Quality and Technology Drive Indian Aftermarket Business

India is becoming a major Asian hub of automotive manufacturing with increasing degree of local sourcing of components. Improvement in the perceived quality of Indian products has facilitated a transition of the auto component industry from aftermarket to OEMs suppliers. This has improved their visibility and acceptance in the aftermarket also.

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The rapid globalisation and the shift to electric, electronic and hybrid vehicles are opening up new opportunities for the transportation industry. In the coming years, this will lead to new verticals and new avenues for the auto-component manufacturers in the aftermarket also.

The poor condition of the Indian roads and the consequent higher wear and tear of automobile components necessitate more frequent replacement and vehicle maintenance. Similarly the increasing number of local independent aftermarket (IAM) service centres in India places the automotive components and aftermarket in the country in a continuing growth trajectory.

The Government of India’s Automotive Mission Plan (AMP) 2016–2026 envisages creation of an additional 50 million jobs and increase in the value of the output of the automotive sector to Rs 1,889,000 crore (US$ 282.65 billion).

The auto component market in India is estimated to grow at an annual growth rate of 19-20% till 2020. According to the Automotive Component Manufacturers Association of India (ACMA), the Indian auto-components industry is expected to register a turnover of $200 billion by 2026 backed by strong export growth to $80 billion - $100 billion from the current $11.2 billion. This would make the Indian auto-components industry the third largest in the world.

Automotive components fall into two general segments, those for the original equipment manufacturers (OEMs) and for the aftermarket. Market analysts estimate that the OEM segment will dominate the auto component market, up to 89%, by 2020. However, the Indian aftermarket business is expected to grow to an estimated $30-32

According to a Confederation of Indian Industry (CII) report, three important factors, the plan of the OEMs to enter multi-brand service business, online-retailing, and GST, are likely to impact the growth of the aftermarket to this level.