Sona Comstar, Motherson to benefit from stress in European auto parts companies

Subscribe to enjoy similar stories. NEW DELHI : Electric vehicle investment write-offs by global auto giants, and a general automotive slowdown in demand, are sending some European auto component suppliers into bankruptcy, creating a potential business opportunity for Indian parts manufacturers as customers shift orders away from the distressed vendors.

According to Harshvardhan Sharma, group head at Nomura Research Institute, the development is translating into incremental order flows for Indian companies not only from emergency resourcing of distressed European vendors, but also from deliberate long-term reallocation of global platforms. “If this trend persists, India could realistically capture an additional $1–1.5 billion of export-linked component business over the next 3-5 years, purely from European supply realignment," Sharma said.

At least two Indian parts makers, Sona Comstar and Samvardhana Motherson International Ltd, say troubles at European suppliers will likely drive incremental business in coming years as customers shift orders or past acquisitions begin to pay off. Laksh Vaaman Sehgal, director at Samvardhana Motherson, India’s biggest auto parts company, has said that customers have asked the company to take over troubled suppliers.

“You've seen that the European zone has been reeling from the EV not being as successful as anticipated," Sehgal said during an earnings call on 13 November. “So, a lot of extra capacity, a lot of things were built up for that reason." While Sona Comstar has not made a public comment on the opportunity, a note by analysts at Nuvama Institutional Equities on 5 December — based on management commentary — said that the company expects new business in the European market owing