Indian Automotive Aftermarket Study Book 2011 & White Paper on Legislative Improvements to combat counterfeiting
Press Conference February 11, 2011; New Delhi
About the Report
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Vehicle parc estimation from 50 RTOs in India (first ever) 3000 auto component dealers, retailers, mechanics & workshop managers interviewed. Primary Research findings till 31st March, 2010 Insights on distribution structure of auto components, rural automotive aftermarket and key trends in the aftermarket.
Contents of the Report
• Automotive Industry & Auto Component Industry •
Vehicle parc data - State wise - City wise - Segment wise (2 wheelers, 3Ws, PVs, CVs, Tractors)
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Size of the Indian Auto Aftermarket - Segment wise - Age wise - Geographical distribution
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Taxation, Legal & Regulatory Environments & its impact
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Rural aftermarket & Industry Trends
The Indian Vehicle Industry •
Production of ‘on road’ vehicles 2008
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: 11.1 mln
2010 : 17 mln 2 Wheelers & PVs : High potential domestic market segments Largest 3 Wheeler & 2nd Largest Two Wheeler Market, only behind China 4th Largest Car Market in Asia
• 4th Largest Tractor Market in the World •
5th Largest Commercial Vehicle Market in the World
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5th Largest Bus & Truck Market in the World
Indian Auto Component Industry 120 100.2 ) n o il li b $ n I(
80 60.6
40
27.5
25.7 4.3
3.8
8.4
12.8
9.4
0 2009
2015(E) Domestic Aftermarket
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Export
2020(E) Domestic OE
Current Market share - OEM: 76% - Exports: 11% - Aftermarket: 13%
Organized sector in India contributes to more than 85% of country’s total production of auto components •
On-road Vehicles Parc – All India All India Vehicle Parc as on March 31, 2010 2Ws
72,092,421
3Ws
3,475,351
PVs
14,530,412
CVs
4,630,170
Total
94,728,354
Total vehicle parc – 94.7 mln 2W share – 76%
Base: 94.7 mln
On Road Vehicle Market share (%) : 2020
PV 15% CV 5%
PVs – 21% 2Ws – 73.5%
3Ws 4%
2Ws 76%
Vehicle Parc - Age Profile Age of Vehicle
2Ws
3Ws
PVs
CVs
0 & <= 2 years
28.22%
22.05%
33.00%
25.29%
>2 years & <= 13 years
66.36%
70.63%
63.02%
68.06%
> 13 years
5.42%
7.32%
3.98%
6.65%
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33% of PVs on road are <= 2 years of age (3.3 million cars were sold in the last 2 years) More than 20 million 2Ws have been sold in the last 2 years. 28% of 2 Wheeler vehicle parc < 2 years.
Vehicle Distribution Across States 2Ws
3Ws
PVs
CVs
Gujarat
Maharashtra
Maharashtra
Maharashtra
Maharashtra
Gujarat
Delhi
Gujarat
Tamil Nadu
Kerala
Gujarat
AP
UP
AP
Karnataka
Rajasthan
AP
UP
Tamil Nadu
Karnataka
Contribution 51%
Contribution 66%
Contribution 49%
Contribution 44%
Note: Contribution figure is with respect to All India Parc •
Maharashtra – Largest Vehicle parc across categories
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Delhi - PV parc - 1.7 mln
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Rajasthan - 4th spot in the CVs category
Vehicle Distribution Across 44 Cities % Contribution of 44 cities to all India vehicle parc. 2Ws
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Robust 2 Wheeler sales in Rural areas accounting for uniform 2 Wheeler distribution across country
2Ws, 34.8%
3Ws
34.8% of total 2W parc (80 by the slide line)
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3Ws, 32.8%
CVs, 34.4%
CVs
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PVs concentration in metropolitan and urban areas
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Delhi share of overall PVs population in India – 12%
PVs, 50.7%
PVs
0.0%
20.0%
40.0%
60.0%
• Uniform parc. Of 3 Wheelers across India is an important part of last mile distribution •
34.4% of CVs on Indian roads are present in 44 cities
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CV hubs are generally present just outside major industrial hubs
Off-road Vehicles - Tractor Parc 700 604 600
) d n a s u o h t In ( e m u l o V
Tractor parc. 500 400
345
312
309
302
300
318 275
260
227
222
208
203
200 100 0
UP
AP
t ra a j Gu
n ha t j as Ra
tr a as r ha Ma
MP
na ya r Ha
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Largest market share in the world
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Total Tractor parc. In India – 3.5 mln.
