Automotive aftermarket in India and its growth opportunities

1. 1
The changing Aftermarket Industry and
how Indian Automotive ancillaries can
benefit from arising opportunities
Prepared for:
Singex
Prepared by:
Spire Research and Consulting
Date:
18th September 2019

2. 2
Topic
1 Automotive Market
1a Overview
1b Segmentation of four wheelers
1c Tire Industry-Overview
1d Tire Industry-Key Players
2 Automotive Aftermarket
2a Overview & Trends
2b Online E-retailing
2c Safety & Security
2d Auto Components Export
3 Summary
Agenda

3. 3
Automotive Market – Overview

4. 4
Automobile Industry in India – Overview
The automobile industry in India is the world’s fourth largest vehicle market. In 2018 India was the world's 4th largest
manufacturer of cars and 7th largest manufacturer of commercial vehicles.
Indian automotive industry (including component manufacturing) is expected to reach INR16-18 trillion (USD251-283
billion) by 2026.
35 39 39
44
51
2 2
2.2
2.5
2.6
0
1
2
3
0
20
40
60
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
inMillions
InBillions
Size of the market FY19
Overall Revenue of Auto Components Number of Automobiles Sold in India
Source: SIAM Society of Indian Automobiles.

5. 5
81%
13%
4% 3%
Automobile Domestic Sales
Trends FY19
Two Wheelers Passenger Vehicles
Commercial Vehicles Three Wheelers
Automobile Industry in India – Overview
Source: SIAM Society of Indian Automobiles.
Domestic sales are dominated by large number of two wheeler vehicles. In 2017, India surpassed China to become
the world’s biggest market for two wheelers.
A total of 21.1 million units were sold last year, which comes down to 58,000 units every day.

6. 6
Automobile Industry in India – Segmentation of
four wheelers
50%
26%
24%
Automobile Domestic Sales Trends
2018
Hatchbacks SUV's and MUV's Sedans
Indian Market has been known for the market for hatchbacks. Even the government has implemented rules to allow
the development of cars under 4 metres, as they attract lesser duty and other taxes. Petrol engines smaller than 1.2-
litre and diesel engines that are under 1500cc, have a lesser excise duty. This helps to increase fuel efficiency and also
reduce pollution.
Total Number of Commercial
Vehicles Sold in 2018
1,007,319

7. 7
Tire Industry: Overview
Key Figures for FY2018:
No. of Tyre Companies in India: 41
No of Tyre Plants in India: 62
Industry Turnover 2018-19 (est.): INR63000 crore (USD9 Bn)
Exports 2018-19 (est.): INR12890 crore (USD1.8 Bn)
0%
20%
40%
60%
80%
100%
38% 30%
62% 70%
Distribution across various
channels
Aftermarket OEM+exports
58%
28%
14%
Global
Truck & Bus
Passenger Vehicle (PV)
2/3-Wheeler
55%
22%
13%
10%
Indian
Truck & Bus
Passenger Vehicle (PV)
2/3-Wheeler
Others
Distribution of exports/sales of
Tyres manufactured in India FY18
2011 2018

8. 8
Tire Industry: Key Players and Plant Locations
• Limda, Gujrat
• Perambra, Kerala
• Kalamessey, Kerela
• Orgadam, Tamilndadu
• Chittor, Andhra Pradesh*
• Kankroli, Rajasthan
• Banmore, Madhya Pradesh
• Mysore (2), Karnataka
• Sriperumbudur, Tamil Nadu
• Haridwar, Uttrakhand
• Balasore, Orissa • SIPCOT Thiruvallur, Tamil Nadu
• Dhar, Madhya Pradesh
• Pune, Maharashtra
• Chennai, Tamil Nadu
• Arkonam, Tamil Nadu
• Trichy, Tamil Nadu
• Puducherry
• Medak, Telangana
• Poda, Goa
• Kottayam, Kerala
• Baruch, Gujarat*
• Mumbai, Maharashtra
• Halol, Gujarat
• Ambarnath, Maharashtra
• Nasik, Maharashtra
• Nagpur, Maharashtra
• Sriperumbudur, Tamil Nadu* • Bahadurgarh, Haryana
• Modipuram, Uttar Pradesh • Rudrapur, Uttarakhand
• Madurai, Tamil Nadu
• Baliabhgarh, Haryana
• Aurangabad, Maharashtra

