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Auto Expo 2012: Auto Component channels expect a big change of consolidation

Auto Component channels expect a big change of consolidation as aftermarket in India matures.

A few years down the line if your car breaks down on a highway, you just might not find one of the local garage shops. You might be entering into a glass walled urbane car parlour, with all the frills.

The Auto Component Manufacturers Association, or ACMA unveiled the 'Aftermarket Study Book Phase - II' on  Wednesday, a day before the Auto Expo 2012 starts in Delhi, which showed many such trends for the servicing and aftermarket in India.

The other trends that were discussed during the press briefing were on the retailers and distributors, and how spurious components are a growing cause of road accidents in India. The organisers urged that awareness against spurious parts will not only bring down accidents, but also pay back to the government in form of taxes. The survey was conducted over 100 cities and 150 RTOs.

According to the survey, OEM-authorized service stations to 20-30 per cent from 15-25 per cent by 2017. Semi-organised service stations will grow from 10-20 per cent to 20-10 per cent, and unorganised will come down from 60-70 per cent to 45-55 per cent during the same period. One big reason for this change is that the cars are getting more complex and sophisticated. "We will have to upgrade the unorganised by training them," said Soumitra Bhattacharya, Chairman, committee of consumer affairs and after market, ACMA.

On the other side the distributors and wholesalers will have to become savvier and smarter to keep up with the pace of the changing Indian market. Tier 1 distributors will grow more in number and size. The end of the pyramid of retailers will come down from 125,000 to 100,000 in a few years.

A consolidation wave is expected as the strong become stronger. To survive they will require highly skilled sales people and will have to manage order to payment cycle in a much more sophisticated manner, else they might fall prey to consolidation or even be wiped out, explains Arvind Kapur, President, ACMA Definitely, with more global car being launched and bought in India, management of product information will be critical and so will be engaging with the products.

The current after-market which is valued at Rs 24,000 crores is set to reach new highs as our new car sold number go up to 5 million in 2015 and to a higher 10 million in 2020.

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