The Indian automotive components industry, which is a critical partner for the domestic as well as the global automotive industry is expected to grow by 8-10 percent in FY2026 according to ICRA.

The estimates are based on the company’s assessment of about 46 auto ancillaries with aggregate annual revenue of over INR 3,000 billion in FY2024, which accounted for about 50 percent of the industry.

For FY2025, the industry is expected to report 7-9 percent growth, with operating margines to be around 11-12 percent for FY2025 and FY2026. The confidence comes on the back of the industry benefitting from operating leverage, higher content per vehicle and value addition while remaining vulnerable to any significant unfavourable movements in commodity prices and foreign exchange rates.

The study stated that the ‘disruption along the Red Sea route has resulted in a surge in ocean freight rates by 2-3 times in CY2024 compared to CY2023. Any further sharp and sustained increase in ocean freight rates could also have a bearing on margins for auto component suppliers having significant exports/imports.’

In FY2026, ICRA estimates that the auto component sector will pump in INR 250-350 billion investment towards enhancing capacity, localisation/capability development and new technologies (including EVs) among others.

The big opportunity in EV segment can be seen on the fact that at present only 30-40 percent of the supply chain in India is localised, which includes traction motors, control units and BMS. On the other hand, EV battery cells that make up for almost 30-40 percent of an EV cost continues to be imported.

Vinutaa S, Vice President and Sector Head – Corporate Ratings, ICRA, said: "The domestic auto component industry is in a transitory phase with the automotive players increasingly focusing on sustainability, innovation and global competitiveness. Demand from domestic original equipment manufacturers (OEMs), which constitutes over half of the industry revenues, is estimated to grow by 7-9 percent in FY2025 and 8-10 percent in FY2026. Part of the growth would stem from premiumisation of components and higher value addition. Growth in replacement demand is pegged at 5-7 percent in FY2025 and 7-9 percent in FY2026, driven by increase in vehicle parc, higher average age of vehicles/used car purchases, preventive maintenance and growth in organised spare parts, among other reasons.”

“Exports, which account for close to 30 percent of the industry’s revenues, are likely to be impacted by subdued vehicle registration growth in the target markets. However, factors like rising supplies to new platforms because of vendor diversification initiatives by global OEMs/Tier-Is and higher value addition, partly stemming from increase in outsourcing, augur well for Indian auto component suppliers.”

Metal Castings & Forgings

ICRA finds that Indian component suppliers in the metal castings and forgings also have a bigger opportunity on the back of plants closure in European Union on the back of viability issues.

The report stated that ‘ageing of vehicles and sale of more used vehicles in global markets would aid in exports for the replacement segment. The impact of any import tariffs on Indian auto component exports remains monitorable.’

In the medium-to-long term, premiumisation, localisation, EVs and stringent regulatory norms continue to offer tailwind for the Indian automotive industry.

“ICRA’s interaction with large auto component suppliers indicates that the industry is estimated to spend INR 150-200 billion in FY2025 and another INR 250-300 billion in FY2026. The incremental investments would be made towards new products, product development for committed platforms and development of advanced technology and EV components, apart from capex for capacity enhancements and upcoming regulatory changes. R&D, though, is still at an average of 1-3 percent of operating income, significantly lower than the global counterparts. ICRA expects auto ancillaries’ capex to hover around 7-8 percent of operating income over the medium term, with the PLI scheme also contributing to incremental capex towards advanced technology and EV components,” he concluded.

Representational Image courtesy: Ronaldo Galeano/Pexels 

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Mumbai-headquartered automotive engineering and components supplier Remsons Industries has signed a Strategic Technical License Agreement with Brazil-based AUSUS Automotive Systems do Brasil.

As per the understanding, Remsons will collaborate with ASUS Brazil to license proprietary technologies, enabling the development and manufacturing of high-quality products tailored to the local market.

The move aims to introduce advanced technologies for supporting the automotive and electronics industries in Brazil.

Rahul Kejriwal, Executive Director, Remsons, said, "We are excited to partner with ASUS Brazil to bring our technological expertise to the Brazilian market. This collaboration is a significant step towards supporting local OEMs and strengthening the industrial ecosystem in Brazil."

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Taiwan-headquartered Innolux Corporation is set to acquire Japanese electronics major Pioneer Corporation from EQT for USD 1.1 billion. As per the understanding, CarUX, a subsidiary of Innolux Corporation, focussing on smart cockpit solutions, will create strong synergies with Pioneer’s existing capabilities to continue on its global expansion trajectory.

Pioneer, a Japanese leader in automotive sound and navigation systems, has been an engineering powerhouse since its founding in 1938, known for its robust research and development and industry-leading manufacturing. The company provides in-car navigation and audio electronics to both original equipment manufacturers (OEMs) and the consumer aftermarket, alongside various hardware and software solutions for the automotive sector.