9. 9
Automotive
Aftermarket
Overview and Trends
Online E-retailing
Government Regulations
Auto Components Export

10. 10
Automotive Aftermarket
The Automotive Aftermarket refers to the manufacturing, retailing and installation of all vehicle parts
after the sale by the OEM (Original Equipment Manufacturer).
The automotive aftermarket is broadly divided into three sectors:
The post warranty vehicle (>4 years) service market was mainly captured by small independent
garages i.e. the unorganized sector because of the huge cost differences (of after warranty
services) between authorized and local garages.
46%
52%
1% 1%
Automobile Aftermarket FY19
Organized Single
Brand Outlet
Unorganized
MBOs/ Workshops
Organized Multi
Brand Outlets
Online Platforms
Automotive Aftermarket
Products/Services
Replacement Parts
Replace the original stock
components which are worn out
in due course of time.
Accessories
Made for comfort, convenience,
performance, safety, or customization,
and are designed for an add-on.

11. 11
The total aftermarket has grown at a CAGR of 14% over 2013-2018. The vibrant automotive sector
drives the growth of the automotive aftermarket in India and is estimated to grow at INR75,000
crore by fiscal year 2020.
Automotive Aftermarket
Drive
Transmissi
on and
Steering,
21%
Engine
Compone
nts, 18%
Electricals,
18%
Suspensio
n and
Braking,
15%
Consuma
bles and
Miscellane
ous, 14%Cooling
Systems,
8%
Rubber
Compone
nts, 3%
Electronic
Compone
nts, 3%
Product-wise share in
aftermarket turnover (FY18)
Major Players by Segments:
Engine &
Engine Parts
Goetze, Rane Engine
Valves, Ucal Fuel Systems
etc.
Transmission &
steering parts
Sona Koyo Steering
Systems, Rane NSK
Steering Systems.
Suspension &
braking parts
Brakes India, Rane Brake
Lining, Jamma Auto & Jai
Parabolic and Gabriel
India.
Electrical Lucas TVS, Denso, Delco
Remy Electricals
Equipment Lumax, Premiere
Instruments & Controls
and Jay Bharat Maruti.

12. 12
Automotive
Aftermarket
Overview and Trends
Online E-retailing
Government Regulations
Auto Components Export

13. 13
Trends in Automotive Aftermarket: Online E-
retailing
At present, the automotive aftermarket sale channels is fronted by traditional stores and garages.
This majorly falls (53% in FY2018) under the unorganized sector.
Taking in consideration factors such as increase in the spending capacity, changing consumer
behaviour, penetration of technology, e-commerce and most importantly; need for an organized
market. Online e-retailing will soon be a business disruptor for this sector. It has already been
observed in western countries and developed markets.
2% 3% 3%
4%
4%
4%
0%
2%
4%
6%
2015 2016 2017 2018 2019* 2020*
US Online sales of auto parts and
accessories 2015-2020
Revenue from online sales of auto parts *Projected

14. 14
Trends in Automotive Aftermarket : Online E-
retailing
In 2014, the online auto aftermarket in India was estimated at around USD20 million (less than one
percent of the overall parts aftermarket at a retail level) and is expected to increase at a CAGR of
7%, valued at USD26 million in 2018 and is projected to reach USD30 million by 2020. There are huge
opportunities to explore in the B2B space due to speedy growth of organized and independent
workshops along with customers being positively disposed towards them.
Recent advancements in the online automobile aftermarket include:
Online autoparts marketplace
SparesHub.com has raised INR2
crore from Singapore-based
Anthill Scale Ventures, US-based
Esvee Technologies, Chennai
Angels and other high net-worth
individuals (HNIs).
Boodmo – an online
marketplace for auto
components (Ukrainan
company) – has ventured into
the Indian Markets. It aims to
organize the replacement parts
market and make the shopping
process easier and convenient.
Recently raised a funding of
INR8 crore, adding up to a total
of INR35 crore.
New Delhi-based Cross Roads
India Assistance, popularly
known as CRIA, has acquired
based MeriCAR.com, a
marketplace and aggregator for
the after sales automotive space.

