Growing promise of India's aftermarket

The Chinese were the largest contingent at the first ACMA Automechanika that may have seen more participation if it weren’t for limited exhibition space.

Autocar Pro News DeskBy Autocar Pro News Desk calendar 14 Feb 2013 Views icon5366 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
Growing promise of India's aftermarket
The first edition of the ACMA Automechanika New Delhi 2013 trade fair (February 7-10) at Pragati Maidan saw 258 exhibitors from 12 countries. The fair, organised around the theme of the automotive aftermarket, saw country-exclusive pavilions from China (the largest with close to 30 exhibitors), Germany, the UK, Italy and Taiwan. It also included a day-and-a-half-long seminar at which speakers from different backgrounds deliberated the challenges of aftermarket distribution, auto servicing and finally, a session on manpower skill challenges, very appropriate given what the auto sector is going through at present.

Two overriding themes dominated the inaugural session as well as the seminar. One, the Indian aftermarket is growing at 10 percent. While this means a huge jobs potential beyond the cities, the key area of concern is that there is a huge skills gap.

Secondly, there is the widespread menace of counterfeit parts which is assuming serious proportions. Both need to be tackled with a keen sense of urgency and ACMA officials went all out to explain what is being done.

Component of growth In his inaugural address, Union minister of heavy industries, Praful Patel, set the tone for the event saying that an event of this kind is important for India’s automotive sector which he said has made key strides in R&D and quality. This, he said, would enable it to cater to the OEMs around the world. While sounding a note of caution on the current slowdown, Patel reiterated that “in an integrated world, the event showcased India’s achievements in the auto components field."

And in a comment that would gladden the auto sector, the minister said, “The auto sector, including the components industry,

is going through a tough time. It’s important to revive the sector. We must see how we are able to incentivise the industry. I will certainly talk to the finance minister. We’ll try to see what is the best way forward,” said Patel.

Also speaking at the inaugural session was Michael Johannes, vice-president, Brand Management Automechanika, Messe Frankfurt Exhibition, who said: “We are proud to have organised the first ACMA Automechanika 2013. We think there is a lot more potential in the Indian auto component industry as it has been doing well in the last few years and the quality of the products is also improving.”

Asked as to why several big names weren’t there, he said, “Delphi and ZF are there. This is the first show which has people coming to see what it is all about, about the organising levels and visitor profiles. We know that a lot of big companies are coming here to visit the first show and they are really keen to come for the next edition. I think we can grow the show tremendously in future years.” He added, “We asked for more exhibition space this year but unfortunately were not able to get it. We have another 100 companies who had applied but could not participate.”

The need for intervention by the government was also echoed by Surinder Kanwar, ACMA’s president who addressed the seminar as well and who said a stimulus from the government could kick-start growth. On the potential of the aftermarket, Kapur said that the sector, currently worth $6.1 billion, is growing at between 10-15 percent. ACMA, he said, is working on a white paper that will detail the association’s recommendations and of this, the most significant is that selling of spurious parts will be treated as a non-bailable offence.

Cutting down on fakes

In the seminar held on the second day of the fair, a variety of topics were discussed and some interesting insights came to the fore. Soumitra Bhattacharya, chairman of ACMA’s consumer affairs and anti-counterfeiting committee (and joint managing director of Bosch Ltd), said ACMA is leveraging a process-based plan to cut the incidence of spurious parts, which account for 35 percent of the components sold in India.

Nitin Gokarn, CEO of the NATRiP project said that a diversifying vehicle parc will impact the country’s aftermarket on the one hand as well as legislative changes on the other. He provided some chilling statistics when he said that in India an accident occurs every minute and a fatal accident every four minutes; 20 percent of all accidents are caused by vehicles with fake parts. On NATRiP, specifically, he said the project hopes to have its R&D lab ready by early 2015.

The first ACMA Automechanika trade fair saw the launch of an IPR handbook by the Automotive Component Manufacturers Association of India (ACMA). The IPR handbook by Anand & Anand is aimed at educating consumers on the nuances of intellectual property rights (IPR). It is available on the ACMA website and can be downloaded for free.

At ACMA’s Asli Naqli stall member companies have showcased genuine products alongside spurious ones to educate visitors about the differences. Vinnie Mehta, executive director of ACMA (pictured above with Heavy Industries minister Praful Patel), says that the anti-counterfeiting initiative has involved creating of kiosks at three markets in Delhi for educating the common man against use of fake parts besides enacting ‘nukkad nataks’ or street plays. “There are no standards in the aftermarket; for instance, safety standards for imported parts; standards at the excise level when components are coming out of the factory gate or at the retail level involving checks by the police,” says Mehta.

ACMA’s Consumer Affairs & Anti-Counterfeiting Committee has conducted about 500 raids in the last two years under the ACMA umbrella. “Every month one SMS is sent at a cost of 3-4 paise to 10,000 auto component wholesalers, retailers and mechanics to spread the message of maintaining vehicle health,” adds Munish Malhotra, chief general manager – sales and marketing, Talbros Automotive Components.

A major lapse in the legal framework is the ease with which a spurious part manufacturer or dealer escapes the dragnet of the law, the offence being bailable. Hence, ACMA has submitted a white paper to the Heavy Industries Ministry for making it a cognizable and non-bailable offence.

In the session on the business of parts distribution, Atish Mukhopadyaya, principal, Delivery Excellence and Automotive and engineered Products, Tata Strategic Management Group, said that component makers in the aftermarket must improve the extent and quality of collaboration with OEM spares.

