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.
The automobile industry consumes plenty of energy before they ever make it to the open road. Automotive production leaves an enormous footprint because materials like steel, rubber; glass, plastics, paints, and lots of more must be created before a replacement ride is prepared to roll.
Similarly, the top of a car’s life doesn’t mark the top of its environmental impact. Plastics, toxic battery acids, and other products may stay within the environment. Fortunately, junkyard pile-ups are getting much smaller than they were within the past. About three-quarters of today’s average car, including the majority of a steel frame, are often recycled.
Production, recycling, and disposal costs to the environment are difficult to quantify and largely beyond the control of most consumers. It’s also true that the majority of an automobile’s environmental impact, perhaps 80 to 90 percent, are going to be thanks tofuel consumption and emissions of pollutionand greenhouse gases that climate scientists say are driving global warming.
Petroleum products raise environmental red flags even before they’re burned. Extracting them from the world is an energy-intensive process which will damage local ecosystems. Shipping fuels can also consume plenty ofenergy, and creates an occasional environmental disaster like an oil spill. As world demand rises, and unconventional fuel sources, like oil sands, become more economically viable, the ecological impacts of petroleum extraction may additionally increase dramatically. That’s another reason why fuel efficiency is so important.It’s also partly why electric-powered vehicles can help reduce environmental impacts, because the natural resources are not harmed.
The issues are oftendifficult to tease out of other factors, like increaseand resource consumption. And to eradicate such global issues on environment due to the growing of automobile industry the new type of battery based plans has recently been introduced by the Indian government that led to the holistic plan of a roadmap for the future of battery sector with different ministries like power, new and renewable energy, road transport, department of science and technology, heavy industries, external affairs, mining and environment, forest and global climate changeworking in sync as all of them would govern some aspect for the success of the world. With the inevitable growth of Electric Vehicles (EV) and renewable energy sectors, it’simperative for India to forge an ecosystem that permitssetting-up an indigenous battery manufacturing industry. India has been hooked in toexternal imports for oil, solar Photovoltaic (PV) equipment and now even batteries to satisfyits requirements. This makes India vulnerable to becoming hostage to risky supply chains and geopolitical tensions alongsidemammoth capital expenditures. India cannot afford to lose the bus within thebattery sector which is becoming a key for achieving a coffeecarbon economy.
The Electric Vehicle Market is projected to achieve26,951,318 units by 2030 from an estimated 3,269,671 units in 2019, at a CAGR of 21.1% during the forecast period. The base year for the report is 2018, and thusthe forecast period is from 2019 to 2030. The electric vehicles market has witnessed rapid evolution with the continued developments in the automotive sector. Favourable government policies and support in terms of subsidies and grants, tax rebates and other non-financial benefits within the sort of set lane access, and new car registration (specifically in China where ICE engine new car registration are banned in some urban areas) the increasing vehicle range, better availability of charging infrastructure and proactive participation by automotive OEMs would drive the global electric vehicle sales.
The involving and evolving of charging units and battery manufacturers-
The coronavirus pandemic has strengthened the necessity for encouraging domestic manufacturing in India since it’s overly hooked in to imports to suffice its requirements. This has gained urgency since substantial commodities are imported from China, a country, with whom India’s geopolitical tensions is making trade increasingly difficult. With mega targets to build up the renewable energy mix, especially solar, to its power generation capacity, and an increased specialise in electric vehicles (EVs), India has got to make concerted efforts to incentivise the domestic manufacturing of EV components, renewable energy equipment and batteries.
