Industry body Automotive Component Manufacturers Association of India (ACMA) on Tuesday reported a 3% drop in sales to OEMs (original equipment manufacturers) in FY21 at ₹3.4 lakh crore. In its industry performance review, it also said that imports fell by 11% while exports declined by 8%.

While the industry witnessed a healthy recovery in the second half, sales to OEMs in H1 2021 had declined by 31% over the corresponding period in the previous year.

“The automotive value-chain faced significant disruptions in FY21. The nationwide lockdown in the wake of the pandemic—one of the severest in the world—put the entire supply chain in disarray. The entire industry took a significant time to stabilise again post the gradual unlocking of the economy," said Deepak Jain, president, ACMA.

While vehicle sales and production improved quarter-on-quarter from the second quarter of FY21, the first quarter of FY22 was once again confronted with another round of disruptions due to the second wave of the pandemic, ACMA said. "While this wave was a much severe humanitarian crisis, the lockdowns, however, were regional, in line with the government’s ethos of ‘Lives and Livelihoods’ resulting in lesser adverse impact on economy and production," Jain said. "We are also wary of a third wave of the pandemic and hope that the current revival in demand will be a sustained one. We are optimistic that the lessons learnt in managing the first two will stand us in good stead in managing the third one as well.”

Exports saw a de-growth of 8% to ₹0.98 lakh crore in 2020-21 from ₹1.02 lakh crore in 2019-20. "Europe, accounting for 32% of exports, saw a decline of 4%, while North America and Asia, accounting for 30% and 26%, declined 7% and 8%, respectively," ACMA said. The key export items included drive transmission and steering, engine components, body/chassis, suspension and braking, etc.

“With the economy progressively returning to normal and as vehicular demand picks up, we are cautiously optimistic about the performance of the industry for this year," said Jain. According to ACMA, challenges on the availability of semiconductors; escalating prices and availability of raw materials; and logistical challenges, including non-availability and high prices of containers, among others, continue to hinder a smooth recovery.

The industry body also said that the slowdown in the domestic market also reflected on the imports of components into India. Component imports fell by 11% to ₹1.02 lakh crore in 2020-21 from ₹1.09 lakh crore in 2019-20. "Asia accounted for 66% of imports followed by Europe and North America at 25% and 7% respectively. Imports from Asia declined by 9%, while those from Europe by 13% and from North America by 17%.

While the two-wheelers and passenger vehicles segments of the aftermarket witnessed strong recovery, revival in the commercial vehicles aftermarket was less than expected, leading to an overall decline of 7%. "The turnover of the aftermarket in FY21 stood at ₹64,524 crore compared to ₹69,381 crore in the previous year," ACMA said.

Jain said that in this environment of volatility, despite disruption of production in the supply chain, the industry displayed remarkable resilience and evolved in a spirit of collaboration. Whilst the OEMs gave consistent direction and visibility, the components industry supported them well in ensuring smooth ramp-up and business continuity. "It is also noteworthy that despite several challenges, many ACMA members undertook relief measures by setting up hospitals and oxygen camps, donating ventilators and concentrators, and contributing generously towards community service,” Jain said.

ACMA's director general Vinnie Mehta, too, said that the economic slowdown of FY20 was compounded by the challenges of a pandemic-led national lockdown in FY21 resulting in a decline in vehicle production and consumption. "The vehicle industry in India witnessed two successive years of de-growth of 14.6% in FY20 and thereafter of 13.6% in FY21. While the first quarter of FY21 was a complete washout, the industry regained significant ground [from the] second quarter onwards," Mehta said.

Follow us on Facebook, X, YouTube, Instagram and WhatsApp to never miss an update from Fortune India. To buy a copy, visit Amazon.