Value of value chain

In the second session of the seminar, Rakesh Batra, partner and national leader (auto sector) at Ernst & Young, spoke about the importance of the value chain in the auto components field. In his crisp and succinct address on ‘Improving the Auto Components Value Chain – Why it is important to focus on Aftermarket Improvement’, he said telematics will be a huge factor for the future and that companies will have to develop a business model.

Batra added that the key areas of the future will be safety and security, vehicle diagnostics, regulations which include the ‘Right to repair’ that is mandated in the developed markets and V2V (vehicle-to-vehicle) communication which will have implications for factory-fitted parts. Batra said all this is now relevant for the west. He also spoke about how social media will lower the costs of education and marketing in the automotive repair chain. This will require a well-defined approach as well as the need to understand the complexity of the business.

In a session on the changing face of auto servicing, K R Sridhar, head – distribution, TVS & Sons, said that while the automotive aftermarket is expected to grow 9-11 percent till 2016-17, it is not going to be an easy game to be in. “Because of the growing overhead costs and capital requirement, the Return on Capital Employed (ROCE) is going down,” he said. In order to be able to compete well in the aftermarket business, players will have to “drop the complacency about costs,” felt Sridhar. He also expects a consolidation in the automotive aftermarket sector. There could be a 25 to 30 percent reduction of small retailers in the aftermarket while the stronger ones will have better viability, according to Sridhar.

In the final seminar session on HR issues, Dilip Chenoy, who heads the National Skills Development Council (NSDC) said that the automotive sector has a 12 percent skills gap and therefore, will continue to be a challenge for the overall sector. On the aftermarket, he said that jobs in this sector will be likely created in Tier 2 and Tier 3 cities and in rural areas, non-migratory jobs that will potentially curtail urban migration.

This session was also addressed by the head of the Automotive Skills Development Council (ASDC) head, Sunil Chaturvedi, who said he hopes to have its national occupational standards (NOS) ready. He said his organisation will contact 200 organisations between now and April 2013. The NOS have been based on standards developed by the NSDC. The NOS to be developed pertain to R&D, sales and service-related aspects, Chaturvedi said. ACMA Automechanika coincided with the six-day New Delhi World Book fair (organised by the National Book Trust that comes under the HR ministry and ITPO) held at adjoining pavilions at Pragati Maidan. The sheer size of the book fair had its impact with ACMA sources suggesting that if they had more space, an additional 20 Indian participants could have taken part.

With both fair pavilions cheek-by-jowl, the food courts saw a co-mingling of visitor profiles which included two Afghan businessmen in traditional attire scouting for truck parts at ACMA Automechanika and a group of young Buddhist monks in their robes. Both fairs reflected the diversity of India and what it can offer the world.

Will ACMA Automechanika set the bar high for next year’s Auto Expo? SIAM, one of the organisers, will have a rehearsal of sorts at the Bus and UV event slated for the Greater Noida Business centre in mid-February. Visitors and exhibitors will certainly take a close look at how it is organised.

A report by Brian de Souza, Shobha Mathur, Sumantra Barooah and Amit Panday.


Do you find the first ACMA Automechanika comparable with the international show? We are very proud to have organised this first ACMA Automechanika at Delhi. We had a lot of visitors on day 1 as well as business people as Automechanika is the main brand in the aftermarket and is a B2B platform. We think there is a lot more potential, especially in the Indian automotive component industry. We offer Indian companies a platform to international markets.

Some of the big names are not here though. . .

You will find big players like Delphi and ZF but this is the first India show. If you are in the exhibition industry, then you know that many people as well as potential exhibitors will look at the overall organisation and visitor profile. Many big companies are keen to come for the next edition. So I think we can grow the show tremendously.

Do you think that the infrastructure has lived up to the demands of the show?

Infrastructure could have been better in terms of organising the different product groups. For example, not only in repair and maintenance but also parts and systems, IT systems management and garage equipment. Therefore, we need more space.

Overall, I am happy to do the first show here. We got the right dates and were here at the beginning of the year. We had asked for more space but could not get it or we could have accommodated another 100 international companies who wished to participate. In 2015, I am quite sure that we can get more space.

Any new product category that you may consider for the 2015 show?

We are looking at what is happening in e-mobility concepts worldwide. In 2012 at Frankfurt, we had for the first time a special section on it. Whether we have one here in the future depends on how fast this area is developing in India.

In which areas do you think the Indian component industry could improve further?

The Indian component industry has improved substantially over the last five years but there is some way to go, especially in terms of quality. I think it should try and sell its products in other global markets. I would mention South Africa and Russia in this context and there is potential in China even though there is a lot of competition there.

I think Indians should have enough self-confidence about their products to go in for exports. On the other hand, Europe’s national market is so big that companies can easily improve their business here in India.

Any specific initiatives in quality?

What they can do is better marketing and get more contacts in different countries because the business is done by people. Price and quality is one thing but you also have to have trust.

So, if Indian companies increasingly go abroad and make more international contacts, people will learn that Indian products have quality and can compete price-wise with other countries.

Is Messe Frankfurt helping them in terms of outsourcing of parts?

What we can do is to make sure they get space at our shows and let them know what they could do and, of course, we are service providers. It is not only about Indian companies but other countries as well. We would like to bring together national and international customers together and provide a platform.

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