News and Events

Economic Times reported that the usually unflappable Indian auto after market, which grew robustly even in the aftermath of the debilitating global crisis of 2008-09, seems to have slowed down in the last few months owing to a combination of service term changes, tax hikes and slowing auto sales.

 

 Everyone from Mr Jagdish Khattar the former Maruti chief who now runs the multi brand auto sales and service chain Carnation, to Mr R Dinesh of the TVS group reckons the slowdown has finally reached their industry's doorsteps. But no one, including consultancies and research units, could quantify the exact extent of the deceleration.

 

 This includes the Auto Components Manufacturers' Association, the industry body. Mr Vinnie Mehta executive director said that "We find the sentiment down among members across the four regions." The auto aftermarket encompasses everything from car servicing to motor parts, tyres and batteries.

 

 The broad signs of the slowdown are very much evident, though. Mr KR Sridhar VP of parts distribution of TVS & Sons said that "We are seeing pessimism in the aftermarket in the last three or four months.

 

 The offtake of parts by retailers and distributors have come down." Usually, Mr Sridhar said, customers in the North and the West are more averse to repairing their cars unless they have suffered a major damage. He said he's sensing a similar reluctance in the Southern markets of late.

 

 Angel Broking Research Analyst, Mr Yaresh Kothari said that "The topline growth of leading auto component companies in the first quarter was either subdued or muted and it is expected to be the same in the second quarter.

 

 Companies like Bosch and Apollo Tyres have announced production cuts. Mr Khattar said that "The aftermarket seems to have been spooked by too many forces putting pressure on it. It is difficult to decide whether it is entirely due to slowdown or the effect of monsoon.”

 

 A Motilal Oswal report earlier this month said that the general mood in the entire automotive market is not very positive and that has effected the demand in the service sector too. In fact, sales of vehicles of almost all kinds have slowed down in the country. Slowdown earlier visible in passenger cars is now clearly evident in two wheeler volumes as well. In August, two wheeler sales fell for the first time in well over three years.

 

 That month, 1.12 million vehicles were sold in all, a drop of nearly 12 per cent year-on-year. In fact, as Acma's Mr Mehta said, the reason can also be the deferring of purchase of used vehicles, which typically require a lot of refurbishing. Slowing auto sales aren't seen as the only reason, though. One other reason is the recent tax hikes. For instance, the excise duty on motor parts had gone up from 10.3 per cent to 12.36% in March 2012.