ACMA urges members to explore export opportunities in the global aftermarket

New Delhi, August 22, 2012: The Automotive Component Manufacturers Association of India (ACMA) today hosted an international conference on the global automotive aftermarket and addressed growth opportunities in the current environment and the need to explore exports.

The global automotive market varies significantly across regions driven largely by contrasting trends in vehicle-parc growth. While there are emerging economies with lower density of vehicles, traditional high-income matured markets such as the US, Europe and Japan, characterised by higher per capita vehicle ownership, are almost saturated with over 500 vehicles per 1,000 persons on an average.

Speaking on the occasion, ACMA president Arvind Kapur said, “The auto component industry in India, has over the years, through continuous improvements surpassed stringent international quality standards and requirements. Today almost 80 percent of our exports are to global OEMs and Tier 1s while the rest is to aftermarkets. With significantly well-defined and dominant aftermarkets in the US and Europe, I am confident the Indian auto component industry will focus attention on these and will carve a niche for itself.”

The conference saw consulting agency Frost & Sullivan release a concept note on opportunities and challenges in the global aftermarket. It pointed out some of the salient features in mature and emerging markets. They include:

• The size of the global automotive aftermarket is around US$ 400 billion (Rs 2,218,400 crore. In mature automotive markets, the aftermarket generates a big slice of the profit-pie while in emerging markets the aftermarket is a minor contributor.

• Large aftermarket players including multi-brand service and specialty chains dominate mature markets

• In mature automotive aftermarkets, strong service and parts brands have a visible footprint, offering differentiated services and product choices to the end user. In emerging markets strong aftermarket brands, differentiated on quality-price matrix, do not exist.

• In markets like Western Europe and the USA, a strong regulatory mechanism ensures a level playing field for all the industry players thus encouraging competition and offering many choices to the end user. In emerging markets, the regulatory framework for aftermarket is weaker.

• Efficient and well-managed supply chain and logistics have contributed to aftermarket development in mature markets. Emerging markets are yet to achieve efficiency in warehousing, transportation, inventory management and related services.

• Fake and counterfeit parts are another major challenge for aftermarket players in the emerging economies, especially China and India. Mature markets, while not entirely free from fake and counterfeit parts, are not adversely impacted by this menace to the same extent due to legal framework, industry activism and maturing of markets.