The changing Aftermarket Industry and how Indian Automotive ancillaries can benefit from arising opportunities - Prepared for: Singex Prepared by: ...
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The changing Aftermarket Industry and
how Indian Automotive ancillaries can
benefit from arising opportunities
Prepared for:
Singex
Prepared by:
Spire Research and Consulting
Date:
28th September 2019
1
Agenda
Topic
1 Automotive Market
1a Overview
1b Segmentation of four wheelers
1c Tire Industry-Overview
1d Tire Industry-Key Players
2 Automotive Aftermarket
2a Overview & Trends
2b Online E-retailing
2c Safety & Security
2d Auto Components Export
3 Summary
2
Automotive Market – Overview
3
Automobile Industry in India – Overview
The automobile industry in India is the world’s fourth largest vehicle market. In 2018 India was the world's 4th largest
manufacturer of cars and 7th largest manufacturer of commercial vehicles.
Indian automotive industry (including component manufacturing) is expected to reach INR16-18 trillion (USD251-283
billion) by 2026.
Size of the market FY19
60 3
2.6
2.5
2.2
2 2
40 2
in Millions
In Billions
51
20 44 1
39 39
35
0 0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
Overall Revenue of Auto Components Number of Automobiles Sold in India
Source: SIAM Society of Indian Automobiles. 4
Automobile Industry in India – Overview
Domestic sales are dominated by large number of two wheeler vehicles. In 2017, India surpassed China to become
the world’s biggest market for two wheelers.
A total of 21.1 million units were sold last year, which comes down to 58,000 units every day.
Automobile Domestic Sales
Trends FY19
4% 3%
13%
81%
Two Wheelers Passenger Vehicles
Commercial Vehicles Three Wheelers
Source: SIAM Society of Indian Automobiles. 5
Automobile Industry in India – Segmentation of
four wheelers
Indian Market has been known for the market for hatchbacks. Even the government has implemented rules to allow
the development of cars under 4 metres, as they attract lesser duty and other taxes. Petrol engines smaller than 1.2-
litre and diesel engines that are under 1500cc, have a lesser excise duty. This helps to increase fuel efficiency and also
reduce pollution.
Automobile Domestic Sales Trends
2018
24% Total Number of Commercial
Vehicles Sold in 2018
50% 1,007,319
26%
Hatchbacks SUV's and MUV's Sedans
6
Tire Industry: Overview
Key Figures for FY2018:
No. of Tyre Companies in India: 41
No of Tyre Plants in India: 62
Industry Turnover 2018-19 (est.): INR63000 crore (USD9 Bn)
Exports 2018-19 (est.): INR12890 crore (USD1.8 Bn)
Distribution across various Distribution of exports/sales of
channels Tyres manufactured in India FY18
Global Indian
100% 14% 10%
13%
80%
62% 70% 28% 55%
60% 58% 22%
40%
20%
38% 30%
Truck & Bus Truck & Bus
Passenger Vehicle (PV)
0% Passenger Vehicle (PV) 2/3-Wheeler
2011 2018 2/3-Wheeler Others
Aftermarket OEM+exports
7
Tire Industry: Key Players and Plant Locations
• Kankroli, Rajasthan
• Limda, Gujrat • Banmore, Madhya Pradesh
• Perambra, Kerala • Mysore (2), Karnataka
• Kalamessey, Kerela • Sriperumbudur, Tamil Nadu
• Orgadam, Tamilndadu • Haridwar, Uttrakhand
• Chittor, Andhra Pradesh*
• Balasore, Orissa • SIPCOT Thiruvallur, Tamil Nadu
• Dhar, Madhya Pradesh • Chennai, Tamil Nadu
• Pune, Maharashtra • Arkonam, Tamil Nadu
• Trichy, Tamil Nadu
• Puducherry
• Medak, Telangana
• Poda, Goa
• Mumbai, Maharashtra
• Kottayam, Kerala
• Halol, Gujarat
• Baruch, Gujarat*
• Ambarnath, Maharashtra
• Nasik, Maharashtra
• Nagpur, Maharashtra
• Sriperumbudur, Tamil Nadu* • Bahadurgarh, Haryana
• Modipuram, Uttar Pradesh • Rudrapur, Uttarakhand
• Madurai, Tamil Nadu
• Baliabhgarh, Haryana
• Aurangabad, Maharashtra
8
Overview and Trends
Automotive Online E-retailing
Aftermarket
Government Regulations
Auto Components Export
9
Automotive Aftermarket
The Automotive Aftermarket refers to the manufacturing, retailing and installation of all vehicle parts
after the sale by the OEM (Original Equipment Manufacturer).
