Are Automotive Ancillary Stocks In A Bright Spot?

Automotive ancillary companies are an essential part of the automotive industry, playing a critical role in the manufacturing and maintenance of automobiles. As the demand for automobiles continues to rise, the demand for automotive ancillary products and services will continue to increase as well. Bhavya Rathod highlights the various factors that will spur further growth in this sector

-  Bhavya Rathod

The automotive ancillary industry plays a critical role in the growth and development of the automobile sector. It encompasses a wide range of companies that manufacture and supply various components, parts and systems required for the production and maintenance of automobiles. Automotive ancillary companies are important because they support the automobile industry by providing a diverse range of products such as engine parts, transmission parts, electrical parts, brakes, suspensions, and more.

The industry is highly competitive and constantly evolving with players continuously innovating to meet changing customer needs and comply with regulatory requirements. In addition, the growth of the automobile sector has been a key driver of the automotive ancillary industry. The increasing demand for passenger and commercial vehicles, coupled with the rising focus on sustainability and energy efficiency, has led to a surge in demand for high-quality and reliable automotive ancillary products.

Sector Performance

According to the Society of Indian Automobile Manufacturers (SIAM), the passenger vehicle sales of automotive companies within the country reached 3,792,356 in 2022, surpassing the previous record set in 2021. Maruti Suzuki India, which is the largest passenger vehicle manufacturer in India and a key industry indicator, exported 263,068 units, representing a 28 per cent increase over its previous record in 2021. Data provided by the Automotive Components Manufacturers Association (ACMA) indicates that the automotive component industry in India grew 34.8 per cent to ₹2.65 lakh crore during the first half of FY23, benefitting from the industry’s growth trend.