CIE Automotive

The European operations faced a perfect storm in Q3, with the light vehicle market contracting by 19% sequentially. This was exacerbated by stagnating EV penetration (12-14% vs expected 20%) and a 30% drop in revenue at Metalcastello due to the US off-highway slump. Despite these headwinds, CIE maintained a 16% EBITDA margin in Europe by implementing aggressive cost-saving measures, including stopping factories one day per week and eliminating temporary workers.

India operations remained a pillar of stability, growing 2.2% YoY, matching weighted average market growth. While the 2-wheeler segment showed strength due to festive demand, the tractor and light vehicle markets were flat to slightly negative. Management is optimistic about a recovery to 5-6% growth in Q4, supported by rural income recovery and the ramp-up of new projects at the Hosur plant.

Due to the slowdown in EV adoption in Europe, management noted that OEMs are shifting focus back to Internal Combustion Engines (ICE) and Diesel platforms in the short term. CIE is adapting by increasing production of components for these traditional platforms to meet immediate demand while remaining 'technology-agnostic' for the long-term transition to 50% EV penetration by 2030.

Metalcastello's monthly revenue has fallen from EUR 6-6.5 million to EUR 4-4.5 million. Management attributes this to the depressed US off-highway market and delays in electric transmission programs in the US. They expect the market to bottom out in the next two quarters, with a recovery to EUR 5-5.5 million monthly run rates by the second half of 2025 following the US elections.

India's export contribution dipped to 10-11% this quarter from historical levels of 13-14%, primarily due to the global slowdown^🌐 and delays in a major Stellantis order. However, management reiterated their medium-term target of reaching a 15% export mix. They are actively diversifying their customer base beyond anchor clients (M&M, Maruti, Bajaj) to include Toyota, Hyundai, and Volkswagen.