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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American technology company Visteon has launched in-house manufacturing of its next-generation high-resolution Analog and Digital Camera System and Display Backlight Unit (BLU) at its Chennai facility in India. The company said it has initially invested USD 10 million towards developing the manufacturing capabilities.

The new production lines will build analog and digital cameras with 1.3 MP-8MP HD resolution, which it claims offers significantly sharper visuals than traditional automotive cameras. It will support the demanding requirement from modern high-definition in-car displays and are optimised for seamless integration with Advanced Driver Assistance Systems (ADAS), helping drivers park, manoeuvre and navigate with greater safety and precision. 

Sachin Lawande, President and CEO, Visteon, said, “India plays a critical role in our vertical integration strategy. Localising production of camera systems and backlight units strengthens our ability to scale, innovate, and deliver next-generation cockpit technologies more efficiently to global markets.”

Visteon stated that this expansion compliments its existing display manufacturing in India, creating a more cohesive, vertically integrated production ecosystem for next-generation cockpit solutions.

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Pune-headquartered tier 1 supplier Varroc Engineering has announced its financial results for FY2025, with revenue of INR 81 billion, up 8 percent YoY.

The company reported profit after tax of INR 1.69 billion, which was down 46 percent YoY, as compared to INR 3.15 billion for same period last year. This the company attributed due to an exceptional item worth INR 1.47 billion on the back of restructuring of subsidiaries and exit from its joint venture in China.

For Q4 FY2025, the company reported revenue of INR 20.99 billion, up 11 percent YoY, profit after tax of INR 1.03 billion.

Tarang Jain, CMD, Varroc, said, "India has now become the 4th largest economy, and the GDP had a steady growth of 6.2 percent in Q3 FY2025. Softening of Inflation in the last few quarters and interest rates reduction globally encouraged our Central Bank to reduce Repo rate by 50 basis points. Weak growth in consumption, on top of global and regional conflicts and uncertain tariff regime, may impact discretionary spending which can have impact on automotive Industry. However, we remain confident about the medium-to-the-long-term growth prospects of automotive industry.”

He revealed that in FY2025, the company filed 25 patents of which more than 10 patents were already granted to Varroc, bringing the total filings to more than 120 for the company.

“We continue to strengthen our balance sheet and return ratios. The net debt of the company in FY2025 was reduced by INR 2,348 million and as a result the net debt to equity was reduced to below 0.5x at the end FY2025 from 0.64X at the end of FY2024. The absolute net debt figure was INR 7,480 million. ROCE (before tax) for FY2025 was 20.8 percent and free cash flow generation was also healthy at INR 3,116 million or 3.8 percent of revenue before growth CAPEX in land,” he added.

IN FY2025, the company also won new business wins estimated to add INR 11,734 million in revenue, with electric vehicle constituting more than 55 percent of it.

“It is more heartening to see business wins in our overseas operations also, which will improve profitability from FY 27 onwards. Our continuing focus on revenue growth, improvement in gross margin, control on fixed cost and optimization of capex and working capital will enable us to generate healthy free cash flows in the future also,” concluded Jain.

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Samvardhana Motherson International (SAMIL) has announced its financial results for FY2025, demonstrating significant growth across key metrics.

The company reported consolidated revenue of INR 1,136 billion, up 15 percent YoY. Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) rose by 17 percent to INR 108.77 billion, while Profit After Tax (PAT) saw a substantial 40 percent jump, reaching INR 38.03 billion.

Vivek Chaand Sehgal, Chairman, Motherson, said, "Our performance underscores the resilience and adaptability of our business. With a booked business value exceeding USD 88 billion, encompassing both automotive and non-automotive sectors, we have established a robust foundation for future growth."

He further congratulated the Motherson team for an ‘exceptional performance’ over the past five years, achieving record sales and integrating 23 acquisitions despite global volatility, all while maintaining a strong focus on free cash flow and reducing the leverage ratio to its lowest point in five years.

The company also highlighted its strategic advancements, including outpacing the industry by approximately 15 percent through content growth and mergers and acquisitions. Return on Capital Employed (ROCE) improved to 17.2 percent at a consolidated level, even amidst expansions. Net Debt to EBITDA stands at a comfortable 0.9x. Capital expenditure for the year was INR 44.33 billion, calibrated to market dynamics.

Furthermore, 14 greenfield projects are underway, with nine expected to commence operations in FY2026.

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Aumovio, the automotive business of Continental Group, will see Philipp von Hirschheydt, presently CEO, take on the additional duties of the Chief Financial Officer (CFO). This comes on the heels of Karin Dohm’s decision not to take on the intended role of CFO due to personal reasons.

It was on 23 April 2025, German technology company Continental Group revealed the new identity for its Automotive Business – Aumovio at the Auto Shanghai Show 2025.

Stefan E Buchner, Designated Chairman of the Supervisory Board, Auomovio, said, "We deeply regret her decision, but at the same time, have the greatest understanding and respect for her choice. Together with our strong team, we will consistently continue on the path we have begun and lead Aumovio into the future with responsibility and foresight."

The announcement is said to have no impact on the planned spin-off, with Aumovio on track to be listed on stock exchange in September 2025. The company stated that during the transition the existing Finance and Controlling team will take on additional responsibilities to ensure a seamless spin-off.

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