The automobile industry is experiencing an enormous transition towards the next generation of mobility. The industry’s evolution from the rapid advancement of electric vehicles (EVs) to the rise of software-defined automobiles has resulted in technological advances, expanded scalable computer platforms and new business models, regulating how suppliers and manufacturers can collaborate. In addition, the car accessories market has also gained momentum, owing to an increase in demand for vehicles and their customisation trends. Following this, Mordor Intelligence has projected that the global car accessories market will reach 300 billion by 2029.
The Indian after-sales market for car accessories has reshaped the automotive sector. Car owners no longer have to rely solely on auto manufacturers for luxury accessories for their brand-new or pre-owned vehicles. With the emergence of the car accessories market, the trajectory has completely altered and its impact is fairly apparent in the auto industry. Moreover, the after-sales market for car accessories has a significant influence on small enterprises and MSMEs.
Given the growing inclination towards car customization, Indian car buyers have become more demanding and savvy, while aftermarket auto accessories players have begun to offer advanced technology-driven car accessories. Such remarkable technical advancement, along with the availability of foreign components that are difficult to locate in vehicle dealerships, paved the way for the development of the automobile accessories market and had an immense impact on large, small and medium-sized companies.
India, the third-largest automotive market globally, is developing aggressively. According to a report by the Society of Indian Automobile Manufacturers, overall sales of passenger cars by April 2024 were counted at 42,18,746; this is an 8.4% increase over the same period the previous year. For the first time ever, the yearly sales of passenger cars exceeded the 40 lakh unit mark. Additionally, by 2030, the India Brand Equity Foundation predicts that the nation would lead the world in shared transportation, opening doors for EVs and driverless cars. This rise in figures shows how quickly India’s automotive sector is expanding, which has an effect on the nation’s market for vehicle accessories.
Market Outlook
While the car accessories (after-sales) market has grown immensely, the auto component industry continues to thrive. As per the report by Indian Investment Grid, the country’s auto component market (ACM) is expected to reach USD 85 billion by the year 2026, driven by increasing demand, enhanced product quality and rising competitiveness.
At present, the auto components industry accounts for 2.3% of India’s GDP and provides direct employment to more than 1.5 million people, as stated in the report by India Brand Equity Foundation. This figure is expected to rise by 5-7%, ensuring employment for 3.2 million people by 2026.
Growth Drivers for the Indian ACM Market
The Indian Automotive Components Market (ACM) is rapidly experiencing growth, propelled by various factors. Here’s a look at some of them:
Make in India Initiative
Launched in 2014, the ‘Make in India’ initiative strives to build India as a global manufacturing and innovation stronghold. It promotes R&D by encouraging investments, improving infrastructure and establishing novel sectors for foreign capital. The collective efforts of ‘Make in India’ and other government policies attract investments and contribute to the expansion of R&D, making India an appealing location for innovation and production. This is accomplished via more simplified rules, improved simplicity for conducting business and subsidies for local manufacturing and technological development.
Foreign Investments
In recent years, the OEMs (original equipment manufacturers) of vehicles have grown significantly in India, leading to the components’ localisation. These OEMs focus on improving their service networks considerably, providing both efficiency and availability.
These OEMs focus on improving their service networks considerably, providing both efficiency and availability.
In light of this, the nation earned USD 70.9 billion in FDI (foreign direct investment) in total in 2024. Consequently, the nation received USD 70.9 billion in FDI (foreign direct investment) in the year 2024. The country’s competitiveness in the global ACM industry has also strengthened owing to the growth of sophisticated manufacturing facilities and technological advancements caused by this influx of foreign direct investment.
NATRiP
The National Automotive Testing and R&D Infrastructure Project (NATRiP) is an Indian government-funded project that aims to provide exemplary vehicle testing, homologation and R&D facilities in the country. As to the India Briefing report, the objective of this USD 388 million initiative is to enhance the competitiveness of the nation in the global car industry.
Automotive Plan 2026
The Indian government and the auto industry collaborated to formulate the Automotive Mission Plan to present a road map for the sector’s growth. This plan focusses to develop India into a global manufacturing hub for vehicles and auto components. Under this plan, the government has allocated funds for several initiatives, including infrastructure development, talent upgrading, and R&D. Also, this strategy is critical in determining the roadmap for the ACM industry’s growth and aligning it with worldwide norms.
Production-Linked Initiative (PLI)
The PLI scheme, with a USD 3.5 billion investment for the automobile sector, provides financial incentives of up to 18% to stimulate the local manufacture of sophisticated automotive technology goods. Furthermore, the Ministry of Heavy Industries has announced a one-year extension of the PLI scheme for automobiles and their components. Until now, the scheme has been successful in garnering a projected investment of INR 67,690 crore, contrary to its target estimate of INR 42,500 crore over five years.
These government policies and incentives have established a suitable environment for manufacturers to invest in the Indian market, encouraging the expansion of the car component and accessory industries.
Technological Advancements
Technological advances have also contributed to developing the Indian car accessories and components market. Since OEMs do not want to share their aftermarket opportunities or encourage foreign players to enter the nation, they are using cutting-edge technology to retain as many consumers as possible. Initially, these breakthroughs aimed at improving turnaround time, service costs, transparency and establishing trust between dealers and customers. However, the objective has now shifted to include big data analytics for monitoring vehicle health through sensors, adapting intelligent storage systems for spare parts management and implementing the Internet of Things (IoT) to track car components across the supply chain.
Additionally, the emergence of electric vehicles (EVs) in India has led to extensive development of specialised car components. Since environmental consciousness has gained popularity, there has been a greater emphasis on sustainability and energy conservation. This has raised the requirement for new and environmentally friendly car components and accessories that align with evolving customer standards.
Likewise, the aftermarket industry has grown significantly amid the rise in vehicle ownership. As more individuals purchase vehicles, the need for replacement parts and accessories multiplies. Consequently, a vibrant aftermarket ecosystem has emerged, with various enterprises catering to automobile owners’ maintenance and customization needs.
In a nutshell, the Indian Automotive Components and Accessories Market is on a phenomenal development trajectory, powered by an array of dynamic forces. Rapid urbanization, greater disposable income, government initiatives, technical developments, and the expansion of the aftermarket sector have all contributed to India’s automotive industry’s success.