A Close Look At India’s Auto Ancillary Sector – The Numbers and Trends that Matter

India is on track to be one of the world’s strongest economies. The progress has been visible even in the last few years when other major countries were facing stagnation and turmoil. The good news is that the country’s growth prospects are fueled by rapid advancements in core industrial businesses such as the auto sector.

Being a sector that generates major tax revenue as well as mass employment, the Indian automotive space is being closely monitored and encouraged by both regional governments and the central government.

The rise of auto ancillaries

While almost every major global automaker has invested in setting up production facilities in the country, recent years have seen a similar spree of investments going into auto ancillary production as well. Indian brands as well as the Indian subsidiaries of global brands are making their presence felt in this market. Combined, the Indian automobile and ancillary sector is projected to contribute nearly 7.1% of the national GDP with over 19 million job prospects.

Why is there a rise in demand for ancillaries in India today?

Auto components are an integral part of the overall growth drivers of the sector. From the smallest bolt to the most expensive powertrain or batteries of electric vehicles, the range of components produced by India’s auto ancillary makers is now huge. The diversity in India’s automotive space is also a factor that contributes to the massive boom in ancillary production.

By some projects, India is on track to beat China and become the world’s largest 2-wheeler market very soon. From an EV perspective, the Indian market saw more than 70% year-on-year growth in registrations. Additionally, the growing industrial strength of the country is pushing ahead the increased production of heavy vehicles like trucks, trailers, and other large logistic vehicles. Significant investments are being made by local and regional government bodies in public transport assets like buses and other urban mobility schemes, leading to growing demand and emerging business models.

When combined, these factors are creating a domestic demand for ancillaries at a scale never contemplated before. The export strategy of the nation’s ancillary brands in all these sectors only adds to the production requirements.

The numbers that matter

When we explore the Indian auto ancillary space, it is crucial to have information on how the sector has performed in recent years. This is an indication of how well it is poised to create impact both from an economic perspective as well as for job creation. Let’s look at some numbers:

Revenues

The Indian auto component industry posted record revenues in 2023-2024 and stood at USD 74.1 billion annually. All segments within the sector such as export revenue, domestic revenue, etc. grew significantly in the last year.

Job creation

OEMs are investing heavily in setting up their production facilities in the country thereby aiding more localization. This ultimately leads to lower costs and increased employment opportunities in the sector. By 2026, it is estimated that over 3.2 million people will be provided with direct employment by the Indian auto ancillary sector alone.

Market value

The growth prospects of the Indian auto component industry are spectacular according to estimates. Industry bodies expect the market value of the sector to be well over USD 200 billion in value by 2026.

Investments

The auto ancillary sector will be focused on growing its capabilities and meeting the rising demand from both domestic and international markets. As an indicator of this trend, it is expected that nearly INR 20,000 to INR 25,000 crore worth of investments will be made by companies in the sector in FY 2025 to expand their production capacity as well as to implement advanced technologies in their operations.

The roadblocks ahead

So far, we have discussed how the Indian auto ancillary industry is gearing up to grow its operations and meet significant demand. At the same time, leaders in the space need to acknowledge the heavy competition. Both foreign and domestic companies are flooding the Indian ancillary space and launching new products for automakers. A highly competitive market will put leaders under pressure. This will force them to come up with strategies that help profitably grow the business with minimal risks.

The key to winning in a competitive market: Pricing

In other words, auto ancillary manufacturers need end-to-end visibility and a better understanding of the entire costing workflow that then feeds into carefully orchestrated pricing strategies. They must base their pricing on relevant market data, analysis of bestselling price points, and much more. They need granular insights on pricing changes aligned with every macro environment change in the market.

Such a high penetration into costing and pricing scenarios requires more than just manual pricing approaches. Auto ancillary makers need access to a comprehensive end-to-end pricing platform like Pricing Pro to help build the most profitable pricing roadmap for all their offerings. Get in touch with us to learn more.