ACMA's Deepak Jain: 2019 a year of resilience, suppliers' competence powers OEMs in Mission BS VI 

Deepak Jain, President of ACMA, on what was clearly a very difficult year for industry but one which also saw leading suppliers innovate to cut costs but also improve quality. They have also been instrumental in assisting OEMs meet BS VI norms, displaying its competence.

By Mayank Dhingra calendar 28 Dec 2019 Views icon15740 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
ACMA's Deepak Jain: 2019 a year of resilience, suppliers' competence powers OEMs in Mission BS VI 

2019 and the first eight months of FY2020 have been a rather forgettable year for the Indian automotive industry, which has had to deal with a prolonged economic slowdown and experience month-on-month plummeting sales across vehicle segments.

For the April-November 2019 period, overall vehicle sales stood at 15,705,447 units, down a sharp 15.95 percent over November 2018’s 18,686,895 units. December 2019's numbers will soon be out but they would not make much of a difference as consumer sentiment and the economy are still down, and there's BS VI with all its price increases just around the corner. Not surprisingly, these tough times have had an adverse impact on OEMs and in turn their component suppliers.

Most leading components players have had a rough time in the past year or so, with many having to defer investments and cut production with the industry averaging just about 50 percent capacity utilisation. The impact is even more on a number of MSMEs, which had expanded capacity eyeing more future growth while riding high on the accelerated growth of 2018 when capacity utilisation had peaked at 80-85 percent. Furthermore, there have been an estimated 100,000 job losses at component suppliers during the April to September 2019 period.

As per the Automotive Component Manufacturers Association (ACMA) industry analysis of the first half of FY2020 (April-September 2019), India Auto Components Inc clocked revenues of Rs 179,662 crore (US$ 26.2 billion), declining 10.1 percent year-on-year (H1 FY2019: Rs 199,849 crore / US$ 29.1 billion). While sales to OEMs dropped further by 15.2 percent to Rs 150,743 crore (Rs 177,755 crore), the aftermarket supplies recorded a 4 percent growth with overall revenues clocking Rs 35,096 crore (Rs 33,746), albeit still being comparatively slower to last year’s growth ranging in double-digits.

Exports, which are means to hedge the cyclical changes in the domestic business, too remained subdued due to concerns in various global economies. Component exports from India recorded a marginal 2.7 percent uptick with shipments worth Rs 51,397 crore (H1 FY2019: Rs 50,034 crore). Electricals and electronic components (20%) and interior parts (16%) saw the highest demand; the USA remained the biggest market while Mexico and Turkey saw highest sales declines.

Component industry re-carves competitiveness
In a recent interaction with Autocar Professional, Deepak Jain, president, ACMA, said, “Fundamentally, 2019 was a year of conservation. We saw a lot of fundamental policy interventions which, unfortunately, derailed growth. But I think it would also be seen as an opportunistic year because a lot of companies saw an opportunity to introspect and re-carve their competitiveness by using certain tools that we have always believed in — cost cutting, quality circles and many others.”

“So, it was actually a year of resilience as we came out resilient and stronger against the slowdown. Yes, it was undoubtedly a painful year because when you see that there's an opportunity to grow further and you are de-growing, then it's a lost opportunity.

“But, if we see the merits, I would reiterate that it's been a year of resilience for the industry. Also, 2019 was unique because we saw a number of changes on the economic as well as the structural front, alongside a series of technological changes in the automotive industry per se. We could consider this as being a year of realisation because to have long-term gains but had to endure short-term pain –that is the realisation everyone has,” Jain added.

Citing his expectations for the coming year, Jain remarked, “Going forward into 2020, the first and foremost thing is that the industry will successfully launch BS VI in record time, globally. This shows the competence of the auto component industry and how we collaborated with our customers to ensure that the national agenda is fulfilled.”

“Secondly, we saw a lot of chaos due to many mobility solutions being talked about and projected as the most suitable ones for the country; I think this will continue into the next year as well. This is because it is just the start of the transition towards sustainable mobility and we are figuring out how India can fit into all of this. As the Prime Minister has himself said, being a diverse country, there is a possibility of co-creation and co-existence of different new technologies.

“I will re-emphasise that the key challenges going forward will be to remain competitive and to ensure that we promote the 'Make in India' brand. What the component industry is doing is 50 percent contribution to the manufacturing GDP. Germany, Japan and the US have all developed with the backbone of the automotive industry remaining strong. So, we would like that when this industry has done so much, it given the due credit,” he added.

“On our part, we commit to ensure that we work with all stakeholders in the endeavour of generating less pollution, improving safety and reducing road congestion. The idea is to have a positive imaging of this whole industry. I hope that by 2020 and beyond, by using the whole technological landscape, we should be able to make a much more positive connect,” Jain signed off.

Even though most industry professionals would like to forget 2019 as soon as they can, hope and optimism still lie ahead for 2020, which marks the beginning of a new decade and might just prove to be a major transitional juncture towards sustainable mobility with BS VI and a host of electrified models due to be launched in the Indian passenger vehicle market in the coming months. Will the future mark a comeback for India Auto Inc? Well, as the saying goes – ‘There’s always light at the end of a tunnel.'

Also read: ACMA’s Vinnie Mehta: 'Skills in new-age materials, AI, robotics, additive manufacturing, and machine learning are already in demand.'

ASDC’s Nikunj Sanghi: 'Real skilling will happen in India when the National Apprenticeship Programme picks up pace.'

 

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