Automotive Ancillaries

 

Overview

The automobile ancillaries industry in India has a market size of USD 38.5 billion and is expected to reach USD 115 billion by 2021. The industry is important for the success of the automobile industry and has established India as a global hub for the sourcing of automobile parts. Relative to competitors, India is geographically closer to key automotive markets like the Middle East and Europe. Besides this, India overtook the USA as the world’s third largest steel, producer. This is a significant development as steel is one of the most important raw materials in the automobile industry. India also has a relative cost advantage of about 10-25% lower manufacturing cost as compared to Europe or Latin America.

Product Segmentation:

Buy Industry Analysis

Domestic and Global Outlook

The outlook for this industry is largely positive as the automobiles sector is expected to grow at a CAGR 9.5%. The sector has had some set back in the past as the sales of automobiles had fallen between 2012 and 2014 but the improvement in 2015-20 will drive demand for this sector.

 

There are about 10,000 unorganised players and only about 500 organised players in this industry but the market is dominated by the organised ones which command 85% of the total market share of the industry. The production volumes of the various product segments can be seen in the diagram below:

 

 

 

The industry has performed very well since 2008 despite recent setbacks. Revenues have grown from USD26.5 billion in FY08 to USD 66 billion in 2016(e) – a CAGR of 12 per cent between years 2008 and 2016. Capital investments in the auto component sector have seen a downward trend despite of its improved market conditions mainly because of the moderations made in the vehicle sales and depressed market sentiments. Export is another important revenue stream for this industry. India’s exports of auto components increased at a CAGR of 14.01 per cent to USD11.2 billion during the period between 2009 and 2015. Original Equipment Manufacturers (OEMs) dominate production volumes by market range and encouragingly, exports account for a healthy 29 per cent.

 

In addition to this, the thrust given to manufacturing in India through the ‘Make in India’ initiative is a big benefit to this industry as will attract large investments from foreign companies. The government has also allowed 100% FDI in this sector without prior approval making things really smooth for investments.

 

Future Potential

After the BREXIT that has taken place in the EU, industries with higher exposure to the EU will also be affected. The sector thus will face some short term volatility because of this exit on 23rd June 2016. Being complementary to one of India’s most important sectors, the automobile ancillary industry has tremendous potential for growth domestically. Higher population and increased earning power will boost the Indian market. The low penetration of passenger cars in the India is a big indication of the opportunities that lie ahead. The phenomenal growth of the Indian economy at over 7% per annum along with the fast paced development of Tier I and Tier II cities is seen as a big plus for this industry as demand for passenger vehicles is expected to rise. Industrialization in these cities is expected help demand growth in the commercial vehicle segment which currently occupies a very small share in the automobile market.

 

Growing working population and expanding middle class are expected to remain key demand drivers. India is set to break into the league of top five vehicle producing nations. The middle class population in India is expected to increase from 160 million people (over 50 per cent of the total US population) in 2011 to 320 million by 2019, equivalent to more than three times the population of Germany, the largest economy in Europe, and is indicative of rising incomes of people in the country.

 

Also, increased R&D operations and laboratories are being set up to conduct activities such as analysis and simulation, and engineering animations which are facilitating modernization in the industry. The growth of global OEM sourcing from India and the increased indigenisation of global OEMs is turning the country into a preferred designing and manufacturing base. Lastly, India is also emerging as a sourcing hub for engine components, with OEMs increasingly setting up engine manufacturing units in the country. For companies like Ford, Fiat, Suzuki, and General Motors, India has established itself as a global hub for small engines.

 

What this report contains:

  • A detailed overview of the industry

  • Structure of the industry from both, domestic and international perspectives

  • Related industries that this industry has inter-dependencies with and their understanding

  • Detailed analysis of industry segments in terms of the value and depth of corresponding market

  • Analysis & insights about the elements and critical success factors of this industry using strategic models

  • A forecast on the state of this industry in 2021, predicting the growth and movement patterns for 2017 - 2021

  • Our professional analysis on the future of the industry based on strategic actions adopted by major industry participants

  • Quantitative estimates and forecasts of the growth prospects of the industry using revenue and financial forecasting models

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