For the first time in past ten years, the automobile industry is expected to clock single digit growth in the country. The recent figures released by Auto Component Manufacturers Association show the seriousness of the situation where the sector is expected to clock 6 percent growth in turnover and 5.5 percent growth in export earnings during the fiscal year 2008-09. It had previously recorded a growth of 20 percent and 24 percent in past years.
Auto component sector had witnessed a growth of 38 percent in 2005-06 in domestic demand and 47 percent growth in exports in the same period. The exports have nose-dived to 5.5 percent in the past financial years which are the lowest figures in past 10 years.
Most of the auto component manufacturers had hiked their capacities due to the export opportunities. These firms, which are mostly closely held, are facing severe overhead expenses and are looking for cost-cutting due to slack in export demand. "Tightening belts and a cautious-yet-optimistic approach is the way ahead. Combine it with realistic, judicious investments. More than costs, it is cash management that is critical," said an auto component manufacturer.