The automotive aftermarket is broadly divided into three sectors:
Automobile Aftermarket FY19
1% 1% Organized Single
Brand Outlet
Unorganized
46% MBOs/ Workshops
Organized Multi
52%
Brand Outlets
Online Platforms
The post warranty vehicle (>4 years) service market was mainly captured by small independent
garages i.e. the unorganized sector because of the huge cost differences (of after warranty
services) between authorized and local garages.
Automotive Aftermarket
Products/Services
Replacement Parts Accessories
Replace the original stock Made for comfort, convenience,
components which are worn out performance, safety, or customization,
in due course of time. and are designed for an add-on.
10Automotive Aftermarket
The total aftermarket has grown at a CAGR of 14% over 2013-2018. The vibrant automotive sector
drives the growth of the automotive aftermarket in India and is estimated to grow at INR75,000
crore by fiscal year 2020.
Major Players by Segments:
Product-wise share in
aftermarket turnover (FY18)
Engine & Goetze, Rane Engine
Engine Electricals, Engine Parts Valves, Ucal Fuel Systems
Compone 18% etc.
nts, 18%
Transmission & Sona Koyo Steering
steering parts Systems, Rane NSK
Steering Systems.
Suspensio
n and Suspension & Brakes India, Rane Brake
Braking, braking parts Lining, Jamma Auto & Jai
Drive 15% Parabolic and Gabriel
Transmissi India.
on and
Steering, Electrical Lucas TVS, Denso, Delco
21% Consuma Remy Electricals
bles and
Electronic
Compone
Miscellane Equipment Lumax, Premiere
Rubber Cooling ous, 14% Instruments & Controls
nts, 3%
Compone Systems, and Jay Bharat Maruti.
nts, 3% 8%
11Overview and Trends
Automotive Online E-retailing
Aftermarket
Government Regulations
Auto Components Export
12Trends in Automotive Aftermarket: Online E-
retailing
At present, the automotive aftermarket sale channels is fronted by traditional stores and garages.
This majorly falls (53% in FY2018) under the unorganized sector.
Taking in consideration factors such as increase in the spending capacity, changing consumer
behaviour, penetration of technology, e-commerce and most importantly; need for an organized
market. Online e-retailing will soon be a business disruptor for this sector. It has already been
observed in western countries and developed markets.
6% US Online sales of auto parts and
accessories 2015-2020
4%
4%
2% 4%
4%
3% 3%
2%
0%
2015 2016 2017 2018 2019* 2020*
Revenue from online sales of auto parts *Projected
13Trends in Automotive Aftermarket : Online E-
retailing
In 2014, the online auto aftermarket in India was estimated at around USD20 million (less than one
percent of the overall parts aftermarket at a retail level) and is expected to increase at a CAGR of
7%, valued at USD26 million in 2018 and is projected to reach USD30 million by 2020. There are huge
opportunities to explore in the B2B space due to speedy growth of organized and independent
workshops along with customers being positively disposed towards them.
Recent advancements in the online automobile aftermarket include:
Boodmo – an online
Online autoparts marketplace marketplace for auto
SparesHub.com has raised INR2 components (Ukrainan New Delhi-based Cross Roads
crore from Singapore-based company) – has ventured into India Assistance, popularly
Anthill Scale Ventures, US-based the Indian Markets. It aims to known as CRIA, has acquired
Esvee Technologies, Chennai organize the replacement parts based MeriCAR.com, a
Angels and other high net-worth market and make the shopping marketplace and aggregator for
individuals (HNIs). process easier and convenient. the after sales automotive space.
Recently raised a funding of
INR8 crore, adding up to a total
of INR35 crore.
