Why Should Auto-components Industry Change the Route to Avoid a Bumpy Ride Ahead?
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The automobile component segment is known as the bedrock of the automobile industry across the globe, but government’s decision of promoting EV’s against ICE vehicles is considered a big threat to the auto components industry. Does the disruption that is desired as well as inevitable is also scheduled rightly? These days, this is the prime topic of discussions in the industry. No doubt environment degradation is a serious global problem that needs to be addressed sincerely, but in pursuit of environment conservation, insinuating the large-scale unemployment is not the right way to deal with a problem. Government’s commitment towards a green drive deserves due appreciation, but making this 100% shift in just 10 or 12 years is giving less room to auto the components industry. The current situation is creating a dilemma for the manufacturers that, whether they should invest in their existing production facilities or wait for some time. But, ignoring the present demands of the industry may oust them completely from the competition.
On the one hand, with the reduced complexity, a very limited number of components and low maintenance cost of the EVs, the number of jobs lost could be as high as 80% at the auto components manufacturers and automotive workshop level. On the other hand, for manufacturers with futuristic plans, the onset of EV era is the harbinger of new hopes and new opportunities. Many industry experts believe that the fear surmounted in the industry seems scarier when opportunities in the near future are ignored due to negative vibes. In fact, despite ongoing progress in the EV segment, ICE vehicles are also expected to grow parallelly for the next two to three years. And, to exploit this growing trend, manufacturers must act positively while meeting the expected demand.
In Between Fear and Hope
From Maruti Suzuki to Ford India, all leading automobile brands in the country are still focusing on the conventional vehicles. According to Anurag Mehrotra, Managing Director of Ford India, “Full electrification will not happen in the near future, and that IC engines are going to be in the play. Besides, there will be export opportunities for component manufacturers. In the last twelve to eighteen months, there has been some aggressive positioning by Indian automotive companies for exports.” Similarly, Maruti Suzuki has advised its component vendors to expand their capacities as the company is aiming to sell 2.5 million vehicles by 2025.
Opportunities are enveloped in challenges that need to be addressed and harnessed strategically for a risk-free and sustainable future. According to the Director-General of ACMA, Vinnie Mehta, “As of now there is uncertainty among component manufacturers as to how their business will be impacted by the advent of electric vehicles. Hence, a coherent policy framework is the need of the hour the government should come up with a technology-agnostic roadmap for the development of sustainable mobility solutions for the future.”
Finding a Better Track
The industry focus should remain on meeting customers need, and to attain excellence in this direction, manufacturers in the auto components industry must strive for consolidated collaborations and joint ventures. The seeds of innovations must be sown urgently to reap the industry with increased competence and efficiency level. So, to ensure a healthy survival amidst prevailing threat, Indian manufacturers must think over raw material substitution, economies of scale, technological advancements, quality improvement and process re-engineering. Organisations which are receptive to adopt change and are innovative in delivering value for money solutions will always maintain sustainable growth.
Industry experts believe that in the medium to long term, the growth of the auto component industry will be a bit higher than the growth of the automobile industry due to the sheer increase in exports and a significant improvement in the performance of original equipment manufacturers (OEMs). Besides, the expansion of aftermarket and availability of the components on e-commerce portals have further bolstered the sector. Moreover, as the quality of the Indian products is improving gradually and they are getting a good response from the foreign buyers. The overall scenario augurs well that the automobile components industry prepares to face-off every challenge with a positive outlook.