Indian auto ancillaries seek new markets amid tariff challenges

The Indian auto component industry is facing tough challenges with exports due to ongoing tariffs from the United States. A report from DAM Capital Advisors highlights that weakness in demand from the Middle East and a slowdown in Europe are also affecting sales. Manufacturers are reacting by seeking new clients in different regions to lessen their dependence on markets currently struggling. Some companies are looking to add clients from various geographies, hoping to secure smaller orders in both automotive and non-automotive sectors. The general automobile market in India is experiencing a decline in demand, although domestic consumption remains steady. The competition in pricing has intensified, leading to increased discounts across many vehicle categories. Specifically, demand for passenger vehicles and commercial vehicles appears weak, while the two-wheeler segment is holding up better. Exports in the two-wheeler and three-wheeler markets are robust, helping to maintain stability in that area. In contrast, the tractor industry has a positive outlook, with expectations of double-digit growth by March 2025. Despite these challenges, auto component manufacturers are optimistic. They believe they can outperform the overall industry due to rising demand for electric vehicles and the introduction of new features in vehicles. Many companies are also planning to launch new products to sustain growth and counter the effects of the industry slowdown. Experts are hopeful for a recovery by the second half of fiscal year 2026, especially with the festive season, which usually boosts demand in the market.