Frost & Sullivan: Indian Internal Engine Parts Market Expected to Continue Rapid Growth as Replacement Market Demand Increases

9 February 1998
Frost & Sullivan: Indian Internal Engine Parts Market Expected to Continue Rapid Growth as Replacement Market Demand Increases

    MUMBAI, India, Feb. 9 -- Due to increased demand for
automotive vehicles in the early and mid-1980s, the Indian internal engine
parts market has hit a tremendous growth spurt, and is expected to continue
its rapid growth throughout the forecast period 1997 to 2004.
    According to strategic research conducted by Frost & Sullivan
( http://www.frost.com ), The Indian Automotive Internal Engine Parts Market, the
market generated revenues of $423 million in 1997. It is forecast that by 2004
the internal engine parts market will be worth a staggering $1.2 billion, with
an annual growth rate of 16 percent. Manufacturers are expected to increase
their manufacturing capacities by 50 to 55 percent by the year 2000.
    Since the vehicle population in India has grown so quickly, more vehicles
will now need replacement parts. The lag time between the original equipment
(OE) and the replacement demand for internal engine parts is about seven to
eight years. Although the OE demand now accounts for almost 70 percent of the
market, the replacement market is expected to grow much more rapidly. All the
major internal engine parts manufacturers are beginning to concentrate on the
replacement market, as well as the OE market.
    Automation is a general trend in the engine parts industry. Manufacturers
must switch over their plants often, which leads to drops in productivity.
Most companies expect to have fully automated manufacturing plants to achieve
quick changeovers. Another trend is that international manufacturers source
engine components from their suppliers abroad for their Indian operations,
because they do not get the high quality they demand from domestic vendors. As
this is more expensive than local manufacturing, international manufacturers
are expected to begin sourcing from domestic manufacturers as their quality
improves.
    Because the replacement market is so price sensitive, spurious components
manufacturers now claim about 40 percent of the entire replacement market for
internal engine parts. Spurious parts consist of cheap substitute raw
materials that cost 30 percent of the original parts. Also, most spurious
manufacturers do not incur heavy overhead costs because the business is so
small, which allows them to sell their products at 40 to 45 percent of the
original products.
    The main competitive issues of which manufacturers should be aware are
cost, quality of components, flexibility of manufacturers and countering
competition from spurious components manufacturers. The Indian internal engine
parts industry may also face stiff competition from global components
manufacturers. Multinational manufacturers are expected to enter the country
by forming a tie-up with their Indian counterparts, which will cause a
shakeout in the domestic market.
    Frost & Sullivan's study The Indian Automotive Internal Engine Parts
Market includes gaskets, valve and valve train parts, piston and piston rings
and engine bearings for the OE and replacement markets. This report provides
market trends, revenues forecasts, competitive issues and strategies for
participants in the Indian internal engine parts market. It also helps the
reader understand the diversity of markets, geographic trends and price
trends.
    This study forms part of the Asian strategic marketing consulting series,
with valuable information gathered from Frost & Sullivan's Asia-based analysts
through in-depth, face-to-face interviews with executives from key market
participants.
    The companies participating in this market include:  A. D. Wills Rowat (I)
Pvt. Ltd., Amul Industries Pvt. Ltd., Autolec Industries Ltd., Auto Pal
Industries Ltd., Banco Products (India) Ltd., Bharat Forge Ltd., Bhavani
Industries Ltd., Business Combine Ltd., Cee Dee Gaskets Ltd., Engine Component
Ltd., Engine Valves Ltd., Escorts Mahle Ltd., Friends Auto Industries Ltd.,
Gasket Engineers Ltd., Gaskets & Materials Ltd., GNA Axles Ltd., Goetze India
Ltd., Guru Nanak Enterprises Ltd., India Pistons Ltd., Indo-Gaskets Industries
Ltd., I P Rings Ltd., Jayem Industries Ltd., Menon Pistons Ltd., NRB Bearings,
Pefco Foundry Ltd., Perfect Circle Victor Ltd., Reinz-Gaskets Ltd., Shriram
Pistons & Rings Ltd., SKF Bearings Ltd., Siyaram Kumar Engineering, Works Pvt.
Ltd., Southern Autocastings Pvt. Ltd., Speed Val Industries Ltd., Super Circle
Auto Ltd., Talbros Auto Components Ltd., Texpin Bearings Ltd., Triton Valves
Ltd., United Engineering Works Ltd., Vaishnav Gaskets Pvt.  Ltd., Vikram
Gasketing Products Pvt. Ltd.
    Frost & Sullivan is an international marketing consulting company that
continually monitors the automotive industry for market trends, market
measurements and strategies.  Recently published reports include #5366-18
North American Engine Parts Aftermarket.
    Visit Frost & Sullivan's web site at: http://www.frost.com

    Report:  4957-18      Publication Date:  January 1998     Price:  $3450

SOURCE  Frost & Sullivan