New Delhi: The auto component industry in the country is facing export challenges due to the ongoing overhang of tariffs by the USA. In addition, currency depreciation has led to demand weakness in a few Middle Eastern countries and a major slowdown in the European region, says a report by DAM Capital Advisors.

However, the report also noted that Indian companies which have lower exposure to these countries, are planning to mitigate the impact by adding new client from various other geographies.

It said “there is a high level of demand uncertainty on exports front due to ongoing overhang of tariff by USA, currency depreciation led demand weakness in few middle-east countries and major slowdown in the European region”.

It also added that some Indian auto component manufacturers, which have lower exposure to these affected markets, are trying to mitigate the impact. They are focusing on adding new clients from different regions, increasing their market share, and securing smaller orders from both auto and non-auto segments across various geographies.

The overall automobile industry in India is currently experiencing near-term demand weakness, with slow or declining growth in some segments. While domestic demand is stable, growth remains subdued. Price competition is increasing, leading to rising discounts in most vehicle categories.

The report also stated that the passenger vehicle (PV) and commercial vehicle (CV) demand appears weak, while the two-wheeler segment is performing relatively better. Two-wheeler and three-wheeler exports remain healthy, supporting the segment’s stability.

Meanwhile, the tractor industry stands out with a positive outlook and is expected to grow in double digits by March 2025.

Despite the challenges, auto component manufacturers remain confident about outperforming the industry. Their optimism is driven by increasing content in vehicles, premiumization, the introduction of new features, and the rising share of electric vehicles (EVs), which require more components.

Many companies are also planning to launch new products and expand their offerings to maintain growth and offset the impact of the overall industry slowdown.

Experts and industry leaders remain positive about a recovery in the second half of FY26, especially with the onset of the festive season, which typically drives higher demand.