult time in overseas sales, something that had been shaping up firmly over the last few years.
"While the domestic market is on a recovery path, there has been trouble on the export front. Both Europe and the US have been horribly down," Mathur told TOI. Component exports from India, that touched $3.6 billion in 2007-08, are estimated to be near flat in 2008-09, witnessing a minor growth on the back of appreciation of the rupee that helped get higher realisations, he added.
With situation on the export front remaining grim, he refused to guess on when there would be a revival. "It is difficult to say anything now. There are no real indicators to suggest when there would be recovery," Mathur said.
Companies have been bearing the brunt of the slowdown. Amtek Auto, that gets as much as 50% of its sales from abroad, has seen foreign market shrink majorly. "Overseas sales for us was down as much as 30-40% last fiscal following the slowdown in Europe. While we had done around $650 million in 2007-08, the number came down to around $450 million last fiscal," said Santosh Singhi, CFO of Amtek.
Worse, the company that supplies to nearly all major manufacturers including Aston Martin, Jaguar, Land Rover, Cummins, BMW and Toyota expects the market to remain sluggish for some more time. "There is not much visibility going forward. There would be a turnaround only around January next year," Singhi said.
Kiran Deshmukh, deputy managing director of Sona Koyo Steerings Systems, also said sales in overseas markets have been a laggard. "It has been more or less flat and there has not been much improvement in the situation," he said. Deshmukh said demand in export markets was likely to remain subdued in the coming time. "Revival seems to take longer to come back," he added. The company is a supplier of steering systems to cars and off-highway vehicles.
Arvind Kapur, MD of Rico Auto Industries that makes components for engines, also said the situtaion had not been satisfactory. "Our exports dipped by around 7% last fiscal as US and Europe shrank," he said. Rico supplies to companies like Ford, GM, Caterpillar, BMW and Cummins and Kapur said the situation in the current financial year also remained uncertain.
AK Taneja, President of Shriram Pistons & Rings, also said overseas markets remained sluggish. "While we could still manage a growth of about 20% in exports, this was way below our targets. The problem is that while we have created new capacities, the volumes are not realised. Even in the after-market, there is now a reluctance as people expect prices to drop after the fall in prices of commodities," Taneja said.
He said the fall in car sales would mean surplus capacity in the market. "This can be devastating. Also, this will see a lot more pain in the market as the question will be what to do with the surplus capacity for which investments have been made," he said.
While Europe accounts for nearly 44% of auto component exports, North America's share is 22% which is followed by Asia with 15%. And while Middle East and Africa account for around 7% each of the component exports, South America accounts for 4%.
http://timesofindia.indiatimes.com/Business/Auto-parts-exporters-feel-heat/articleshow/4628832.cms
