India’s rapid development should offer attractive growth to parts and service suppliers in the coming years, as the vehicle population doubles in size.
Driven by double-digit increases in GDP – the country’s total economic output increased from $522.8 billion in 2002 to $1.84 trillion by 2012 – more and more Indians are becoming vehicle owners for the first time. In 2013, total passenger cars and light trucks numbered approximately 43.2 million. Frost & Sullivan expects this to surge to 77.9 million in 2020.
With the rise in total vehicles, though, comes a corresponding need for additional parts and service to maintain them.
Nonetheless, it will remain a very distinct and challenging market for foreign entrants.
For starters, automobiles are not the primary means of transportation in India. More Indians own two-wheel scooters and motorbikes – standing at 121.4 million as of 2013 – than cars. As such, it will take time for consumers who own cars in this country to develop good vehicle maintenance habits.
Additionally, there are very few North American or European vehicles in the mix. Maruti Suzuki dominates India’s automobile market, accounting for more than four in 10 vehicles in operation, while Tata Motors, Hyundai and Mahindra & Mahindra have most of the rest. Parts manufacturers will have to conduct fresh research and development, and distributors will have to create new sourcing programs, in order to participate in India’s booming aftermarket.
There is also the issue of counterfeit parts. The same factories that produce “knock-off” brakes, filters and engine components sold in North America are also making parts for use domestically in India, thus limiting the market potential of OEM replacement and aftermarket products.
In spite of all this, the automotive aftermarket is still a developing industry across India. There are no large retail parts stores or franchised service chains crisscrossing the country. Only a few parts distributors cover the entire nation, and most repair shops get their parts from local or regional companies that do not carry everything.
Vehicle maintenance needs are also higher than average in India. Only about half the roads are paved, and the frequency of vehicle accidents is among the highest in the world. All this extra wear and tear therefore enhances India’s market potential.
Since vehicle ownership is new to many Indians, OEMs have a higher share of the parts and service business (about 40 percent). However, the industry in India will come to resemble those of North America and Western Europe in the coming years, with larger distribution groups and service chains forming to consolidate the aftermarket.
Bosch Car Care Service, MyTVS, Carnation and Mahindra First Choice are among service chains planning to expand the number of locations they operate in India.
Finally, India is a comparatively young country – more than half the country is below 25 years of age. Aftermarket parts and service companies that can cultivate a relationship with these young consumers could enjoy growth for years to come.
Stephen Spivey is the Program Manager for Frost & Sullivan’s Automotive & Transportation Aftermarket research practice. He focuses on monitoring and analyzing emerging trends, technologies, and market behavior in the global automotive aftermarket. For more information on Frost & Sullivan’s Automotive and Transportation research, contact Jeannette Garcia, Corporate Communications, at [email protected].
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