New Delhi [India], June 11 (ANI): Diversification strategies and rising vehicle premiumisation emerged as the key drivers of growth in India’s auto ancillary sector over the past decade, helping the industry triple its revenues despite uneven performance across segments, according to a report by Equirus Securities.
The report noted that the listed auto ancillary universe delivered an 11 per cent revenue CAGR during FY16-26, with revenues growing threefold to around Rs 5 trillion.
According to the report, “India’s listed auto ancillary sector grew revenues 3x over FY16-26,” but “the decade was not one story — it was fifty-two stories running simultaneously.”
Highlighting the factors behind the sector’s growth, the report said, “Diversification beat volume, EVERY TIME.”
It added that “the companies that outgrew the sector average shared one characteristic above all others: multiple growth levers operating simultaneously.”
The report observed that companies which expanded through acquisitions, new products, new geographies and customer additions consistently outperformed peers that relied on a single growth driver.
“The fastest-growing auto ancillary companies over FY16-FY26 have largely been those that successfully diversified through acquisitions and new product additions, enabling them to expand wallet share with OEMs and enter adjacent segments,” the report said.
Premiumisation also played a significant role in boosting growth. According to the report, “premiumization, emission-led content increases, and rising vehicle electronics have further driven content growth per vehicle, supporting sustained revenue expansion.”
The report highlighted that increasing content per vehicle was one of the most powerful trends during the decade.
“The sector’s most powerful single dynamic over the decade was the steady rise in content per vehicle — the value of ancillary components in each car or two-wheeler sold, independent of whether volumes grew or fell,” it stated.
Electricals and Lighting emerged as the fastest-growing segment, registering a 17 per cent revenue CAGR during the period, while Batteries grew at only 8 per cent.
It further explained that “content that grows because of genuine consumer preference — SUV mix, premium lighting, digital instrument clusters, connected car features — is structural and compounds.”
In contrast, the report cautioned that regulatory-driven content growth tends to be temporary. “Content that grows because of regulatory mandates — airbags, ABS, TPMS, emission after-treatment — is one-time in nature,” it said.
Looking ahead, the report believes electric vehicle adoption will create new opportunities for ancillary manufacturers through higher content per vehicle.
It said EV adoption is creating “new content categories — battery management, charging electronics, digital clusters — that did not exist in FY16 and are not dependent on the auto volume cycle.”
The report noted that companies focused on diversification and structural content growth linked to premiumisation and electrification are likely to remain better positioned for growth over FY27-30. (ANI)
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