McKinsey & Company Report prepared for Auto Serve 2010, a conference on improving the productivity in the automotive aftermarket organised by the Confederation of Indian Industry at Chennai on November 19th, 2010.
The automotive aftermarket for parts in India is a large and growing market that spans manufacturers, distributors, retailers, service providers and garages. Currently worth INR 19,000 crore to INR 24,000 crore1, the market has been growing at 11 per cent, and is estimated to reach INR 39,000 crore to INR 44,000 crore by 2015. This growth will primarily be fuelled by the increasing number of vehicles on the road, as well as the aggressive expansion of independent and foreign players. While current margins for the industry remain attractive, players across the value chain may see margins reducing to the lower levels observed in developed economies. Therefore, to sustain profitability, it is imperative that players evaluate additional ways of capturing value, including expanding service networks, developing branded generic parts, forward integrating and building scale. Looking ahead, revenue pools remain large across the value chain, hence if players are able to pursue appropriate strategies, significant profits can be made in this sector.