15. 15
Trends in Automotive Aftermarket : Online E-
retailing
These Online Markets are now offering complete
range of auto components from OEM spares to
price effective alternatives:
Advantages compared to offline stores:
Braking
System
Clutch
Systems
Filters
Suspens
ion
Systems
Unassign
ed Parts
Car
Access-
ories
Tires
Interiors
Suspens
ion
Systems
Maintan
nce
/Service
Parts
Convenience
Freedom of choice
Multi-Product
Selection
Round-the-clock
Service
Fair Points

16. 16
Automotive
Aftermarket
Overview and Trends
Online E-retailing
Government Regulations
Auto Components Export

17. 17
Government Regulations
1st April, 2018
ABS (Anti-braking system) for
two wheelers/cars for all new
models.
BS VI emission norms
April, 20202024
1st April, 2018 ABS( Anti-braking system) for
two wheelers/cars for existing
models.
Airbags mandatory for all new
models/existing post 2017.
FE Regulations 2
Government
The government of India has revised/introduced new regulations for passenger safety and pollution checks for
automobiles. Some are already in place, while upcoming norms have also been preponed.
Deadline for airbags was preponed by 6 months and BS VI scheduled in 2023, has been preponed to 2020.

18. 18
Trends in Automotive Aftermarket : Safety &
Security
One of the key concerns in the automobile sector is the rising safety and security standards. Indian
Government put in place new regulations for automobile manufacturers. Consumers have also
realized the importance and relevance, where a growth in demand has been observed off late.
TotalAutomotiveIndustry:TechnologiesandSegmentScope
Technologies like Anti-lock
Braking System (ABS) and
Reverse Parking Sensors (RPG)
have very high penetration
across vehicle segments and are
expected to generate revenue
of INR16,000 crores by FY 2020.
2W PV CV
Reverse Parking Sensor
In Car Entertainment(ICE) System
Anti- Lock Braking System (ABS)
Driver Information System (DIS)
Body Control Module (BCM)
Immobilizers
Telematics
Tyre Pressure Monitoring System (TPMS)
Airbag Electronics
LED based Headlamps
Electric Power Steering
Remote Vehicle Diagnostic Sys.
Automatic Transmission (AMT,DCT,CVT)
Electric and Hybrid Vehicles

19. 19
India emerging as a global hub for sourcing
auto parts
Government Initiatives :
The target for this sector is to cross the USD100 billion mark with exports reaching USD35-40 billion and
USD20-22 billion in revenue from overseas assets. Initiatives that are taken by the government to
encourage the growth of this industry include :
1. The Automotive Mission Plan 2016-26 (AMP 2026) 2. Voluntary Vehicle Fleet Modernization
programme (V-VMP)
AMP 2026 under one of it’s five main
objectives, seeks to increase the net
exports of the Indian Automotive industry
several fold. It recognizes that the Indian
Automotive industry (both vehicles and
auto components) has the potential to
scale up exports to the extend of 35-40%
of its overall output over the next 10
years (FY16-26).
This policy offers incentives worth 8-12%
of the cost of a new vehicle for
surrendering the old one. It would be
able to generate steel scrap worth USD
1,728 million domestically every year
with the set-up of organized shredding
centres; in addition to providing
environmental and energy efficiency
benefits.
Turnover USD200
billion
Export USD80
billion
Export USD80
billion
Direct Incremental
employment – 3.2
million
Metal Scrap
Vehicles Scrapping Policy 2018

20. 20
India emerging as a global hub for sourcing
auto parts
After the implementation of such government initiatives:
Several global tier-I suppliers have already
announced plans to increase procurement of
auto parts from their Indian subsidiaries.
French tyre manufacturer Michelin announced
plans to produce 16,000 tonnes of truck and bus
tyres from its Indian facility this year, a 45% rise
from last year.
Auto components maker Bharat Forge Ltd (BFL),
has formalized an agreement with Rolls-Royce
Holdings Private Limited Company (Plc), which
will supply BFL with critical and high integrity
forged as well as machined components.
Everstone Capital – a Singapore-based private
equity (PE) firm – has purchased 51% in Indian
auto components maker SJS Enterprises for an
estimated USD51.35 million.

