< news analysis fering spares for atleast seven-ten years. We offer almost 80 percent of the parts for the older cars as most users do not need to change the balance 20 percent of the parts like seats or roof lines.”
lending a Hand Managing the logistics of spares is the responsibility of manufacturers, as they are answerable to customers. According to a spokesperson of an auto ancillary industry seeking anonymity, the onus of ordering spares lies with the manufacturer, and the supplier continues to do so at the manufacturer’s behest. “Most manufacturers make more than one model of cars. So even if the model is phased out, it does not mean that maintaining spares are also discontinued. For instance, one variant of spark plugs would be fitted in several models, and the components supplier would continue to manufacture it, and it would also be available to all consumers.” The Sales Head of an MNC automobiles company explains the role that automobiles company play in sourcing spares. “Before the emergence of all the new breed of manufacturers, we had few companies like Hindustan Motors, Premier, and Maruti Suzuki. The responsibility of stocking spares lay with them. So they also owned or had stakes in the spares and replacement business. Today, spares are easily available with dealers in the replacement market.” All vehicle manufacturers outsource parts from ancillaries, locally and globally, depending on their reach. The parts are made to order. A decision to change specifications of newer models could make older parts defunct. “Users then
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Auto companies ensure that they maintain stocks of spares as long as the vehicle is allowed to run on the road.
resort to searching for parts on the internet and sourcing. There is a continuous demand for parts for phased-out models, and then there’s also the secondary market,” adds the Sales Head of the MNC. According to Mr. Chandak, “Most manufacturers stop supply of spares for phased-out models beyond a time. Consumers are then dependent on local garages for spares and repair. With manufacturers moving to newer models, it is likely that the availability of common parts for phased-out cars would also reduce in the long run.” The lack of spares stocks with the organized sector has given rise to the grey market. Original Equipment Manufacturers (OEMs) cannot be concerned with constantly supplying or making provisions of spares for old models. They
October 2011 | www.logisticsweek.com
would much rather have the customers sell the old car and buy a new one. The availability of quick finance schemes is also working in their favor. According to Automotive Components Manufacturers Association (ACMA), the Indian aftermarket for vehicles stands at $7.5 billion of which aftermarket services accounts for $2 billion and the rest in spare parts. It also estimates that a whopping 1/3rd of the component market is plagued with counterfeit parts. Mr. Chandak adds, “The lifecycle of vehicles have shortened. For up to five years, most cars will run smoothly. Manufacturers may phase-out a car model in one country and begin selling it in another, and ensure that spares are not an issue.” A few years ago, the dearth of spares presented an opportunity to dealers in Taiwan and Korea.
Having identified fast-moving parts and knowing that a vehicle model would be phased-out, they began exporting spares and developed tie-ups with local Indian distributors and dealers and began dumping spares into the country. But this seems to have lessened over time. Second-hand car dealers also saw a lucrative chance of selling cars in smaller towns after some local ‘fixing’ such as engine reconditioning for the high-value cars. There are also no fixed rules for manufacturers to keep up the steady supply of spares. Mr. Chandak says that globally manufacturers are expected to continue supply of spares for as long as seven-ten years, which is what Indian companies follow. “Here, in case of spares for phased-out models the OEMs are asked to fix the car or support in the most suitable manner.”