Auto component makers to suffer due to slowdown in car sales

Auto component producers are really facing the problem due to an unexpected fall in the domestic demand. Reduce in demand might be due to regular increases in petrol prices and the rising interest rates. This reduce in demand is forcing the auto component makers to focus on the rising export opportunities and they will surely not face any problem in getting any of these opportunities. But still where demand sedan cars and SUV is decreasing but at the same time the demand for the small cars in the country is increasing.

The component industry has reported a growth of 25% during the last financial year, and the automobile industry has also reported a growth of 30% in the last financial year. But industries now have projected an overall growth of just 15% in this financial year because of the increase in the petrol prices in the country and high interest rates. The RBI has already lifted the repo rates by 25 basis points on June 11 and is now raising prospects to increase in home and auto loan rates.

Mahindra president Pawan Goenka and president of SIAM said that their target growth rate of FY12 is significantly lower. As against a growth rate of 30% the company has only projected an overall growth rate of 15% for automotive sector.

Auto component makers still believe that the slowdown in the market will be only for first two quarters of the year and then it would become stable in the next two quarters. The companies for these two quarters have shifted their focus on the exports of good in the international market especially in the countries like France and Germany.

 Though these companies would surely make profits from international market, but when the Indian market conditions would become stable, will these companies sell their products