A thriving aftermarket is an indicator of a healthy automotive industry and India, one of the world's fastest growing economies and likely to hit the 25 million vehicles sales milestone in FY2019, is a fine example. In FY2018, the domestic aftermarket recorded sales of 61,601 crore (US$ 9.2 billion), marks 9.2 percent year-on-year growth.
Recognising the aftermarket's potential for speedy growth, the Confederation of Indian Industry (CII) has forecast that that the domestic auto aftermarket industry is estimated to reach the Rs 75,000 crore mark by FY2020.
In a report titled 'Transformation Shifts in Mobility and Impact on Aftermarket in India', released at the Autoserve 2018 trade expo in Chennai last week, CII says the total aftermarket has grown at a CAGR of 14% over the past five years. Passenger vehicles dominates the aftermarket with 37%, followed by commercial vehicle at 30%. Two-wheelers are estimated at 20%, tractors at 10% and LCVs 3 percent.
Tamil Nadu, Andhra Pradesh, Karnataka and Kerala are among the top 10 states that contribute to more than 75 percent of the total aftermarket potential.
Given that India's domestic car market is slated to grow to over 6 million units per annum by 2020, compared to 3.7 million in 2016, the future looks bright for the aftermarket. Citing India's Automotive Mission Plan 2026, government and industry have targeted an almost three-fold increase of industry revenues to about $300 billion (Rs 2,117,400 crore), improved manufacturing competitiveness and expanding of exports to $80 billion (Rs 564,640 crore).
In terms of new mobility solutions, CII expects the segment will grow to around $2 trillion (Rs 14,116,000 crore) market by 2030, with revenue from the taxi cluster alone to contribute more than $1 trillion (Rs 7,058,000 crore) by 2030.
The report points out that alongside the growing vehicle parc in the country, there is also growing customer loyalty for the OE service channel, which impacts the aftermarket.
CII says the growth in vehicle ownership (new and used) in both semi-urban and rural markets is driving demand for auto components. It expects the vehicle parc to grow 6-7 percent next year, which would offer substantial opportunity for independent aftermarket service providers – both existing and new entrants – to grow.
Also read: Auto Serve 2018 with over 100 aftermarket exhibitors opens in Chennai