As much as Rs. 8,928 crore (around 36pc) worth of components in the Indian automotive aftermarket (current size Rs. 24,800 crore) are either counterfeit or fake. These are some of the findings of a study undertaken by the Automotive Component Manufacturers Association (ACMA). ACMA Chairman for Committee on Consumer Affairs & After Market, Soumitra Bhattacharya said “The aggregate aftermarket around the globe is expected to cross USD 1 trillion by 2012, growing at over 5 per cent. The current size of the components business in the Indian automotive aftermarket is estimated at Rs 24,800 crores. Two wheelers segment with 49.7 per cent leads the market followed by passenger vehicles, commercial vehicles and three wheelers at 24.7 per cent, 23.1 per cent and 2.5 per cent respectively. Only 41 per cent of the components consumed in the Indian aftermarket belong to OEMs and OESs with other manufacturers and imported parts contributing to 23 per cent share. It is estimated that almost 36 per cent of the components in the aftermarket are counterfeit or fake”.
ACMA, the apex body representing India’s auto component manufacturing industry announced the finding of its study on ‘Emerging Trends in Distribution, Servicing and Future Regulations’ in the Indian auto component aftermarket. The study is in continuation of the association’s efforts in understanding the dynamics of the auto component aftermarket in India and is yet another of its initiatives to help increase public awareness on the danger to life and property due to usage of spurious auto components.
The study is a sequel to the earlier edition released in February 2011, ‘Automotive Aftermarket - The Future Ahead 2011’ which was an extensive research to estimate the automotive aftermarket business potential in India and its likely size by 2020. It was for the first time that vehicle parc data was collated by make and model-wise, from 44 RTOs in the country.
The current edition of the study focuses on auto components distribution structure and the likely changes in roles of channel partners as the market starts to mature. It also brings to light the dynamics of the vehicle servicing market along with the opportunities & threats. Further the study also enumerates the impact of future regulations - emission, safety, noise etc. on the Automotive Aftermarket. The study with updated vehicle parc data from over 150 RTOs, covering 100 cities, is expected to help the industry in servicing better the smaller towns and cities in the country.
The study conducted by leading market research agency - The Nielsen Company is a timely and meaningful primary research study of the Indian automotive aftermarket undertaken by ACMA. Further, extensive secondary research and structured consultations have been carried out with each stakeholder including OEMs, auto component manufacturers, aftermarket distribution channel, relevant ministries & government bodies and associated institutions to validate the market realities of the primary survey. Comparisons of the Indian aftermarket have been drawn with similar markets like BRIC countries and references drawn from the mature markets of Europe & USA.
“The study, through the primary survey, reveals that the top 100 towns and cities in the country, by population, account for 56.2 percent of the total Two Wheelers Parc; 45 percent of the total Three Wheelers Parc; 66 percent of the total Passenger Vehicles Parc and 54 percent of the total Commercial Vehicles Parc. With fast growing vehicle penetration in the top 100 cities, and with a rapidly evolving aftermarket, it is expected that by 2017 the market share of the OEM-authorized network of service stations will grow to around 20-30 percent from existing 15-25 er cent; that of multi-brand organised service chains to 5-10 percent from 1-2 percent. Semi-organised service centres accounting for 10-20 percent of the market today will account for 20-30 per cent in 2017 while the share of unorganised garages will drop from the current 60-70 per cent to 45-55 percent.” added Bhattacharya.
Commenting on the challenges in evolution of the auto component aftermarket in India into a world-class sector and the way forward President ACMA, Arvind Kapur said, “Only a small portion of vehicles in India are serviced by OEM-authorised service centres; the rest by organized, semi-organized and a large number of small unorganized players. To ensure better quality of service for the customer, a process of accreditation needs to be devised and basic minimum standards for aftermarket players in each product / component category be defined. Further, communicating to end-users the benefits of high-quality components is necessary to create a pull for branded and quality assured products & components.”
Emphasising on the need for modern logistics management in the aftermarket value chain, Kapur added, “The geographical spread and the sheer diversity of components along with specialized requirements for slow-moving parts and sub-assemblies poses one of the greatest challenges in devising efficient logistics. Distributors, retailers, stocking garages, etc. will need training and education on scientific inventory management, deployment of IT systems and professional management. This will, in turn, necessitate hiring a range of IT-capable manpower – salespersons, sales managers, warehouse personnel, mechanics, service supervisors, service managers, service advisors and IT-support staff.”