India bought batteries worth USD 1.2 billion in 2019-20 making this sector heavily hooked in to imports. The key sectors which will drive the demand for batteries is that the growth of electricalvehicles (EVs) and renewable electricity storage. EVs are poised to scale back India’s oil import bill and contribute to cleaner air and hence the country has set a target of getting 30 percent EV penetration by 2030. India is additionally tendering many renewable energy plus storage projects where the stationary storage components are going to be catered to by batteries. India lacks the capacity to manufacture cells commercially and, hence, to chopthe coston imports, the Indian government has made plans to indigenise battery manufacturing. A report by NITI Aayog has stated that if India has got to meet its EV targets through one hundred pc domestic manufacturing of batteries, it might require a minimum of 3,500 GWh of battery storage at a wholesale cost of USD 300 billion, which can be but half the value of oil imports thus avoided. The India Energy Storage Alliance (IESA) has estimated a 300 GWh demand till 2025 taking into consideration the EV and energy storage system opportunities. In lieu of the growing battery sector, the Indian government launched the ‘National Mission on Transformative Mobility and Battery Storage’ last year to plugphased manufacturing programmes for battery and EV components. The initiative will support fixing of large-scale export competitive integrated battery manufacturing plants in India. NITI Aayog has proposed fixing gigafactories aggregating a capacity of fifty GWh over subsequent ten years at projected cost of USD 5 billion. The most dominant battery technology today is that thelithium ion (Li-ion) batteries. All the opposite breakthroughs in battery innovation aren’t scalable commercially as of now. Research shows that cost of Li-ion battery packs fell by 85 percent within the last decade and can further fall by 35 percent by 2024 to below USD 100 per kWh. A recent report states that the Li-ion battery manufacturing capacity will grow fourfold to 1.3 TWh in 2030 compared to 2019. Asia Pacific dominates this capacity by accounting for an 80 percent share and, within this region, China, who is that theleader is predictedto double its capacity from 345 GWh to more than 800 GWh by 2030. Rare earth metals like lithium, cobalt, nickel, manganese, etc are the essentialraw materials required to manufacture Li-ion batteries, for which mining of the required metals and fixing of manufacturing plants are highly capital intensive. China has made heavy investments locally and overseas (Latin America, Africa and Australia) in mining lithium and rare-earth elementmetals. Also, China has financed a hugebattery manufacturing capacity making it difficult for other countries to compete.
India has so farnot surveyed if it’s sufficient reserves of lithium. Last year India discovered around 14,000 tonnes of lithium, but this is so oftenoften far less compared to 8.6 million tonnes in Chile, 2.8 million tonnes in Australia and 1.7 million tonnes in Argentina so asto achievebuilding a battery manufacturing industry.
Boldly, India has recently acknowledgedKhanij Bidhesh India Pvt. Ltd. to explore strategic mineral assets abroad. And, India and Australia recently signed a preliminary deal to supply the critical minerals required for a new-energy economy. Though India was late to the solar powerequipment and Li-ion manufacturing race, but it shouldn’t miss the long runbattery technology opportunity. Instead it should explore new approaches by providing for long-term research in multiple aspects of battery manufacturing. These include solid state batteries, battery-chemistries with higher energy densities, new battery materials and chemicals withstanding higher temperatures, hydrogen fuel-cells, etc. If India lays a robustresearch foundation for battery technology, it can use this unique opportunity to steer during asector that interests many economies. India could jump an entiretechnology phase by moving straight to novel battery technologies and strategically reduce its battery import dependence and risks of supply squeeze. Bridging the rift between industry and laboratories can aid faster transitioning towards commercial manufacturing of batteries. The government offersventure funding or high-risk funding to research institutions that specialises in battery technology which shall enable them to showcase the commercialisation potential of their innovations. An example might besodium-ion battery technology whose performance is inching on the brick ofthat of Li-ion batteries and therefore the staplefor these batteries are oftensourced locally leading tolow costs also, As the number of batteries start multiplying, it will cause a bigquestion of battery waste disposal since this willhave serious environmental implications. A report has predicted that by 2030, the battery recycling industry in India are often a million-dollar opportunity. Recycling at an industrial level is completedby EU and China, but the market is at a nascent stage. To scale backimports and attain sustainable battery manufacturing, but looking up to the battery recycling matter is equally important.
There isa requirement for an enabling framework where circular economies of manufacturers undertaking battery recycling or new enterprises that specialize inrecycling develop within the approachingyears. Government of India has renewed its support to the domestic industry to formIndia self-reliant under its ‘Atmanirbhar Bharat’ scheme.