Since its 2019 acquisition by EQT, Pioneer has undergone a significant transformation to restore its financial health and ensure long-term growth. This effort has yielded strong results, with the company achieving double-digit EBITDA margins and substantial free cash flow for the fiscal year ending March 2025. EQT’s strategic initiatives included strengthening corporate governance, appointing a new leadership team and implementing strict cost and capital discipline, all of which substantially boosted profitability and cash generation.

The Japanese company has successfully refocused on its core expertise in automotive audio, introducing a new amplifier technology platform and securing major projects from clients both domestically and internationally. The company has also expanded into new growth areas by leveraging its existing technologies, launching Mobility Services (software-led navigation utilising proprietary Japan-specific map data) and Mobility AI Connectivity (AI-based dash cameras for global markets). Furthermore, Pioneer demonstrated resilience during challenging periods like the Covid-19 pandemic and semiconductor shortages, thanks to enhanced operational efficiencies and the strategic divestment of non-core assets.

Shiro Yahara, President and CEO, Pioneer, said, “EQT has been instrumental in helping us drive transformation and innovation while preserving our DNA as a global leader in automotive technology. We look forward to this next chapter of growth with CarUX, building on the solid foundation that EQT helped us establish. We are proud to celebrate this milestone and look forward to partnering with CarUX to continue our product innovations and accelerate our global expansion.”

Sanjay Dhawan, Chairperson of the Board and Independent Director of Pioneer, said, “The automotive industry is undergoing a profound digital transformation, with digital content in vehicles rising from 27 percent to 40 percent and software playing an increasingly central role in cars. Under EQT’s ownership, Pioneer has embarked on a transformative journey – embracing innovation to lead in this new, software-defined era of mobility. This innovation has created substantial value across the board, benefiting customers, employees and shareholders alike.”

Shane Predeek, Partner, EQT Private Capital, said, “We are proud to have helped revitalise one of Japan’s most iconic brands and reposition it for long-term success. This milestone marks an exciting new chapter for Pioneer, and we believe that there are synergies with CarUX and its parent company, Innolux, that will greatly benefit the business and its future potential. At EQT, we are committed to being responsible stewards of our companies – ensuring they are handed over to owners who can continue the momentum we’ve built and support their next phase of growth. This transaction also reflects EQT’s growing momentum in Japan, where we continue to execute on our strategy of building stronger, more resilient businesses with global ambition.”

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Tier 1 supplier Uno Minda has announced that its Board of Directors has approved setting up of a greenfield manufacturing facility for aluminium die casting in Sambhaji Nagar (Aurangabad), Maharashtra.

The new facility is targeted to meet the growing demand for casting components, particularly in electric two- and four-wheelers. As automakers look to introduce alternative energy vehicles with higher energy efficiency, lightweighting becomes a critical focus area. This is an area where aluminium die casting has emerged as a critical requirement for lightweight, high-performance vehicle platforms. EVs fundamentally require significantly more aluminium-based structural and thermal components compared to their internal combustion counterparts—making advanced die casting capabilities central to EV powertrain and body applications.

In addition, the upcoming facility will play vital role in supporting Uno Minda’s backward integration strategy by supplying essential casting components to its forthcoming four-wheeler electric vehicle powertrain plant.

The new project involves a total planned capital investment of approximately INR 2.1 billion, to be implemented in a phased manner over the next five years. The investment will be funded through a balanced mix of internal accruals and debt. Phase 1 of the plant is expected to commence commercial operations by Q2 FY27.

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German private equity investor Mutares SE & Co is set to acquire Continental’s drum brakes production and R&D location in Cairo Montenotte (Italy) as part of its new platform investment in the automotive and mobility segment.

This follows the Continental Group’s recent announcement to spin off its automotive business as an independent company, Aumovio in September 2025.

As per the understanding, Mutares will take over all employees and business activities related to Continental’s drum brake business in Cairo Montenotte. This is expected to add about EUR 100 million in revenue for the company in 2025. The facility in Cairo Montenotte, Italy, is a production and R&D site for hydraulic drum brakes and manufactures products such as the Parking Brake for Simplex Brakes (EPB-Si) and the Drum Brake (Si). It employs around 400 people.

Johannes Laumann, CIO, Mutares, said, “With the acquisition of Continental’s Cairo Montenotte site we are strengthening our automotive and mobility segment. The long-standing expertise, strong product portfolio and highly skilled workforce provide an excellent foundation for operational development and future growth.”

Philipp von Hirschheydt, member of the Continental Executive Board and CEO of the future Aumovio, added, “We are confident that Mutares, with its extensive experience in the automotive business, is the right owner to lead this site into the future. Our shared goal is to ensure continuity for employees, customers and partners while securing long-term prospects for the Cairo Montenotte location.”

“With this agreement, we further consolidate our European manufacturing footprint. Moreover, it marks an important step in our strategy in Europe to better allocate R&D and investments with our product strategy and future technologies, such as electric braking or integrated friction solutions. The transaction deal follows Automotive’s strategy to sharpen our focus on our core business and streamline our business operations,” added Hirschheydt.

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