Did you know, that the auto ancillary business in India has a crucial role in India’s economy? Yes. It contributes to roughly 2.5 per cent of India’s gross domestic product. Moreover, there is a close relationship between this industry and the automobile industry. But do you know who can help you expand your auto ancillary business in India? Well, appointing a distributorship franchise will be the best way to expand.
About India’s Auto Ancillary Business – Why Appoint A Distributorship Franchise Today
One of the most important factors determining the performance of the auto auxiliary business is the demand for automobiles, two-wheelers, and tractor-trailers in the domestic market. So, you see, there is an amazing demand and chance for you to immediately expand your auto ancillary business in India!
61% of the revenue that the automotive ancillary business in India generates comes from original equipment manufacturers (OEMs), 18% comes from the aftermarket, and 21% comes from exports.
Casting, bearings, batteries, tyres, lubricants, forgings, fasteners, diesel engines, and other ancillary parts are the nine sectors that make up the automotive auxiliary sector. These industries are classified according to the many types of automotive parts.
As the world’s second-largest producer of steel, India enjoys a competitive edge in the bearings and fasteners markets due to the existence of a significant number of participants in these markets.
The thought is good, but every expansion requires a proper strategy and development plan to help you find the right distributorships to help in the expansion. And here’s the solution to it.
Take the help of the experts at Sparkleminds to hire distributorship franchises to expand your auto ancillary business in India.
This blog is a full insight into how to appoint a distributorship franchise while franchising your business in India, what are the benefits of a distributorship franchise for the franchisor, steps to choose the right franchise and distributorship in India and more.
Outlook Of India’s Auto Ancillary Business in India
This industry reaps the rewards of India’s massive geographical population diversity. A potential reason for the expanding domestic market is the increasing purchasing power of the country’s working-age population.
For the year, FY23, analysts predicted a 14-16% increase in the Indian automotive auxiliary sector. In FY24, there is potential for a rise in the production of both commercial and passenger automobiles.
Factors Driving The Growth of The Auto Ancillary Industry in India
In addition to improving people’s access to basic transportation, India’s automotive industry has played a crucial role in the country’s economic progress. Many micro, small, and medium-sized enterprises (MSMEs) in the metals and auto parts industries rely on export income generated by the automotive sector.
Not only are manufacturers, suppliers, and dealers of vehicles and their components considered wide players, but so are ancillary businesses, financial institutions, the government, and ultimately, the customers!
Here’s a screenshot of the automobile sales trends over the last few years.
This is how the sales have been recorded over the years. Here are some factors that have driven the auto ancillary business in India.
- Growth of the Automobile Industry: As the automobile business expands, so does the auto ancillary industry. The demand for automotive parts and related services is directly proportional to the growth in the number of people purchasing vehicles.
- Initiatives by the Government of India: The manufacturing industry, which includes auto ancillaries, has been heavily supported by the government through programmes and policies like the “Make in India” campaign. The expansion of the sector is helped by government subsidies, incentives, and support.
- Export Opportunities: New opportunities have arisen for Indian automobile accessory industries as a result of globalisation. The expansion of the market has been stimulated by the rising export of automotive parts to different nations.
- Investment in R&D: When automobile ancillary companies put resources into R&D, it helps the industry as a whole create more efficient and cutting-edge goods to satisfy customers’ ever-changing needs.
- Green Technology Growth: There has been a change towards green technology in the car industry. This is as a result of rules about emissions and the growing concern for environmental sustainability. This trend is good news for auto auxiliary companies working on environmentally friendly parts.
- Collaborations & Partnerships: Indian auto auxiliary companies greatly benefit from collaborating and partnering with global competitors and OEMs. This helps to expand their skills and market reach.
In short, the expansion and competitiveness of India’s automotive accessory industry are boosted by these factors taken together. Market dynamics and technology developments are driving continuous evolution in the sector.
Steps Franchisors Should Keep in Mind While Giving Franchise Their Auto Ancillary Business
Like any other business, expanding your Auto Ancillary business also requires proper strategic planning, a proper franchise development plan and some key factors to keep in mind while expanding.
- Market Research: Learn about the need for automobile accessories in various parts of India by conducting in-depth market research. Take a look at the competitors, customer tastes, and market tendencies.
- Ensuring Legal Compliance With Indian Laws: Make sure you’re following all the rules and regulations that India has for franchising. In particular, you must be familiar with and abide by all rules and regulations about intellectual property rights, franchise laws, and company operations.
- Choose the right franchise business model to expand your business: Based on the characteristics of this business, select the franchise model that seems most appropriate. Create a distributorship franchise with proper planning.
- Preparing the distributorship franchise agreement template: To ensure that you and the franchisee are aware of their respective rights and responsibilities, it is important to draft a franchise agreement that is both thorough and straightforward. Include information regarding the terms of the agreement, as well as the fees, territory, training, and support.
- Establishing a robust supply chain: Since you are planning to appoint a distributorship franchise to expand your business, it is important for you to ensure having a robust supply chain so that there is no uninterrupted supply of auto ancillary components to your franchisees.
- Planning the expansion strategically: Think long-term about the expansion, factoring in things like the economy, customer habits, and competitors. Make sure that the rate of expansion is compatible with the capacity to efficiently oversee and assist new franchises.
In a nutshell, business owners can establish a strong and lasting footprint in the Indian auto ancillary market. This is possible by paying close attention to these stages and offering franchisees the resources they need to succeed.
Advantages Of Appointing A Distributorship Franchise While Expanding Your Business in India
Expanding your auto ancillary business in India can be very beneficial to you as the franchisor especially if you appoint a distributorship franchise.
Read on to know the importance of a distributorship franchise.
- The distributorship franchise helps the business owner expand geographically. The auto ancillary brand’s market presence can increase by tapping into localised markets and customers through regional distributors.
- Distributors know local market dynamics, consumer preferences, and competitors well. This local expertise can help tailor the business approach to regional needs.
- Distribution networks are set up in their countries. This can help the vehicle ancillary business penetrate the market faster than with standalone stores.
- Distributors build storage, transportation, and logistics infrastructure. This can free up the business owner. It will enable him to concentrate on production and key functions by reducing operational costs and upfront costs.
- Distribution networks can help the vehicle ancillary business penetrate the market faster than with standalone stores.
- Distributorship franchise arrangements provide scalable growth. The owner can add distributors in other regions to scale the business faster without investing in infrastructure.
- Distributors build local brands through marketing and sales. This decentralised method boosts brand presence across areas.
- The business’s owner can profit from production and sourcing economies of scale as the distribution network grows. Bulk orders from many distributors can reduce production costs.
To Conclude,
There are many benefits to owning a distributorship franchise, but only if the owner takes the time to pick and oversee their distributors to make sure they fit in with the company’s goals and beliefs. The benefits of a distributorship model can be completely realised through open and constant communication, continuous support, and teamwork.
Contact us at Sparkleminds to get started in creating a distributorship franchise model for your business.
