Auto comp sector lost worth $4bn during slump:Deloitte

The Indian auto component industry lost $3.5 - 4 billion (about Rs 18,800 crore) in value due to demand slump between 2008-end and 2009, as it could not react efficiently to the crisis, consultancy firm Deloitte Touche Tohmatsu said today.

In the report on auto component sector, the firm said: "The price that auto component sector paid in terms of lost profits on account of the slowdown is in the order of $400 million (Rs 1,880 crore).

"On a conservative note the value lost would be about $3.5 - 4 billion."

Explaining the findings, Deloitte Touche Tohmatsu India (DTTI) Senior Director Kumar Kandaswami said if the component industry was operating at the levels of 2007, their value, which is a multiple of earnings, would have been much better.

The report said high growth and possibility of even more made "the auto component manufacturers strategically rigid and a touch complacent to managing operations" and they were unprepared when the downturn hit.

"While the automotive sector is rightly reputed to be very good at managing its supply chain, it turned out that the difficult times did not bring out the best of the companies. In most cases, companies allowed inventory to build up," Kandaswami said.

As per the Automotive Component Manufacturers Association of India, the auto component industry had a turnover of $19 billion (about Rs 89,300 crore) in 2008-09. It is estimated to become $40 billion by 2015-16.