With the growing electrification and the accelerated push towards sustainable mobility solutions, the automotive ecosystem is witnessing a heightened shift towards electronics-intensive parts, for which, there is a growing demand at both the OE level, as well as the aftermarket.
While it is poised to cater to the demand for EV-specific components from the OEMs, the automotive components industry, led by the Automotive Component Manufacturers Association of India (ACMA), sees strong potential in the aftermarket for auto-electronic components.
According to ACMA, with the growing introduction of various new-age technologies such as telematics, OBD, and software, the market opportunity for automotive electronics in the aftermarket is pegged at US$ 8-10 billion. Furthermore, the unified industry body estimates that the automotive electronics market is set to grow by 10x to about US$ 80 billion over the next decade.
While the demand for such high-on-technology and electronics products such as telematics, is being driven by regulatory push, the changing consumer preferences towards more modern technologies in their vehicles, is also a key enabler of this transition.
Tier 1 majors of the likes of Lumax Auto Technologies (LATL) are eyeing to tap into this growth opportunity by foraying into telematics products for the aftermarket. The company eyes a huge market opportunity of millions of existing commercial vehicles, ready to be equipped with telematics devices, to meet the AIS-140 norms which were implemented in April 2019.
According to Vinnie Mehta, Director General, ACMA, "The aftermarket is one of the fastest growing segments of the industry and also offers better margins to suppliers. Automotive electronics is a valuable opportunity for component manufacturers to tap into future growth."
"We have identified 30 automotive-electronics products that are low-hanging fruits and can be quickly localised. We must create dedicated clusters to localise automotive electronics, and these clusters could also cater to not just automotive, but to a larger section of the industry as well. Many states in India are vying to attract investments into automotive electronics," Mehta added.
Mehta further said that with the unorganised nature of the automotive aftermarket, ACMA is working with the government on making stringent standards to "weed out non-standardised players in the aftermarket." "It is not easy for any company to enter into the aftermarket supply chain. We will make some announcements on this front in the next few months," he said.
With an evolving regulatory framework, particularly on the emissions and safety fronts, Indian component manufacturers are seeing new doors getting opened. As a result, ACMA is extensively exposing its member companies to global aftermarket opportunities by organising routine expositions and buyer-seller meets in key markets. "The favourable changes in emissions and safety regulatory requirements have made Indian products at par with global standards. ACMA is actively involved in the promotion of aftermarket exports and is helping its member companies to map newer markets to tap," Mehta signed off.