Indian Economy News

Auto component replacement demand is estimated to grow 6-8% in FY24: Report

  • IBEF
  • February 27, 2023

According to a report by ICRA, a credit rating agency, the demand for auto component replacements is estimated to grow 6-8% in the next fiscal driven by several factors such as the increase in mobility and healthy freight movement, among others.

The report said that the improvement in demand has positively impacted cash flows for aftermarket dealers and garages while the liquidity remains comfortable. Further, ICRA also reported that Electric Vehicles (EV) adoption, scrappage policy implementation, component lifetime elongation, and potential increased use of public transportation compared to private cars could limit growth even though the medium-term demand prospects are favourable.

About a fifth of the overall demand is constituted by the aftermarket segment which remains a vital aspect in the Indian auto component industry. The credit rating agency also pointed out that the ageing of cars on the road and the rise in vehicle parts bodes well for the demand for auto component replacement.

As per ICRA, the average age of medium and heavy commercial vehicles had increased to almost 10 years, while the average age of passenger vehicles had risen to 7.3 years in FY22, the highest in the past two decades.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.