Analyst View

02.08.2016
Analyst View

The Indian automobile Industry is witnessing strong demand due to improving economy, growing per capita income and disposable income.

Car-owners have multiple options to choose from, authorized dealers, neighborhood garages and independent service station based on price–value expectation. Since authorized station ecosystem tends to be priced higher, they do not meet the value expectations of all classes of customers. Thus, such customers typically migrate to the organized/unorganized market for getting their vehicles’ serviced or repaired.

With the growing internet penetration through mobile, assisting e-commerce companies to penetrate Tier-1 and Tier-2 cities, and with growing e-commerce many people are getting aware from such platforms and ordering spare parts online. Though, the number is still very small but the addressable market for such category is growing. Websites such as Snapdeal, Amazon etc., are assisting car-owners to buy spare parts online. Customers can find the information on various spare parts and their price online and can shop the same through websites.

The Indian spare part market is highly price sensitive. The most important ways to achieve differentiation are service cost and availability of parts. The spare parts aftermarket is highly unorganized and the proportion of spurious parts account for a significant share. Hence, any service or software which assists the end user to identify the spare parts authenticity will absorb the growing addressable market.

Furthermore, there seem to be specific service requirements that are most relevant to Indian consumers. Emphasizing these specific requirements is a potential way to achieve differentiation in the aftermarket. In this market, companies can be profitable by utilizing a strong logistics network that helps them maintain a high service level by focusing on cost cutting and basic service offerings, while keeping an eye on customers’ specific service requirements.