14Trends in Automotive Aftermarket : Online E-
retailing
These Online Markets are now offering complete Advantages compared to offline stores:
range of auto components from OEM spares to
price effective alternatives:
Braking Car Convenience
System Access-
ories
Freedom of choice
Clutch
Systems Tires
Multi-Product
Selection
Filters Interiors
Round-the-clock
Service
Suspens Suspens
ion ion
Systems
Fair Points
Systems
Maintan
Unassign nce
ed Parts /Service
Parts
15Overview and Trends
Automotive Online E-retailing
Aftermarket
Government Regulations
Auto Components Export
16Government Regulations
The government of India has revised/introduced new regulations for passenger safety and pollution checks for
automobiles. Some are already in place, while upcoming norms have also been preponed.
Deadline for airbags was preponed by 6 months and BS VI scheduled in 2023, has been preponed to 2020.
1st April, 2018 1st April, 2018 ABS( Anti-braking system) for
two wheelers/cars for existing
models.
Government
ABS (Anti-braking system) for
two wheelers/cars for all new
models.
Airbags mandatory for all new
models/existing post 2017.
2024 April, 2020
FE Regulations 2 BS VI emission norms
17Trends in Automotive Aftermarket : Safety &
Security
One of the key concerns in the automobile sector is the rising safety and security standards. Indian
Government put in place new regulations for automobile manufacturers. Consumers have also
realized the importance and relevance, where a growth in demand has been observed off late.
2W PV CV
Reverse Parking Sensor
Total Automotive Industry: Technologies and Segment Scope
In Car Entertainment(ICE) System
Anti- Lock Braking System (ABS)
Driver Information System (DIS)
Body Control Module (BCM)
Immobilizers
Telematics
Technologies like Anti-lock
Tyre Pressure Monitoring System (TPMS) Braking System (ABS) and
Reverse Parking Sensors (RPG)
Airbag Electronics
have very high penetration
LED based Headlamps across vehicle segments and are
expected to generate revenue
Electric Power Steering of INR16,000 crores by FY 2020.
Remote Vehicle Diagnostic Sys.
Automatic Transmission (AMT,DCT,CVT)
Electric and Hybrid Vehicles
18India emerging as a global hub for sourcing
auto parts
Government Initiatives :
The target for this sector is to cross the USD100 billion mark with exports reaching USD35-40 billion and
USD20-22 billion in revenue from overseas assets. Initiatives that are taken by the government to
encourage the growth of this industry include :
1. The Automotive Mission Plan 2016-26 (AMP 2026) 2. Voluntary Vehicle Fleet Modernization
programme (V-VMP)
Direct Incremental
employment – 3.2 Vehicles Scrapping Policy 2018
million
Export USD80
billion
Export USD80
billion
Turnover USD200
billion
Metal Scrap
AMP 2026 under one of it’s five main This policy offers incentives worth 8-12%
objectives, seeks to increase the net of the cost of a new vehicle for
exports of the Indian Automotive industry surrendering the old one. It would be
several fold. It recognizes that the Indian able to generate steel scrap worth USD
Automotive industry (both vehicles and 1,728 million domestically every year
auto components) has the potential to with the set-up of organized shredding
scale up exports to the extend of 35-40% centres; in addition to providing
of its overall output over the next 10 environmental and energy efficiency
years (FY16-26). benefits. 19India emerging as a global hub for sourcing
auto parts
After the implementation of such government initiatives:
Several global tier-I suppliers have already French tyre manufacturer Michelin announced
announced plans to increase procurement of plans to produce 16,000 tonnes of truck and bus
auto parts from their Indian subsidiaries. tyres from its Indian facility this year, a 45% rise
from last year.
Auto components maker Bharat Forge Ltd (BFL), Everstone Capital – a Singapore-based private
has formalized an agreement with Rolls-Royce equity (PE) firm – has purchased 51% in Indian
Holdings Private Limited Company (Plc), which auto components maker SJS Enterprises for an
will supply BFL with critical and high integrity estimated USD51.35 million.
forged as well as machined components.
20Trends in Automotive Aftermarket : Safety &
Security
Other technologies which may/can expect growth are:
The global market for automotive
After new regulations, ICRA TPMS (Tire-pressure monitoring
estimates 90% increase in the system) is anticipated to reflect a
penetration by 2019. The domestic CAGR of over 6% 2016-24.
passenger vehicle market has sold Government making it mandatory in
close to 3.64 million units in the last passenger cars and higher focus on
financial year. enhancing fuel efficiency attract
growth.
