CIE Automotive India’s Impact on EV Manufacturing and Automotive Industry Transformation

By fiscal 2026, the Indian auto components market is expected to reach $200 billion in sales. This expansion will be supported by robust export demand, which is expected to grow at a CAGR of 23.9% to reach $80 billion by 2026.

India is also becoming a more desirable location for design and production, with increased original equipment manufacturer (OEM) sourcing and increased localization by global OEMs.

Another exciting development currently underway is in the field of electric vehicles (EV). The global transition to electric vehicles will provide new business opportunities for suppliers in the automotive industry. By 2030, widespread adoption of electric vehicles in India could create a $300 billion domestic market for EV batteries.

Indian auto component manufacturers are therefore focusing on producing components for the growing EV industry. One of the companies with good future prospects in this sector is CIE Automotive India. Over three years, the stock returned 145%.

CIE Automotive India Company Overview

CIE Automotive India is a multi-product, multi-technology automotive component supplier that places high priority on sustainability, quality and innovation. Mumbai, India serves as the headquarters for CIE Automotive India, which operates in more than 20 countries, including the United States, Spain, Germany, Brazil, Mexico and China.

It functions as a division of CIE Automotive, a Spanish industrial conglomerate focused on supplying components and sub-assemblies to the automotive sector. CIE Automotive is a global company traded on the Madrid Stock Exchange.

CIE Automotive India offers a wide range of products and services such as assembly, forging, casting and machining of engines, gearboxes, chassis and other components.

To address the changing needs of the automotive industry, the organization also provides research and development technology, design and engineering services, and other services. Our extensive global service coverage, extensive product offering and commitment to customer satisfaction make us a trusted partner for our customers in the automotive sector.

CIE Automotive India’s India operations

Revenue reached ₹5,530 crores, up 5% from 2022. The business segment originating from India accounts for approximately 63% of the total revenue. Growth in the Indian automotive market in CY23 was not uniform across customers, quarters or segments.

While growth in the light vehicle segment was reasonable, two-wheelers and tractors were overwhelming. Some of CIE Automotive India’s most important customers experienced stagnant or declining demand growth, further impacting performance. Last year, the business announced expansion of production capacity across all business segments.

Sales growth was hampered by delays in ramping up some of these orders, particularly in CIE Hosur and the aluminum vertical. Nonetheless, the industry expects these orders to be successful in 2024. Additionally, we expect a gradual increase in margins as India’s economic momentum recovers.

CIE Automotive India’s European operations

Sales recorded ₹328 billion, up 10% from 2022. Revenues from its European operations account for approximately 37% of the total. Although sales growth was strong in the first quarter of CY23, growth was extremely slow in subsequent quarters. Rising steel prices offset the positive exchange rate impact.

CIE Automotive India is very optimistic about its European business, which offers high margins, high returns and very good cash generation despite the weak market outlook in Europe.

Another noteworthy point is that automotive crankshaft production accounts for a significant portion of forging sales in the European business segment. The transition to electric vehicles puts your crankshaft at risk.

Although no significant negative impact is expected in the short term, crankshaft sales are expected to gradually decline starting in 2026. The division plans to start producing automotive suspension steel items and aluminum forging parts.

The BEV market accounted for more than 40% of new orders received by the automotive forging industry in 2022. By 2027, forged aluminum parts are expected to account for a significant portion of automotive forging sales.

Finance of CIE Automotive India

In 2023, CIE Automotive India recorded a 6% surge in revenue to reach ₹9,280 crore, compared to ₹8,753 crore in 2022. Analyzed over four years from 2020 to 2023, CIE Automotive India recorded a robust Compound Annual Growth Rate (CAGR) of 15.33%.

CIE Automotive India posted revenue of ₹1.125 billion in 2023, compared to a loss of ₹136 million in 2022. However, the loss in 2022 was due to operational disruption worth ₹847.5 crore. Cumulative net profit over the four years from 2020 to 2023 recorded a CAGR of 120%.

In CY23, CIE Automotive India maintained favorable financial metrics with return on equity (ROE) of 18.79% and return on equity (ROCE) of 17.77%.

CIE Automotive India’s future plans

Maximizing profits: Spin-off of German truck forging company

CFG-CIE Forgings – CIE’s decision to cease operations is seen as a positive move as Germany was impacting CIE Automotive India’s EBITDA margins (3-5% vs. 13-15% portfolio). EBITDA margins for the European operations are expected to increase by 150bps from the current level of 13% following the sale.

As a result, CIE Automotive India’s consolidated EBITDA margins will grow faster, eventually reaching the target of 17-18%, which is consistent with the parent company’s CIE global operations. The business has already recorded a one-time loss of ₹900 crore due to goodwill impairment.

Focus on EV space

As climate change emerges, the popularity of electric vehicles (EVs) is increasing. We are currently in a period of uncertainty regarding the pace of the transition to electric vehicles, which varies significantly across sectors and regions.

The business has created a thorough EV strategy and a list of products to pursue in the EV market. As companies take responsibility for their carbon emissions, the demand for localization is increasing.

Near-shoring also reduces supply chain bottlenecks. Certain environmentally hazardous operations, such as aluminum and steel casting, are being relocated to developing countries, while developed countries strive to meet stringent CO2 reduction targets.

Safety and lightweighting are the two main concerns in this field. The first will lead to a push on materials such as aluminum castings, forgings and composites, which are three key focus areas for CIE Automotive India.

The transition to electric vehicles (EVs), lightweighting and safety requires higher precision, tighter tolerances and higher quality components. Herein lies the potential for expansion for CIE Automation India.

conclusion

In summary, CIE Automotive India is well positioned to capitalize on the growing opportunities in the Indian and global automotive markets, especially in the electric vehicle segment.

But the transition to electric vehicles also poses challenges, which the company is actively addressing through strategic initiatives. What are your thoughts on CIE Automotive India’s prospects in the rapidly evolving automotive industry? Do you think your company’s strategy can succeed even in the face of disruptive change? Let us know your thoughts in the comments below!

Written by Nalin Surya

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