India's automotive aftermarket beckons corporate houses

The Indian automotive component aftermarket industry is pegged at Rs 28,000 crore and projected to touch Rs 37,000 crore by 2014-15. On the service side, the industry is estimated at Rs 10,000 crore and projected to grow to Rs 13,000 crore by 2014-15. It is such opportunities that are making big corporate houses like the Tatas and Reliance strategise to grab a share of the pie. While the Tata Sons-promoted Tata AutoComp Systems recently started offering a dozen-odd spare parts in the market a under a new brand called ‘Autocomp’, Reliance Industries is stepping up its ‘Autozone’ business, its maiden attempt in the auto retail business.

Component vendors also see a good opportunity in tapping the aftermarket. There’s a growing opinion that suppliers should also look at alternative ways to sell their products. Most suppliers today sell their spares through vehicle OEMs. “80 percent of ACMA members sell only through OEMs,” pointed out Vikas Kumar, director, Capgemini India.

As is well known, India’s aftermarket is highly unorganised, especially in the servicing side.

Soumitra Bhattacharya, joint managing director, Bosch Ltd, said there were about 300,000 unorganised garages, compared to 950 multi-brand organised garages in 2011, in the country. In order to tap the huge market opportunity, Bosch inaugurated over 125 service centres in Eastern India on January 18. Prior to this expansion, Bosch had set up 100 service centres in North India last year.

As the auto retail industry gathers pace in India, automotive aftermarket players will also have to devise new ways of doing business, profitably. “One big challenge is rentals,” said Arun Dey, head of the Reliance automotive retail business. He added that hiring staff with high retailing skills is another challenge for new players in the automotive aftermarket.

Players in the aftermarket have no option but to work on strategies to overcome the challenges, as the car parc is only going to grow in India over the coming years.

Leaving aside competitive aggression, working together could result in collective benefits. “The mindset of competition with (OEM) authorised centres needs to come in,” said Mohit Arora, executive director, J D Power Asia Pacific. Arora also felt that the Indian aftermarket players could also learn from players in South East Asia like B-Quik in Thailand.

The Indian aftermarket industry is currently skewed towards two-wheelers. Roughly half of the aftermarket is captured by two-wheelers while the rest is equally divided between commercial vehicles and passenger vehicles. Given the positive long-term growth of the Indian automobile industry, the Indian aftermarket can only mature to keep pace with the demand