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Forging Industry Facing The Heat of Declining Auto Sales

India’s auto sector, which grew at a rate of more than 10% in the early 2010s, is now struggling to stay in the green.

Due to various factors such as semiconductor chip shortages, rising input costs, rising commodity prices, and rising fuel costs, total automotive sales in India have declined in double digits in the last two fiscal years (FY20 and FY21).

Mr-Vikas-Bajaj-President-AIFI

Thus, the overall auto- components and forging industry have not seen an improvement in their order books.

The industry anticipated a rebound for the overall passenger vehicle market following the second wave of the COVID-19 pandemic.

However, it is the supply, not the demand, that is likely to lead to longer wait times, which will have a long-term impact on consumer sentiment.

Maruti Suzuki, Toyota, Hyundai, and Mahindra & Mahindra have already indicated that their vehicles will be more expensive in the coming months.

As a result, the forging and auto component industries are anticipating a bleak festive season this year.

According to SIAM, total production of Passenger Vehicles, Three Wheelers, Two Wheelers, and Quadricycle was 2,125,304 units in September 2021, a decrease of (-) 18.89 % from September 2020.

Passenger vehicles fell into negative territory, with domestic sales falling 41.1 % to 160,070 units in September 2021, compared to 272,027 units sold in the same month last year.

Maruti Suzuki India Ltd took a significant hit due to the chip shortage, and its domestic sales declined last month. However, the company’s exports increased by 124% year on year in September.

Hyundai maintains its second-place position in terms of cumulative sales in the country.

In September 2021, the company had a 34% decrease in sales. Tata Motors is the only one of the top five automakers to report positive sales growth in September.

In terms of total sales, Mahindra is ranked fifth. The company’s sales fell by 12%. Apart from that, total two-wheeler sales dropped 17.3 % to 1,528,472 units in September 2021, compared to 1,849,546 units in September 2020.

However, three-wheeler sales increased 53.7 % to 29,185 units in the review period, compared to 18,976 units in September 2020.

The apex body of the forging industry in India, the Association of Indian Forging Industry (AIFI) expressed concerns with regards to High Steel Prices, the increase in steel prices has hammered the Forging Industry in India.

This year AIFI had raised its concern over high steel prices to Prime Minister Narendra Modi.

The association also wrote to Ministry of Micro, Small and Medium Enterprises, Ministry of heavy industries, Ministry of Steel, and Ministry of Commerce and Industry.

With the ripple down effect of declining automobile sales, the forging industry is facing the heat with a sharp decline in demand which has resulted in substantial production cuts.

The Indian Forging Industry primarily caters to the Indian Automotive Industry, which accounts for 60-70% of the forging production, with the auto sector witnessing the slowdown the forging industry has witnessed an average slowdown of 50% of the total capacity.

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