Indian automotive spare-parts market is expected to be worth Rs 37,000 cr by 2015

TN has the highest share in
 two-wheelers spare parts market

Chennai:

The Indian automotive spare parts market is expected to grow from Rs 28,000 crore to Rs 37,000 crore by 2015, according to a study.

The McKinsey report ‘Scaling the Indian automotive aftermarket: Path to profitable growth’ which was released by British deputy high commissioner Mike Nithavriankis during Confederation of Indian Industry Auto serve conference 2012 here on Friday said that automotive service (excluding spare parts) which is pegged at Rs 10,000 crore is expected to reach Rs 13,000 crore by 2015.

Presenting the findings of the study, Ananth Narayanan, partner McKinsey and co said that currently two-wheeler segement is the largest at an estimated Rs 14,000 crore (49 per cent of the overall market) followed by car segement at approximately Rs 7,000 crore (26 per cent of the market).

Commercial vehicles, which include multi-axle vehicles, light commercial vehicles, buses and trailers account for the remaining 25 per cent of the market.

Interestingly, the state along with Uttar Pradesh dominate the two-wheeler segment each having 12 per cent share of the Rs 14,000 market. However, in the commercial vehicles as well as cars, Maharashtra has an edge over other states, the report states.

The report said the spare parts market will continue to grow driven by increasing vehicle parc and shift in the mix of vehicles towards high end variants.

However, despite the strong growth, the return on capital has been under pressure for players across the industry including spart part retailers, independent service workshops and dealership service centres. This is primarily due to rising operating costs, particularly rentals and manpower costs and higher capital lock-in for higher inventory and other fixed capital. This calls for the need for players to evaluate additional ways of capturing value and sustained returns, the report said.

The report also said that number of spare parts distributers and semi-wholesalers will decrease by about six per cent and small retailers will decrease by about 30 per cent in the next five years. Similarly, in the services sector, the number of unorganized garages is expected to decrease by about 15 per cent while multi-brand service centres are expected to double over 2,000 by 2017.

The report also predicted that vehicle electronics market will grow at 22 per cent each year to reach $4.5 billion by 2016.

Factfile:

--- Indian automotive spare parts market is expected to be worth around Rs 37,000 crore by 2015

--- Number of unorganized garages is expected to decrease by 15 pc while multi-brand service centres is expected to double ovr 2,000 by 2017

--- Increasing demand for safety, navigation and multimedia will help electronics market grow at 22 pc each year to reach $4.5 bn by 2016

--- electronics will cover 40 pc of the vehicles cost by 2016 led by technological evolution in safety, navigation, entertainment and convenience