The sales growth in the automobile industry has been on an uptick in the current financial year 2016-17. The industry produced a total 15,791,158 vehicles including passenger vehicles, commercial vehicles, three wheelers, two wheelers and quadricycle in April-October 2016 as against 14,284,913 in April-October 2015, registering a growth of 10.54% over the same period last year.
The sales of passenger vehicles, commercial vehicles, three wheelers and two wheelers grew by 11.02%, 6.92%, 11.84% and 16.01% respectively in April-October 2016 over the same period last year.
Within the two wheelers segment, scooters, motorcycles and mopeds grew by 23.67%, 11.77% and 27.6% respectively in April-October 2016 over April-October 2015.
This year there was a higher than long period average monsoon which has increased the chances of sustained pickup in growth for two wheelers especially in the rural areas.
Anti-lock braking system commonly known as ABS is used in automobiles to increase the effectiveness of brakes which helps in maintaining steering control over the vehicle. ABS uses wheel speed sensors to determine if one or more wheels are trying to lock up during braking. If a wheel tries to lock up, a series of hydraulic valves limit or reduce the braking on that wheel. This prevents skidding and allows the vehicle driver/rider to maintain the control over the steering.
ABS has become mandatory fitment for all new heavy commercial vehicles in India from October 2015 and it would become mandatory for all above-125cc two-wheelers from April 2017. ABS has been made mandatory by the Government for automobiles, because it is expected to reduce the deaths and damages from vehicular accidents in India. The government has made it compulsory for all two-wheelers, which account for the highest share of accidents in the country, to either have the ABS or the combined braking system (CBS) by April 2019.
Two-wheeler manufacturers would have to fit the equipment for the existing scooter or bike models available for sale in the market by that time, and for all new models they plan to introduce from April 2018.
For two-wheelers with an engine capacity above 125 cc, fitting the ABS will be compulsory and for those with capacities at or below 125 cc, auto manufacturers will have an option to provide either the ABS or CBS.
According to ratings agency ICRA, the current ABS penetration of 30% in the PV segment and minimal (< 5%) in the two-wheeler segment means the ABS market could turn out to be a humungous Rs 65 billion opportunity for suppliers by FY2018-19.
Bosch and WABCO are some of the listed auto ancillaries that manufacture ABS in India. Continental Automotive Components India and Brakes India are among other component manufacturers who are planning to supply two-wheeler ABS in India. Continental Automotive Components India and Brakes India are not listed on the exchanges.
WABCO India Ltd. manufactures automotive parts. The Company produces electronic braking, stability and suspension and transmission control systems for heavy-duty commercial trucks, trailers and buses. Bosch Limited manufactures a wide range of automotive parts. The Company’s products include fuel injection pumps, spark plugs, including nozzles and nozzle holders, elements, delivery valves, filters and filter inserts, glow plugs, starter motors, alternators and wipers. Bosch also manufactures hydraulic and pneumatic equipment and electric power tools and fixtures.
Bosch has announced that it would be manufacturing ABS for two-wheelers from April 2017 onwards in its Chakan plant, in Maharashtra.
The opportunity of fitment of ABS is significant for auto ancillaries like Bosch, WABCO and other unlisted manufacturers in India. Especially the two-wheeler segment of the Automobile industry is a sizeable business opportunity for ABS auto component suppliers in India.