Project Consultancy, Reports & Profiles

Automobile & Auto Components: Startup Guide for Parts, Spares & Accessories

The auto and auto components remain largely one of the most fantastic and viable opportunities for small scale investors and entrepreneurs. The extensive and rising vehicle population across two wheelers, passenger cars, commercial vehicles, agricultural machines is expected to translate into fast-growing demand for various components and spares. Once again, start-ups could consider entry through OEM supply chains, aftermarket supplies, or for export markets. This means that the industry is somewhat multi-moated in terms of modular capital intensity.  Once more, both basic and high-value parts production is relatively more technically advanced due to the availability of metal and polymer processing and electronics integration.

 Reasons to start in this sector

• All the aforementioned advantages tremendously enhance the financial opportunity of the sector. 
• To be specific, large, diverse demand can also be interpreted as two-wheelers, passenger vehicles, commercial cars, and agriculture machinery’s parts. Aftermarket flexibility means basically that even if vehicle sales are weak, recovery and service components steadily offer. 
• Moderate to steep technological entry points cover the fact that at first, you only need metal-working and polymer-processing machines; however, you fastly encourage value-added components but especially outer bodies. 
• Export and OEM linkage ability would imply that when the community of cluster suppliers assembled, they can order prepared manufactures from OEMs or aftermarket construction. 
• Moreover, governmental and institutional endorsement means that project reports, manufacturing centre, and commune commencement consulting is possible  that would help to overpower the challenge of beginning. 
• Lastly, vertical integration opportunity suggests that if commence from produce part , e.g. brackets, clamps, etc., then after a couple of years grow to assembly or subassembly line.In financial strategies, these are forecasted; however, the sector has a really good view, because supply is stable, service products are high-profitable, and entry costs are mild to elevated. Thus, right producers are anticipated to stimulate rivalry.

Market Demand

• Vehicle population enhancement – with rising numbers of both personal and commercial cars, the demand for spares and replacement will also rise. 
• Aftermarket sustainability – due to slow vehicle sales cycles, the demand for expenditure and re-expenditure service items will not vary greatly. 
• OEM & Tier-1 demand – the automotive industry gives the opportunity to suppliers of original components and subservience. 
• Exports – while India has grown in cost competition and skilled manpower availability, many vehicle producers have chosen it as a worldwide sourcing hub. 
• Technological usage – new materials, many additional sensors, wire harnesses, electronics and so on, are also contributing to the expanding need for more sophisticated components. 
• Fleet & commercial sector – particularly as the transport and taxis and on-call taxi operators trip at the same time, the demand for extra repeat services and expanding amps.

In conclusion, the sector is characterized by high resilience evident from not only the largely recurring demand in the domestic market but of the international markets too no matter the economic state, and the potential extensive profit margins are the evidence for startups.

Government support

• Manufacturing subsidies, by the title of the specific local governments; capital subsidy programs for MSME, again by title and country according to the law; Export incentive, and cluster development funding, by title and country/sector. 
• Regulatory TouchPoint would be factory registration; surface finishing environmental approval; labor law, and product safety and motor vehicle standards e.g. the national motor vehicle part standards requirements, or the quality standard ISO/TS. In addition, taxonomy and duties that may affect result-financed Airport safety regulations are import duties on individual components, by jurisdiction., 
• The GST/VAT system, and exporters’ concessional schemes, including those under your territory's jurisdiction, would be subject to statute. Consult your local tax authority for the specific percent.

In conclusion, the presented industry of Indian automotive/auto spare parts has a long life cycle stage, high scalability opportunities, and profitability. Considering that the vehicle market is continuously growing, and the demand for auto aftermarket services is relatively stable, the new enterprise would have an opportunity to sustain cash flows. Phased investment not demanding significant working capital might be financed wholly or partially via governmental funding programs. Moreover, the new company may obtain higher profits than expected due to the modest selected offerings, i.e., electronic systems, which increase the level of value addition many times. With the given sector’s high dynamism and the number of distinct items sold there annually, the new business needs to be present in the auto part/spare manufacturer sector.