Wednesday, January 11, 2012
By Pawan Rana
Fitch gave a stable outlook for the 2012 Indian Auto Components Sector
The global rating agency, Fitch has given a stable outlook for the 2012 Indian Auto Components Sector. The constantly increasing demand of the localised stuff by the original equipment manufacturers (OEMs) will create a good business scope for the Indian auto suppliers, as per the report’s speculations.
The Fitch Rating report stated that the revenue growth is expected to remain same without any sharp drop later this year. Following the Fitch rating, one more report has been published proclaiming Indian automotive industry to boom with the growth of passenger vehicles sales volumes by 3-5 percent and commercial sales volume by 8-10 percent this year.
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The Indian currency depreciation will increase the price competition of exports and localization of raw material among the OEMs is to directly favour the auto suppliers, which will create new opportunities for the domestic players, mentioned in the report.
Fitch also spells-out that the changing market dynamics an important phase for the domestic automotive industry. Although, warned if the macroeconomic condition doesn’t go better, it may have adverse effect on smaller auto brands having limited approaches. The Fitch India’s Associate Director Pragya Bansal said, the localization of the raw material is not just an attempt to cut-down the cost but to geographically diversify the suppliers and boost-up the auto supplies.
The rating agency claimed that currency depreciation and localization will be a great opportunity for auto component suppliers to invest in capacity. The free trade agreements between the countries will change the international trade flows over the long term but raise competition waves as well in the domestic market.