With the ongoing pandemic, there is a glimmer of hope for the aftermarket segment. Batteries are expected to be the outliers despite the overall weakness witnessed by the automotive sector. Especially Lead-acid Batteries (LAB). The LAB segment revenue is estimated to grow marginally (~ one per cent) to Rs.330 billion in FY21E. It is expected to be driven by the aftermarket volume growth of 14 per cent in two-wheelers and an estimated six per cent from other vehicular segment batteries. Nonutilisation of vehicles driven by lockdowns according to the Emkay Global report will translate to batteries discharging. Old batteries, it is expected would be replaced. This in turn will positively impact the aftermarket volumes. Here Original Equipment Manufacturer (OEM), Exports and Industrial battery segments will be an exception and continue to be under pressure.
A shift in the share of unorganised players in FY2021 is expected. If customers move towards cheaper products due to the economic slowdown and priority shift towards greater cash conservation, it could particularly impact the commercial segment across taxis, three-wheelers, commercial vehicles and tractors. Replacement volumes are expected to grow at 14 per cent for two-wheelers and six per cent for others. The medium-term has favourable projections for the organised sector though. Previously, the share of the unorganised segment in replacement market reduced in two-wheelers from 39 per cent in FY2017 to 36 per cent in FY2020. In the case of other vehicular batteries, from 50 per cent in FY2017 to 45 per cent in FY20 due to a shift in customer preference toward better quality batteries and the launch of cheaper products by organised players. In FY2020, organised players commanded a share of nine per cent in passenger vehicles; 33 per cent in tractors; 36 per cent in two-wheelers; 55 per cent in commercial vehicles and 74 per cent in three-wheelers.
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