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11 states comprising 92% of the overall
ka ta a rn ka
j ab n Pu
r ha Bi
a di If n o st e R Note – UP includes Uttarakhand TN
Less than 10% of Indian farmers owning tractors indicates huge market potential
Automotive Aftermarket
PVs 26% 3Ws 46%
CVs 2Ws
25%
3%
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Total Size – INR 330 bln.; 2Ws – 46%; 3Ws – 3%
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PVs and CVs have similar shares with 26% and 25% respectively
Aftermarket – Vehicle Segment Distribution Base : INR 248 bln
Base : INR 82 bln
• Labor Cost – INR 82 bln Component replacement - INR 248 bln •
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Labour cost disproportionately low for 2Ws 2Ws contribute around 50% to the total vehicle components’ aftermarket and around 33% to total labor aftermarket
Automotive Aftermarket – State Distribution Top States: 2Ws: Gujarat - INR 14 bln Maharastra - INR 13.9 bln Tamil Nadu - INR 13 bln
3Ws: Maharastra – INR 1.2 bln Gujarat – INR 0.9 bln Kerala – INR 0.85 bln
Combined market share – 47% of the total 3Ws market PVs: Maharastra – INR 8.9 bln Delhi – INR 7.2 bln Gujarat – INR 5.7 bln
Combined market share – 36% of the PV segment CVs: Maharastra – INR 7.3 bln Gujarat – INR 6.1 bln AP – INR 4.3 bln
Combined market share – 31% of total CV segment
Automotive Aftermarket – Top Cities •
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Amongst cities Delhi has the highest potential market size for 2Ws components with an aftermarket size of INR 5.5 bln. The other major cities are Chennai, Bangalore and Hyderabad in the same order Mumbai with the highest 3W parc carries the most potential for 3W components’ aftermarket. Hyderabad and Chennai follow Delhi is way ahead of million plus cities in PV segment with an aftermarket potential of INR 7.2 bln. The next city is Mumbai with an aftermarket potential of INR 2.9 bln In CVs segment Delhi at INR 1.8 bln, Chennai at INR 1.7 bln followed by Bangalore at INR 1.5 bln are the leading contributors among surveyed cities
Future Trends •
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India will emerge as a small car manufacturing hub with more sales of vehicles likely across categories. Used vehicle market expected to grow in India with many OEMs launching their used car ventures High fuel prices will force vehicle manufacturers to offer alternate fuel vehicles Emission and Safety standards will force component and car manufacturers to invest in technology. With increased use of electronics in vehicles the importance of diagnostics to go up Changing distribution and servicing structures will also add to dynamism in the Indian automotive aftermarket
Counterfeits and Fakes in Automotive Aftermarket
Counterfeits and Fakes in Automotive Aftermarket Independents Manufacturers 15%
OE suppliers 19%
Imports 8% Counterfeits 36%
OEMs 22%
In India fake auto parts command a significant market share of the total aftermarket •
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Latest estimates put contribution of fake components at 36% of total value
Auto components most susceptible to counterfeiting are filters, bearings, steering arms, tie rods, brakes, brake linings, bumpers, alternators, wipers and lamps •
Impact of Counterfeiting •
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It is estimated that government loses INR 22 bln per annum due to sales of counterfeit automotive components The loss to the exchequer occurs because firms involved in manufacturing of fake parts do not pay taxes In most cases the consumer is not aware that he is buying fake parts as the finishing & packaging closely imitates original products Also cases where consumers buy counterfeit components to save on costs Study indicates, around 20% of total road accidents either directly or indirectly attributed to use of counterfeit components
ACMA initiative to Tackle Counterfeit •
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Common Raids under the umbrella of ACMA – During the years 2009-10, 439 raids were conducted and a number of infringers were arrested
The raids have served the purpose of: – – – –
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Creating awareness Enhancing cost efficiency Intensifying activities in highly infected markets Eliminating the possibility of isolation of individual companies by retailers Leveraging better support from govt. and aftermarket associations
Asli -Naqli Stall Campaigns in the Exhibitions –Member companies educate customers on how to differentiate genuine from their fake parts
ACMA initiative to Tackle Counterfeit •
Road Shows for the benefit of traders and mechanics in interiors
who cannot travel to exhibitions in urban areas
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Educational Program for member companies – awareness
programs
for
it’s
member
companies
on
IPR,
copyright,
trademark, design and patent
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SMS Campaign – started an SMS campaign which educates
traders, mechanics and end users on the importance of using genuine parts
Limitations of existing laws •
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Lack of product specific Laws to combat spurious auto components Current laws do not provide for ‘suo moto’ action by Government or Government agencies Contract Act, Sale of Goods Act, Consumer Protection Act and Intellectual Property laws have different focus, intent and purpose Motor Vehicles Act and the Certifying agencies are ideally positioned to address the problem
Key Recommendations •
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Re-orient Motor Vehicles Act also as Automotive Components anti counterfeit and Product Safety Law by changes to preamble to the act . Define counterfeit or spurious auto components in a comprehensive way . Provide the Motor Vehicles Act that offences in connection with manufacture, packaging, sale, stocking, distribution etc., of spurious auto components will be considered as cognizable and non-bailable. Also for summary trial of such offences. Accord to the state a proactive role and a ‘suo motu’ authority to monitor, initiate prosecution for offences in connection with the manufacture, packaging, sale, stocking, distribution etc., of spurious auto components and for this purpose establish machinery within the Motor Vehicles Act. Bring clarity that Motor Vehicles Act is intended not only to regulate completely assembled vehicles and parts fitted to completely assembled vehicles but also to components used or intended for use in vehicles supplied or procured from the automotive aftermarket. Notify that Section 109 to Section 111 of Chapter VII shall equally apply to automotive components manufactured or sold or serviced in the aftermarket.
Need for State Level Enforcing Agency •
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Create state level enforcement agency with adequate supervisory powers to deal with persons engaged in the manufacture, storage, packaging, distribution and sale of counterfeit or non standard automotive Component. Similar to the Weights and Measures Act, inspectors and other officers be empowered to search, seize any non complying auto component and also punish the offenders. Motor Vehicles Act should lay down standards for more and more safety, pollution and emission related automotive components. Facility of toll free call number in each district or state which can be contacted by any whistle blower if he comes across any one in the chain of spurious or fake automotive component.
ACMA Members’ Survey Findings
Suo motu action by Government
Improvement to current legislations
Thank You !
