Auto Ancillary Space Analyzed

Elara Capital has picked the top auto parts companies again, believing they’ll do well. They looked at how companies like Uno Minda, Gabriel India, and Minda Corporation performed. Overall, the parts companies grew by 9.1% compared to last year, but not as fast as the car makers themselves. This is due to several factors, including changes in taxes and a busy shopping season.

Key Points

• Top companies: Uno Minda, Gabriel India, Minda Corp & Sona BLW.
• Parts companies grew 9.1% vs. car makers’ 16% growth.
• Tax changes (GST) boosted demand for auto parts.
• Car production up: 2W (11%), 3W (18%), PV (4%).
• Trucks growing: MHCV (4%), Tractors (12%).
• Challenges: Tariffs and high interest rates impacting global car sales.

Car makers are doing better, but the parts companies are still growing. Demand for two-wheeled vehicles (like scooters and motorcycles) is steady, and analysts expect it to keep growing by about 9% over the next few years. Passenger vehicles (cars) are also expected to grow, but not as quickly, by around 6%.

Some parts of the industry are doing particularly well. Companies making suspension systems and brakes saw the biggest jump in sales—13% overall. Lighting and companies that make different parts for cars also saw good growth. However, rising prices for materials like lead are making it harder for battery companies to make money.

Certain companies struggled. Those that make engine parts (for trucks) and some forging companies had trouble because fewer trucks were being shipped overseas. Companies making tires and bearings did better, thanks to strong sales and cheaper raw materials.

To succeed, Elara Capital says these parts companies need to offer more products, sell to new types of customers, expand to other countries, and buy other businesses. They believe these top companies—Uno Minda, Gabriel India, Minda Corp, and Sona BLW—will continue to outperform the car makers.

The car makers are more expensive than the parts companies, but sales are improving, so the parts companies could still do better.

“The auto ancillary sector has a significant opportunity to drive growth, providing vital support to the overall automotive industry.”