CII Says Indian Automotive Aftermarket to Hit USD 10.75 Billion by 2020

The Confederation of Indian Industry (CII) has said that the automotive industry in India is thriving and is set to hit USD 10.75 billion by 2020. India is one of the fastest growing economies in the world and will hit the 25 million vehicles sales milestone in FY2019. In FY2018, the local aftermarket in India recorded sales of USD 9.2 billion, denoting year-on year growth of 9.2 percent.

In line with this trend, the Confederation of Indian Industry (CII) has predicted that the domestic auto aftermarket industry will reach the USD 10.75 billion mark by FY2020.

The CII stated this in a report titled ‘Transformation Shifts in Mobility and Impact on Aftermarket in India’. The report was released at the Autoserve 2018 trade expo which was held in Chennai recently. According to CII, the total aftermarket has grown at a CAGR of 14 percent over the past five years. Passenger vehicles dominated the aftermarket with 37 percent, and this was followed by commercial vehicles at 30 percent.  Two-wheelers accounted for 20 percent, tractors 10 percent and LCVs accounted for 3 percent.

The four southern states of Tamil Nadu, Andhra Pradesh, Karnataka and Kerala were among the top 10 states that contributed to more than 75 percent of the total aftermarket potential.

The outlook for the aftermarket is certainly bright given that India’s domestic car market is projected to grow to over 6 million units per annum  by 2020, compared to 3.7 million in 2016. In light of India’s Automotive Mission Plan 2026, both the Indian government and industry have targeted an almost three-fold increase of industry revenues to about USD 300 billion by improving manufacturing competitiveness and increasing overseas exports to USD 80 billion.

When it comes to new mobility solutions, CII expects the segment to grow to around USD 2 trillion by 2030, with revenue from the taxi cluster expected to contribute over USD1 trillion by 2030.

In addition to the growing vehicle parc in India, the report also focused on growing customer loyalty for the OE service channel, which is a significant factor in the case of the aftermarket.

CII said that the growth in ownership of both new and used vehicles in both semi-urban and rural markets is spurring the demand for auto components. It expects the vehicle parc to grow 6-7 percent next year, which would ramp up the scope for independent aftermarket service providers.