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Auto Parts Makers Rev Up Growth via Acquisitions
15 Jun
Summary
- Component makers are increasing vehicle content through mergers.
- Suppliers aim for fewer, larger partnerships with automakers.
- EVs are driving higher demand for aesthetic components.
Indian auto component makers are increasingly focusing on increasing the value of parts supplied per vehicle, rather than relying solely on sales volumes. This strategic shift is fueling a wave of acquisitions and mergers, consolidating the industry and simplifying sourcing for automakers.
Companies such as Belrise Industries, Bosch India, and SJS Enterprises have reported substantial growth in their content per vehicle. Belrise Industries, for instance, saw its content per two-wheeler rise from ₹12,000 to ₹20,000 after merging subsidiaries, and its four-wheeler content increased from ₹25,000 to ₹45,000 post-acquisition of H-One.
This trend is further propelled by the automotive sector's evolution, particularly the surge in electric vehicles (EVs). EVs demand significantly higher aesthetic content, such as decals and chrome, compared to internal combustion engine vehicles, bolstered by initiatives like production-linked incentive (PLI) schemes and export growth.
Automakers favor working with fewer, more capable suppliers to reduce procurement costs, improve supply chain efficiency, and gain better control over the customer experience. This allows component manufacturers to transition from being mere parts suppliers to strategic technology partners, offering complete solutions.
Tenneco Clean Air India is capitalizing on this by expanding its offerings in emission control and suspension systems, anticipating growth from new emission norms like CAFE III and BS7. Bosch India also reported a continuous increase in content per vehicle, reinforced by its recent acquisition of Bosch Chassis Systems India for over ₹9,000 crore, enabling a more comprehensive product range.
