Archive · 5 Sep 2026
India’s Auto Suppliers Face Inventory and Productivity Challenge
A report says Indian companies that make car parts have a lot of money stuck in products and materials sitting in storage.
Better inventory management could free up ₹29,000-39,000 crore.
Smaller companies, called MSMEs, could unlock ₹4,000-5,600 crore of that money.
The report estimates that these MSMEs could earn much more each year if they became 30% more productive.
Many industry leaders think the companies are not upgrading their technology and skills quickly enough.
Factories are using only 75-85% of their available capacity, even though many companies say they need more capacity.
Problems such as changing production frequently, reworking faulty products and moving materials inefficiently reduce output.
The report says the money saved could help suppliers invest in batteries, electronics, software and other advanced automotive capabilities.
Vector Consulting Group estimates ₹98,000 crore is tied up in India’s automotive component industry inventory.
Improved inventory management could release ₹29,000-39,000 crore, including ₹4,000-5,600 crore from MSMEs.
A 30% productivity improvement could add ₹74,000-88,000 crore in annual MSME turnover.
The report says 95% of surveyed leaders believe automotive MSMEs are not investing fast enough in future capabilities.
Plants run at 75-85% average utilisation, while 91% of respondents still consider capacity a considerable challenge.
- Who
- Vector Consulting Group, India’s automotive component suppliers and automotive component MSMEs; the study surveyed 21 senior industry executives.
- What
- A Vector report estimated substantial inventory, working-capital and productivity opportunities across India’s automotive component supply ecosystem.
- When
- The report was published on September 5, 2026, and its data was collected from July to August 2026.
- Where
- India’s automotive component industry and supplier ecosystem.
- Why
- To assess how operational improvements and additional investment could strengthen suppliers as vehicle value shifts toward batteries, power electronics, embedded software and integrated electronic systems.
- Inventory held
- Around ₹98,000 crore across India’s automotive component industry.
- Potential working-capital release
- ₹29,000-39,000 crore through improved inventory management.
- MSME inventory opportunity
- ₹4,000-5,600 crore could potentially be released within the MSME ecosystem.
- MSME industry share
- MSMEs account for around 80% of automotive component manufacturers in India.
- MSME turnover
- Approximately ₹2.4-2.9 lakh crore.
- Productivity opportunity
- A 30% improvement could generate ₹74,000-88,000 crore in additional annual turnover, with a potential incremental value pool of ₹29,000-44,000 crore after material costs.
- Study sample
- 21 senior industry executives; data was collected from July to August 2026.
