Auto component units feel the pinch of lower vehicle sales

NEW DELHI, AUG. 23. The Rs. 17,000 crore Indian auto component industry is expected to show a 20 per cent drop in investments this fiscal due to the economic slowdown and poor vehicle sales, an industry body said today.

"Investments are likely to come down to Rs. 800 crores or even more this year from Rs. 1,000 crores if the current situation persists. Many companies are expecting negative growth in turnover," the Auto Component Manufacturers Association of India (ACMA) President, Mr. L. Ganesh, told reporters here.

"For the first time in 14 years, the 2001-02 first quarter growth has slipped into the negative. Sales have come down drastically as also capacity utilisation," Mr. Ganesh said while releasing the findings of a 'Business Outlook' survey conducted by the apex industry association.

He expressed concern over the continued slide in vehicle sales, especially the commercial vehicles and tractor segment.

"We need a double digit growth, especially in the small car segment this fiscal since luxury cars are being imported with very less local content," Mr. Ganesh said.

Terming the challenges arising from WTO compliance as a "necessary condition", he said the manufacturers had to create their vision out of the situation which would arise after the inflow of foreign products in the domestic market.

"The current tariff level on auto components needs to be maintained (at 35 per cent) for the next two to three years to make the industry competitive," the ACMA President said.

- PTI

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Section  : Business
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