Auto part makers hit hard by duplicate parts

October 21, 2009 6:50 am

Just when top auto component makers are seeing good OEM business, aftermarket sales, once the most stable revenue stream, has been hit hard by spurious parts. Bosch India is feeling such an impact that the company has created a secret team that tracks such parts with police help. The problem is old, but the last couple of months have seen a spurt in spurious parts. “They are mostly made around Delhi and Ludhiana,” says K. Ravi, Head, automotive aftermarket division of Bosch India.
The company, whose aftermarket sales are around Rs 1,200 crore, has seen 15-20 per cent of its market taken away by spurious parts makers. “This might negate the recent rise in orders from OEMs,” says Vaishali Jajoo, an analyst with Angel Broking who tracks the automotive sector. The new-found urgency to combat spurious parts comes even as the OEM sector recovers quite slowly from its heydays.
The auto-component industry is roughly worth Rs 41,000 crore, which puts the fake market between Rs 15,000 crore and Rs 19,000 crore. The government sees loss of revenue in the form of excise duties, Vat and other local taxes. Currently, the government is incurring a loss of approximately Rs 4,250 crore, according to ICRA Management Consultancy Services.
ACMA, the auto parts makers’ association, has set up a separate cell, the Consumer Affairs Committee, which has undertaken measures such as increasing consumer awareness, and conducting raids to help curb the duplicate market. More than 600 raids have been conduced till now in north India. Bosch India recently set up a team which follows information about spurious parts and takes it up with the police. 
The aftermarket sales market is lucrative for spurious part makers as they can get away with designing fakes that look exactly like the original which ordinary customers are not able to differentiate. More importantly, the aftermarket sales were mostly unaffected by the slowdown as its main customers are people who own the same vehicle for more than five years.
Figures show that the share of fakes in the market has gone up by 10 percentage points form a decade ago. The main parts affected are fuel injection systems, filters and spark plugs.