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  • 1. Indian Automotive Aftermarket Study Book 2011 & White Paper on Legislative Improvements to combat counterfeiting Press Conference February 11, 2011; New Delhi
  • 2. About the Report• 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. Page 2 Automotive Component Manufacturers Association of India 22
  • 3. Contents of the Report• Automotive Industry & Auto Component Industry• Vehicle parc data - State wise - City wise - Segment wise (2 wheelers, 3Ws, PVs, CVs, Tractors)• Size of the Indian Auto Aftermarket - Segment wise - Age wise - Geographical distribution• Taxation, Legal & Regulatory Environments & its impact• Rural aftermarket & Industry Trends Page 3 Automotive Component Manufacturers Association of India 33
  • 4. The Indian Vehicle Industry• Production of ‘on road’ vehicles 2008 : 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• 5th Largest Bus & Truck Market in the World Page 4 Automotive Component Manufacturers Association of India 44
  • 5. Indian Auto Component Industry 120 100.2 (In $ billion) 80 60.6 40 25.7 27.5 9.4 12.8 8.4 4.3 3.8 0 2009 2015(E) 2020(E) Domestic Aftermarket Export Domestic OE• Current Market share - OEM: 76% - Exports: 11% - Aftermarket: 13%• Organized sector in India contributes to more than 85% ofcountry’s total production of auto components Page 5 Automotive Component Manufacturers Association of India 55
  • 6. On-road Vehicles Parc – All IndiaAll India Vehicle Parc as on March 31, 2010 2Ws 72,092,421 Total vehicle parc – 94.7 mln 2W share – 76% 3Ws 3,475,351 PVs 14,530,412 CVs 4,630,170 Total 94,728,354 Base: 94.7 mlnOn Road Vehicle Market share (%) : 2020 PV 15% CV 5% PVs – 21% 3Ws 4% 2Ws – 73.5% 2Ws 76% 6 Automotive Component Manufacturers Association of India
  • 7. 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 66.36% 70.63% 63.02% 68.06%years > 13 years 5.42% 7.32% 3.98% 6.65%• 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. 7 Automotive Component Manufacturers Association of India
  • 8. 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 KarnatakaContribution 51% Contribution 66% Contribution 49% Contribution 44%Note: Contribution figure is with respect to All India Parc• Maharashtra – Largest Vehicle parc across categories• Delhi - PV parc - 1.7 mln• Rajasthan - 4th spot in the CVs category Page 8 Automotive Component Manufacturers Association of India 88
  • 9. Vehicle Distribution Across 44 Cities % Contribution of 44 cities to all India • 34.8% of total 2W parc (80 by the slide line) vehicle parc.2Ws 2Ws, 34.8% • Robust 2 Wheeler sales in Rural areas accounting for uniform 2 Wheeler distribution across country3Ws 3Ws, 32.8% • PVs concentration in metropolitan and urban areasCVs CVs, 34.4% • Delhi share of overall PVs population in India – 12%PVs PVs, 50.7% 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 • CV hubs are generally present just outside major industrial hubs Page 9 Automotive Component Manufacturers Association of India 99
  • 10. Off-road Vehicles - Tractor Parc 700 604 600 Tractor parc.Volume (In thousand) 500 400 345 312 309 302 318 275 260 300 227 222 208 203 200 100 0 ar an na P P at TN b ia a P a ja U A tr ak M ar ih nd th ya as n B uj at as Pu fI ar ar G rn to H aj ah ka R es M R Note – UP includes Uttarakhand • Largest market share in the world • Total Tractor parc. In India – 3.5 mln. • 11 states comprising 92% of the overall Less than 10% of Indian farmers owning tractors indicates huge market potential Page 10 Automotive Component Manufacturers Association of India 10 10
  • 11. Automotive Aftermarket PVs 26% 3Ws 46% CVs 2Ws 25% 3%•Total Size – INR 330 bln.; 2Ws – 46%; 3Ws – 3%•PVs and CVs have similar shares with 26% and 25% respectively Page 11 Automotive Component Manufacturers Association of India 11 11
  • 12. Aftermarket – Vehicle Segment Distribution Base : INR 248 bln Base : INR 82 bln• Labor Cost – INR 82 bln Component replacement - INR 248 bln• Labour cost disproportionately low for 2Ws• 2Ws contribute around 50% to the total vehicle components’ aftermarket and around 33% to total labor aftermarket Page 12 Automotive Component Manufacturers Association of India 12 12
  • 13. Automotive Aftermarket – State DistributionTop States:2Ws: Gujarat - INR 14 bln Maharastra - INR 13.9 bln Tamil Nadu - INR 13 bln3Ws: Maharastra – INR 1.2 bln Gujarat – INR 0.9 bln Kerala – INR 0.85 blnCombined market share – 47% of the total 3Ws marketPVs: Maharastra – INR 8.9 bln Delhi – INR 7.2 bln Gujarat – INR 5.7 blnCombined market share – 36% of the PV segmentCVs: Maharastra – INR 7.3 bln Gujarat – INR 6.1 bln AP – INR 4.3 blnCombined market share – 31% of total CV segment Page 13 Automotive Component Manufacturers Association of India 13 13
  • 14. Automotive Aftermarket – Top Cities• 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 Page 14 Automotive Component Manufacturers Association of India 14 14
  • 15. Future Trends• 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 Page 15 Automotive Component Manufacturers Association of India 15 15
  • 16. Counterfeits and Fakes in Automotive Aftermarket Page 16 Automotive Component Manufacturers Association of India 16 16
  • 17. Counterfeits and Fakes in Automotive Aftermarket Imports Independents 8% Manufacturers Counterfeits 15% 36% OE suppliers 19% OEMs 22%• In India fake auto parts command a significant market share of the totalaftermarket• 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, wipersand lamps Page 17 Automotive Component Manufacturers Association of India 17 17
  • 18. Impact of Counterfeiting• 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 Page 18 Automotive Component Manufacturers Association of India 18 18
  • 19. ACMA initiative to Tackle Counterfeit• 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: – 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 Page 19 Automotive Component Manufacturers Association of India 19 19
  • 20. ACMA initiative to Tackle Counterfeit• Road Shows for the benefit of traders and mechanics in interiors who cannot travel to exhibitions in urban areas• Educational Program for member companies – awareness programs for it’s member companies on IPR, copyright, trademark, design and patent• SMS Campaign – started an SMS campaign which educates traders, mechanics and end users on the importance of using genuine parts Page 20 Automotive Component Manufacturers Association of India 20 20
  • 21. Limitations of existing laws• 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 Page 21 Automotive Component Manufacturers Association of India 21 21
  • 22. Key Recommendations• 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. Page 22 Automotive Component Manufacturers Association of India 22 22
  • 23. Need for State Level Enforcing Agency• 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. Page 23 Automotive Component Manufacturers Association of India 23 23
  • 24. ACMA Members’ Survey FindingsSuo motu action by Government Improvement to current legislations Page 24 Automotive Component Manufacturers Association of India 24 24
  • 25. Thank You ! Page 25Automotive Component Manufacturers Association of India 25 25