21. 21
Trends in Automotive Aftermarket : Safety &
Security
Other technologies which may/can expect growth are:
After new regulations, ICRA
estimates 90% increase in the
penetration by 2019. The domestic
passenger vehicle market has sold
close to 3.64 million units in the last
financial year.
India In-Car Entertainment market
revenue is projected to grow at a
CAGR of 5.3% during 2015-21. Audio
system firm Harman is expects a
revenue of USD1 billion by 2022.
A recent study by Future Market
Insights (FMI) predicted that the
automotive global remote
diagnostics market will grow at a
CAGR of approximately 18%
through 2028.
The global market for automotive
TPMS (Tire-pressure monitoring
system) is anticipated to reflect a
CAGR of over 6% 2016-24.
Government making it mandatory in
passenger cars and higher focus on
enhancing fuel efficiency attract
growth.
Indian Vehicle Telematics market is
projected to touch USD300 mn by
2021. It also becoming an important
part of CV industry because it is
widely used by aggregators like Ola,
Zoomcar and Revv.
Vehicle immobilizers are finding
increased application in PV as well
as CV. Automobile giants like TVS
and Maruti also increased the
electrical components per vehicle
and added immobilizers for Anti-
Theft functionality.

22. 22
Automotive
Aftermarket
Overview and Trends
Online E-retailing
Government Regulations
Auto Components Export

23. 23
Automotive Aftermarket – Auto Components
Export
The automobile components industry contributes towards 25.6% to the manufacturing GDP and 3.8% to
the national GDP, providing indirect employment to 1.5 million people. It has the capacity and
accessibility to export to other auto components across key global automotive markets like Japan,
Korea and Europe. The total value of exports for the year 2018 was USD13.50 billion. Following are the
advantages India has over it’s competitors when it comes to export of auto components:
1. Geographical Proximity
2. Improved Product Quality
3. Increased Investment & Government Initiatives.
USA, 22%
Germany, 7%
Turkey, 6.20%
U.K., 5.10%
Italy, 4.10%
Thailand, 3.30%
France, 3%
U.A.E., 2.80%
Mexico, 2.80%
Brazil, 2.60%
Share of Indian Auto Component Exports – Top
10 Countries FY17

24. 24
71% 71% 72% 75% 74%
29% 29% 28% 25% 26%
0%
20%
40%
60%
80%
100%
2014 2015 2016 2017 2018
Value of auto component exports FY19
Domestic Revenue Exports
Automotive Aftermarket – Auto Components
Export
35 39 39 44 51
Total
Revenue in
billions
India’s exports of auto components increased at a CAGR of 5.77%, during FY14-FY18, with the value of auto
component exports increasing from USD10.2 billion in FY14 to USD13.5 billion in FY18.
Moreover, the number of automobiles being exported grew by 18% during FY14-18.

25. 25
Automotive Aftermarket – Auto Components
Export
Highest component is captured by “brakes and servo-brakes” which also accounts for a high
percentage as it is one the most commonly worn out components of car. Second most sold
component are “Gear boxes” which also account for higher percentage as it is comparatively
expensive component.
Bumpers and
parts thereof, 5%
Other oarts and
accessories of
bodies(including
cabs), 7%
Brakes and
servo-
brakes;parts
therof, 23%
Gear boxes, 19%
Drive axles with
differential w/n
provided with
other transmitters,
17%
Road wheels and
parts and
accessories
thereof, 8%
Suspension shock
absorbers, 7%
Radiators, 2%
Clutches and
parts thereof, 3%
Steering wheels,
steering columns
and steering
boxes, 8%
Component Wise Global Exports of Auto
Components FY18

26. 26
Summary
• Automotive market in India is currently
progressing towards a positive growth path
given the current opportunities and
challenges.
• The factors which contribute to its growth are
primarily –
• Government Regulations - Regulations related
to the introduction of new safety features that
encourage the manufacturing of new safety
components along with ensuring their quality.
• Changing Automotive ecosystem - The
emergence of new sales channels like online e-
retailing and multi brand outlets (MBOs) are
playing a key role in changing purchase
behaviour of the end customers.
In summary, we believe that Indian Automobile
Aftermarket & Indian Automobile Component
Aftermarket is better placed and expected to
grow. Another major factor which ensures this
growth is that we are serving a lot of businesses
in emerging countries outside India. This minimizes
the risk of slowdown due to any dependency on
domestic market. One of the example is tyre
manufacturing and components industry which
has shown tremendous growth in exports in past
five years.

27. 27
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