Auto component maker Uno Minda is aiming for more than 25% growth in its aftermarket business over the next 4-5 years as it seeks to aggressively tap into the segment, a senior company official has said. .
During the quarter ended June 2022, its secondary market business, also referred to as the B2C segment, accounted for 9% at Rs 223 crore of the overall consolidated revenue of Rs 2,555 crore.
Last week, Uno Minda announced plans to invest Rs 300 crore in expanding its manufacturing capacity for four-wheel alloy wheels and 4W automotive switches to meet growing demand, as well as establishment of a wholly owned subsidiary and office in Dubai to strengthen its aftermarket business in the Middle East and Africa region.
The company’s aftermarket division currently distributes 12 major product categories and has a distribution network of 8,000 business partners, more than 12,000 retailers and more than 6,000 mechanics, according to the company’s website. .
“We are becoming very aggressive in our spare parts market, which represents around 10 to 11% of total turnover. We are very optimistic about this business in addition to our other OEM businesses,” Sunil Bohra, Group Executive and Chief Financial Officer, Uno Minda, told PTI during an interaction.
Revenue from the secondary market currently stands at Rs 800-900 crore (per annum) and “we certainly expect very strong growth over the next 4-5 years,” he said. “Our goal is at least 25% growth on top of our total secondary market or B2C segment business,” Bohra said.
According to him, the company’s exports to the aftermarket in the Middle East are very low while many OEMs export vehicles to these markets.
The idea of creating a subsidiary with an office in Dubai aims to exploit opportunities in the Middle East and Africa (MEA) region. This will allow the company to access the entire African and Middle Eastern market from there and have a direct connection with customers, Bohra said.
“Our first target is to grow this business to Rs 80-100 crore and let’s see how it grows from there,” Bohra said.
Although the exact market size in the region is not available as it gets coins from many geographies including ASEAN and China, “We have done our homework. This is how we came to this conclusion that if we are to target at least Rs 80-100 crore of the products that we are currently manufacturing, and once we are physically present there, we will have an idea of the size of the potential market and potential demand,” he said.
Bohra also said that Uno Minda is targeting revenue of Rs 1,500 crore from its joint venture with German company FRIWO over the next 5-6 years.
The company had announced the JV with the firm last December to manufacture and supply various electric vehicle components for two and three wheels for the subcontinent.
He said the company had acquired the land for a manufacturing plant near its Manesar factory in Haryana, for these components, which will be operational by the middle of next year.
At the moment, these components are manufactured at the company’s Pune plant under its controller division, as EV volumes are currently not very high, Bohra said.
“As (EV) volumes grow hopefully we should have this plant up and running where we will have progressive capex over the next 5 years,” he added.