In addition, the growing sensitivity of varied governments toward a cleaner environment has increased the demand for zero-emission vehicles. Developed nations like the US, Germany, and therefore the UK are actively promoting the utilization of electrical vehicles to scale back emissions, which has resulted within the growth of electrical vehicle sales. The electric vehicle market is dominated by globally established players like Tesla (US), BYD (China), BMW (Germany), Volkswagen (Germany), and Nissan (Japan). These companies developed new products, adopted expansion strategies, and undertook collaborations, partnerships, and mergers & acquisitions to gain traction in this high-growth electric vehicle market.
The growth and Scope of Electric Vehicle (EV) market
Moreover, EVs have 75-80% less moving components and this ultimately translate to a way lower maintenance bill. Over and above the robust operating expense angle, EVs also possess an inherent advantage when it involves performance and drive ability. In the last few years, trends suggest an increase in interest among the common masses for electric cars as compared to electric two-wheelers and ICE or petrol/diesel cars, as seen on Google Trends. The manufacturing landscape of EVs, which solely won’t be dominated by the worldwide automakers earlier, is additionally now seeing a reign, as numerous Indian automakers now take a deep dive into the electrical vehicle space, tapping the growing potential that the country has future. India’s push toward electric vehicles are creating opportunities for companies in ancillary spaces like battery manufacturing, consistent with an analyst at diversified financial services firm Motilal Oswal. The move toward electric vehicles is, “inevitable” globally also as in India, where higher fuel prices can make owning cars that run on electricity comparatively cheaper, The acceptability will increase once you have the infrastructure There are two basic sorts of electric vehicles: people who believe batteries and therefore, the hybrid vehicles that use both batteries also as plugging into an external source of power, such as a charging station. What is even more interesting is the mindset of the Indian population is additionally slowly evolving, with many now willing to form a switch to EVs soon. A recent study has highlighted that by 2022, most consumers in India would consider buying an electrical vehicle. This in itself may be a key trend which is probably going to trigger the expansion of the EV segment within the country. Definitely, government intervention and policy has a key role to play in promoting electric mobility within the country. Indian policymakers are actively pushing EV adoption over the recent years, and multiple initiatives have also been introduced to develop domestic capabilities across the whole EV value chain. Besides strengthening the EV manufacturing capabilities, renewable energy targets also are being revisited and various measures are being adopted towards effective recycling of raw materials. The battery price also has been expected to fall by quite 30% between 2018 and 2025, which can make electric vehicles (EVs) cheaper over the amount of your time. Besides this, the government of India has announced various tax cuts and subsidies to further encourage more and more peopled to shop for EVs. The bulk of the thrill in India’s electric vehicle sector is in ancillary spaces where companies are working with global players, many of whom are looking to enter the lucrative market You wear a one hand the battery manufacturers, which are looking to develop the battery for the EVs, and on the opposite side, you’ve got companies like Motherson Sumi, who are into the electrical a part of the vehicles, They are becoming increasing shares of business globally from the (electric vehicle) space. Motilal Oswal prefers Motherson Sumi and Exide Industries, which are up roughly 29% and 11% year thus far as of Monday’s close, respectively. Motherson Sumi works with automakers around the globe in areas like wiring harnesses, rear-view mirrors, cockpits, bumpers and more. Exide sells automotive and industrial lead-acid batteries. Hence, moving to using electric vehicles give businesses the chance to become involved in innovative transport developments which are addressing environmental issues. Setting environmental concerns at the heart of your business can be a key part of demonstrating corporate social responsibility.
The initiative taken by companies on EV in India
It seems that Electric Vehicles (EV) as a thoughtseems to possessfinally come to India. There are many positive green signals coming from the governmentand industry because thenumber of EVs on the road in India has began toincrease. Karnataka are getting tobe home to Tesla’s factory in India, following announcements by Chief Minister BS Yediyurappa and Union Minister for Road Transport and Highways Nitin Gadkari. Investment sentiment has picked up for the planetwith renewed interest by venture capitalists with over US $300 million reportedly invested in companies that affect EVs and better battery technology this year. The number of EVs on the road has also been steadily increasing, and in 2019-20, the amountof EVs on the road stood at 155,400 growing at around 20 percent year-on-year. Government policies just like thatFaster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) which givesubsidies for EV production and charging infrastructure are a welcome fillip. Phase II Clinical trial of the scheme has an outlay of INR 10,000 crore ending this year for creating more demand for EVs. The 2019-20 budget announcements for tax subsidies for loans on EVs are again aimed toward proliferating new kinds ofautomobiles. Broadly, there isa renewed interest by the general publicin owning an EV considering high fuel prices within thecountry, which successivelymakes most goods costlierand contributing to an overall inflation within thecountry.