Indian Vehicle Telematics market is
India In-Car Entertainment market
projected to touch USD300 mn by
revenue is projected to grow at a
2021. It also becoming an important
CAGR of 5.3% during 2015-21. Audio
part of CV industry because it is
system firm Harman is expects a
widely used by aggregators like Ola,
revenue of USD1 billion by 2022.
Zoomcar and Revv.
Vehicle immobilizers are finding
A recent study by Future Market
increased application in PV as well
Insights (FMI) predicted that the
as CV. Automobile giants like TVS
automotive global remote
and Maruti also increased the
diagnostics market will grow at a
electrical components per vehicle
CAGR of approximately 18%
and added immobilizers for Anti-
through 2028.
Theft functionality.
21Overview and Trends
Automotive Online E-retailing
Aftermarket
Government Regulations
Auto Components Export
22Automotive Aftermarket – Auto Components
Export
The automobile components industry contributes towards 25.6% to the manufacturing GDP and 3.8% to
the national GDP, providing indirect employment to 1.5 million people. It has the capacity and
accessibility to export to other auto components across key global automotive markets like Japan,
Korea and Europe. The total value of exports for the year 2018 was USD13.50 billion. Following are the
advantages India has over it’s competitors when it comes to export of auto components:
1. Geographical Proximity
2. Improved Product Quality
3. Increased Investment & Government Initiatives.
Share of Indian Auto Component Exports – Top
10 Countries FY17
Brazil, 2.60%
Mexico, 2.80%
U.A.E., 2.80%
France, 3% USA, 22%
Thailand, 3.30%
Italy, 4.10%
U.K., 5.10%
Germany, 7%
Turkey, 6.20%
23Automotive Aftermarket – Auto Components
Export
India’s exports of auto components increased at a CAGR of 5.77%, during FY14-FY18, with the value of auto
component exports increasing from USD10.2 billion in FY14 to USD13.5 billion in FY18.
Moreover, the number of automobiles being exported grew by 18% during FY14-18.
Value of auto component exports FY19
Total
Revenue in 35 39 39 44 51
billions
100%
29% 29% 28% 25% 26%
80%
60%
40%
71% 71% 72% 75% 74%
20%
0%
2014 2015 2016 2017 2018
Domestic Revenue Exports
24Automotive Aftermarket – Auto Components
Export
Highest component is captured by “brakes and servo-brakes” which also accounts for a high
percentage as it is one the most commonly worn out components of car. Second most sold
component are “Gear boxes” which also account for higher percentage as it is comparatively
expensive component.
Component Wise Global Exports of Auto
Components FY18
Brakes and Gear boxes, 19%
servo-
brakes;parts
therof, 23%
Other oarts and
accessories of
bodies(including Drive axles with
cabs), 7% differential w/n
provided with
Bumpers and
other transmitters,
parts thereof, 5%
17%
Steering wheels,
steering columns Clutches and
and steering parts thereof, 3%
Road wheels and
boxes, 8% Radiators, 2% parts and
Suspension shock accessories
absorbers, 7% thereof, 8%
25Summary
• Automotive market in India is currently
progressing towards a positive growth path
given the current opportunities and
challenges.
• The factors which contribute to its growth are
primarily –
• Government Regulations - Regulations related
to the introduction of new safety features that
encourage the manufacturing of new safety
components along with ensuring their quality.
• Changing Automotive ecosystem - The
emergence of new sales channels like online e-
retailing and multi brand outlets (MBOs) are
playing a key role in changing purchase
behaviour of the end customers.
In summary, we believe that Indian Automobile
Aftermarket & Indian Automobile Component
Aftermarket is better placed and expected to
grow. Another major factor which ensures this
growth is that we are serving a lot of businesses
in emerging countries outside India. This minimizes
the risk of slowdown due to any dependency on
domestic market. One of the example is tyre
manufacturing and components industry which
has shown tremendous growth in exports in past
five years.
26Tel: (65) 6838 5355
Fax: (65) 6838 5855
78 Shenton Way #20-01
Singapore 079120
sg.info@spireresearch.com
www.spireresearch.com
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