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Auto Parts Inventory Holds ₹98k Crore: Unlock Potential Savings
5 Sep
Summary
- ₹98,000 crore inventory trapped in auto components.
- ₹4,000-5,600 crore potential release for MSMEs.
- Suppliers must invest in capabilities for future growth.
The Indian automotive component industry is facing a substantial challenge, with around ₹98,000 crore tied up in inventory. A report by Vector Consulting Group suggests that improving inventory management could unlock ₹29,000-39,000 crore of this capital. For the Micro, Small, and Medium Enterprises (MSMEs) within the sector, this could mean a release of ₹4,000-5,600 crore.
Industry leaders express concern that MSMEs are not investing sufficiently in future growth capabilities, with 95% surveyed believing this is the case. The report indicates that even with plants operating at 75-85% utilization, capacity remains a challenge due to inefficiencies like frequent changeovers and rework.
Unlocking trapped cash and enhancing existing business economics are key to channeling surplus funds into technology and product development. This strategic reinvestment is vital for Indian suppliers to participate in higher-value segments of the automotive industry and capture future global sourcing opportunities.