With these broad signals to the world, there are, however, some policy issues for decision-makers in government, industry, and academia to think about. Like, the Ola Electric on revealed its plans to line up the world’s largest electric two-wheeler charging network. SoftBank-backed Ola Electric plans to providecharging solutions to all or any or any its electric two-wheeler customers. It unveiled the Ola Hypercharger Network, the charging network for its upcoming two-wheeler products starting with the Ola Scooter to be launched within the approaching months. The Ola Hypercharger Network are getting tobe the widest and densest electric two-wheeler charging network within the planet, with quite 100,000 charging points across 400 cities. Within thefirst year alone, Ola is fixing over 5,000 charging points across 100 cities in India, quite double the prevailing charging infrastructure within the country. Ola alongsideits partners would set it up at an estimated cost of $2 billion over a period of 5 years. In India, Ola is now in direct competition with electric two-wheeler makers, like Ather Energy, Hero Electric, and TVS Motor Company. However, the charging network won’t be available to other electric vehicle players and only the purchasers of Ola Electric. And recently, India is also going tocapitalise one of the foremost abundant elements on earth — hydrogen. Minister of FinanceNirmala Sitharman announced the National Hydrogen Mission during the Budget 2021-22 to realizefrom this universally-available element. The green energy source could also compile varietyof India’s biggest companies like Reliance, Tatas, Mahindras, and Indian Oil, the needof the hour could also bea coalition of stakeholders a bit likethe Hydrogen Council or the ecu Hydrogen Coalition. Companies like Indian Oil, the Tatas, the Mahindras, the Eicher — allow them to be an areaof the coalition. Then speciality chemicals companies like Reliance are oftenalso a neighbourhood of it. To be more specific With more and more car manufacturers focusing their efforts on making EVs, it is only a matter of time before there isan EV in every segment and by every major company. The year 2021 will witness the launched of the manyelectric cars and here are five of them The Volvo XC40 was initially introduced within theIndian market with a diesel. Sometime then, the companygot obviate the diesel and brought during a petroleumengine in its place. Now, we’ll be getting a thirdavatar of the XC40 in India and this one are getting tobe all-electric. This one has been eluding us for a couple oftime now. First showcased at the 2020 Auto Expo, the eKUV100 could also be totallyelectric version of the regular KUV100. Another product that was showcased to us at the 2020 Auto Expo was the electrical version of Altroz. The smart-looking hatchback has proven to be a successful product for the home-grown carmaker. It comes with a choice of three engine options currently – 1.2-litre NA petrol, 1.5-litre diesel and thusthe recently launched 1.2-litre turbo-petrol.
The Future of Electric Vehicles (EV)
EVs and therefore the grid can have gigantic synergy. Not exclusively would EVs be ready to charge at whatever point there’s excess force, they need a battery valuable for engrossing variable environment friendly power. They will significantly offer reinforcement power for the lattice. This is often one explanation to make for EVs, one that comes with forceful season-of-day valuing (modest charging when force is excess).
Nonetheless, EVs are efficient—with regenerative braking capturing energy in any case squandered and furthermore due to the characteristic productivity of engines, particularly at low rates—they pollute less. The EVs were designed to guard the environment but thanks to slowdown within the Indian economy, they need now become a requirement in India. There is an unexpected climb within the costs of petroleum and diesel, and pollution levels are gravely high in practically every city of the country.
In such a scenario, EVs seem to be a hope for cleaner future.
There have been enormous changes, especially in technology, but also in individuals’ attitude towards vehicles’ effects on the environment. Although the electrical vehicle market is at the present a rewarding objective for organizations and new businesses in India, there are a couple of obstructions in its production fabricating electric vehicles locally being one among them. Also, battery manufacturing is essentially an upscale endeavour. The Indian Government should focus its energies on checking out these difficulties.