Resilience Gives India’s Auto Component Makers a Competitive Edge: BCG-ACMA Study

Conventional wisdom holds that resilience costs money in the near term. A new study by Boston Consulting Group and the Automotive Component Manufacturers Association of India suggests the opposite over a full business cycle.

BCG and ACMA released the findings on Wednesday at the 66th Annual ACMA Session in New Delhi.

The study tracked 450 Indian auto component suppliers from FY15 to FY25, spanning the 2019 slowdown, the pandemic and repeated commodity shocks. Around 75 firms formed BCG's "Resilient Cohort", comprising companies whose revenue growth beat the industry average in at least six of the last eight years. The remaining 375 made up the rest of the sample.

The resilient group did not start ahead. In FY15, both cohorts posted nearly identical EBITDA margins of about 10.6%. A year later, the resilient firms actually trailed their peers by 0.7 percentage points, weighed down by early spending on technology, capacity and buffers.

That gap reversed and widened most during periods of stress. It reached 1.1 percentage points in FY20, during the pandemic. It touched 0.9 percentage points in FY22, when commodity and energy costs spiked. By FY25, it had grown to 1.4 percentage points. The resilient cohort's average margin climbed from 10.5% in FY16 to 13.3%, a gain of 2.8 percentage points, while the rest of the sector stayed largely flat.

"If that choice helps them become more resilient, then over the long term, those companies are able to make a higher margin," said Saurabh Chhajer, managing director and partner at BCG India.

"The margin gap started widening in tough times, when there was a demand slump, just after Covid," he noted.

Resilience, the report finds, extends well beyond holding extra inventory. Leaders interviewed for the study pointed to engineering capability, supply chain flexibility, diversified sourcing, workforce flexibility and automation as the real drivers. One large driveline manufacturer cited in the report had invested heavily in engineering ahead of any shock. When China curbed exports of rare-earth magnets in 2025, the company shifted from heavy rare-earth magnets to light rare-earth and rare-earth-free motors within two months. That limited the revenue losses that hurt slower rivals.

"More important, the margins improve when the time gets tough," Chhajer added.

For an industry aiming to expand turnover from $86 billion to $200 billion by FY30, the findings recast resilience as more than a defensive cost. The price of building buffers and capabilities early, the report suggests, tends to pay for itself once the next shock lands.