Auto component suppliers feel the heat as demand dips
The falling demand for cars, trucks and two-wheelers triggers alarm in auto component industry. Manu P Toms reports.autos Updated: Jun 22, 2012 20:47 IST
The falling demand for cars, trucks and two-wheelers triggers alarm in auto component industry.
Component suppliers say orders from automotive manufacturers have fallen drastically, in some cases up to 30%.
The drop in sales volume is likely to hurt profitability of many companies, threatening many livelihoods as the auto component sector employs close to a million people.
“From industry point of view, the demand has obviously fallen. In some cases it dropped up to 30%,” said Saideep Rathnam, president, Anand Automotive.
It is estimated that around 10,000 firms, mainly small and medium size companies, are involved in auto component manufacturing.
“Order cycles have got longer,” said Kiran Deshmukh, deputy managing director, Sona Koyo Steering Systems.
About the job scenario in the industry, Rathnam said, “As of now I do not see any job cuts. However, if the situation persists one cannot rule out drastic measures”.
It is contract labourers who constitute almost 50% of the workforce who would be the most vulnerable if demand further drops. The growth of auto component sector depends hugely on the growth of auto industry as supply to vehicle manufacturers account for 95% of sales while the rest 5% is to aftermarket segment.
“Targets given by customers are of lower volume. We expect lower sales of auto grade steel for the next quarter,” said Ankit Miglami, director, Uttam Galva Steels.