New Delhi: India’s automotive component sector is expected to clock 7-9 per cent revenue growth during the financial year 2025-26, driven by sustained demand momentum from the two-wheeler (2W) and passenger vehicle (PV) segments, which account for nearly half of the overall revenue, according to a Crisil report released on Wednesday. A moderate uptick in commercial vehicles and tractor sales, which have a 17 per cent share, will provide an additional tailwind. The aftermarket segment, which accounts for a 15 per cent share in revenue, is seen growing steadily at 5-7 per cent, the report states.

However, weak demand for new vehicles in the US and Europe, which constitute around 60 per cent of India’s exports, presents headwinds.

Operating margins are seen stable at 12-12.5 per cent, driven by the growing share of high-margin components such as ADAS1 modules, infotainment systems, and advanced braking. A decline in input cost -- particularly of steel (45-50 per cent share in input costs), aluminium (15-20 per cent), and plastics (10-12 per cent) -- used for structural rigidity, reducing vehicle weight, and for interiors will support profitability.