How Electric vehicles will crash smaller auto part manufacturers
The government of India has made a great focus of having all cars on roads to be electric by 2030. This determined strategy predicts a conversion to an EV (electric vehicles) revolution that could have big result for a high number of automotive companies.
Our previous note flashed that the government requires to provide hold while companies will have to cut in with their trails to make the changes to EVs smoother. As a next level, we are trying to verify the successor and losers among auto parts companies (specially in the small and mid cap line) with the final finish of ICE (Internal Combustion Engine) and the increase of EVs.
Industry ruled by managed members:
India, a big market for automobiles, serves many auto parts developers providing to 2 segments - original equipment manufacturers (OEM) as well as the exchange market. OEM suck up close to 80 per cent of auto parts. The auto parts industry has closest to 700 panned members whereas there are 10,000 unplanned members. However, planned members have a profit market share of close to 85 per cent.
As per ACMA (Automotive Component Manufacturers Association of India), India’s auto part industry’s revenue was slightly attached at USD 39 b in year 2015-16 and contributed 2.3 per cent of GDP. The industry did the capital investment in the measure of USD 0.44-0.66 b in year 2015-16. These measures pointed that the auto-parts industry is in need of serious focus.
We trust that the conversions from internal combustion engine (ICE) to EVs would consume time and there would not be any crash in the short ways. However, EVs would exactly interrupt the automobile ecosystem in the upcoming 5 to 10 years.
Small members to front heat:
The bigger members in the affected line would be capable to settle in to the changes in technology and would bring in necessary changes required for a smooth shift to the electric power train. However, several smaller members, who are successful on the back of rise in the automobile industry, would view disturbance and some would not be capable to even live on.
Engine parts give the highest share:
In terms of lines, the share of engine parts to entire creation is the largest followed by drive and looking conversions parts? Engine components combine’s engine valves, pistons, camshafts, crankshafts, carburetors, fuel injection structure and cooling structure. Hence the share of all parts for a vehicle is really very important for the performance parts.