Auto component replacement demand estimated to grow 6-8% in FY24: Report

Auto component replacement demand is estimated to grow 6-8 per cent in the next fiscal driven by factors such as the increase in mobility and healthy freight movement, among others, a report stated on Friday.

The improvement in demand has resulted in a positive impact on cash flows for aftermarket dealers and garages while the liquidity remains comfortable, credit ratings agency Icra said in the report.

Also, there have been relatively minimal issues in the collection of receivables, as per the report.

Icra also said that while the medium-term demand prospects are favourable, EV adoption, implementation of scrappage policy, component lifetime elongation, and possible increased use of public transport vis--vis private vehicles could cap the growth.

The aftermarket segment constitutes around a fifth of the overall demand and remains a vital cog in the Indian auto component industry, it said.

The average age of medium and heavy commercial vehicles had increased to almost 10 years, wh