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Auto firms wage war on fakes, ride on double-digit growth in spare parts

Ajay Modi/New Delhi 09 Aug 18 | 10:03 PM

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Auto majors are not just seeing a strong growth in vehicle sales, many are clocking a double-digit growth in sales of spare parts as well, thanks to a sustained campaign against fake parts and a growing vehicle population on the roads.

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Maruti Suzuki, tcarmakery’s biggest car maker has clocked revenue of Rs 72.17 billion from spare parts and components during FY18, growing 10 per cent over the previous year. Apart from existing models, the company provides parts for various discontinued models as well.

Top two-wheeler maker Hero MotoCorp grew its parts business by 13 per cent last year. The reported revenue for the spares business in FY18 is Rs 25.78 billion, marginally up over the previous year. “Our parts business grew by 13 per cent in FY18. However, this does not reflect in the financials because of the necessary adjustments made owing to GST transition. We are committed to growing our parts business and ensure availability across markets," said a Hero MotoCorp spokesperson. 

Companies have acted against the menace of fake spare parts along with government authorities. According to the Hero, the local police in various states have conducted more than hundred raids on spurious parts manufacturers and retail points over the past few months, and seized more than four million units of parts and labels. Hero is running a campaign ‘Fight Fake Stay Safe’ to spread awareness about the hazards of counterfeits and fake products.

Commercial vehicle major Ashok Leyland said its spare parts business grew at 39 per cent last year, the highest in its history. The growth in FY17 was 31 per cent. Sanjeev Kumar, vice president for parts at the Chennai-headquartered firm said multiple initiatives have been undertaken to grow the segment.

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“We have worked with suppliers to rationalise costs and reduce variants of parts which helps in offering better value to customers. We have started selling product categories which were so far catered to by tier two or generic brands. The company has revamped its supply chain," Kumar said. Ashok Leyland said the number of mechanics buying company made parts has grown five-fold during the past two years and the number of retailers selling these parts has grown three-fold.

Kumar said the company estimates about a third of parts being sold in aftermarket are non-genuine. “We have re-designed the packaging and MRP labels which are conduits for fake parts to enter retailer shelves. The new designs incorporate cutting-edge security features to deter counterfeiters," he added. The truck and bus maker conducted over a hundred raids last year on agents engaged in manufacture, distribution and sales of counterfeit parts using Ashok Leyland brand name.

Country’s third bigger two-wheeler player TVS Motor has seen its spare parts business expand by over 16 per cent in FY18 against a growth of just nine per cent in the previous year. Royal Enfield maker Eicher Motors saw a sharp surge of 28 per cent in the spare parts and component business to Rs 5.32 billion last year.

Companies have worked with technicians in garages to advocate the use of genuine parts. Hero has enrolled over 65,000 technicians across the country in a relationship program called ‘Asli Hero’. “These technicians act as brand advocates for the usage of genuine parts, and also identify counterfeits with the help of the tech-based platform provided to them," the spokesperson said. Hero customers also have an option to verify the genuineness of various parts through a simple SMS to a central number. 

A study by auto component industry body Acma and E&Y estimate that one-fifth of all road accidents in India are directly or indirectly attributed to the use of counterfeit automotive parts. For companies, growing this segment adds to the revenue and profitability as well as helps in reducing the probability of road accidents. 

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