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Automotive Product Finder Magazine | RICO Auto set to enter CV and tractor segments in its aftermarket drive
RICO Auto set to enter CV and tractor segments in its aftermarket drive
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Although RICO Auto Industries has been around for over three decades and is a known supplier of high precision fully machined aluminum and ferrous components and assemblies to original equipment manufacturers (OEMs) worldwide, its entry into the aftermarket components segment is fairly recent. The company now all set to service commercial vehicle and tractor verticals in the segment, writes Manish Pant.
Encouraged by the overwhelming market response to its aftermarket components in the two and four-wheeler segments, RICO Auto Industries has decided to enter the commercial vehicle and tractor verticals of the segment this year.
Foraying into the market in 2017, the company’s products have received a highly favourable response. “Since end users were already aware of the brand, product acceptability was fast. Today, we have 62 distributors and have made more than 500 parts available in the aftermarket segment,” Abhishek Kulshrestha, Vice President, Corporate Materials & Aftermarket told AFP recently in New Delhi.
The company hopes to clock a revenue in the region of Rs 250 million in the 2018-19 fiscal from its aftermarket products and hopes to increase it by three-fold to Rs 1 billion by the end of 2019-20.
It was the GST rollout by the federal government and availability of bootleg parts under its brand name that impelled RICO to enter the segment.
“When the GST was introduced by the government, we decided that it was the right opportunity to enter into the market as things would be more uniform and systematic. Moreover, since a lot of duplicate material was being sold in the market under our brand name the move would also help save our brand image,” informed Kulshrestha.
The company decided to enter the segment by first servicing the two-wheeler industry. “Although margins might not be as high as in four-wheelers, the volumes are immense. Once we got a good customer response, we decided that we were on the right track and could proceed further,” reminisced Kulshrestha.
As a leading OEM in the Indian market, RICO supplies engine and transmission parts to auto majors like BMW, Volkswagen, Honda Motor Co. and Maruti-Suzuki. In the two-wheeler segment to Honda Motorcycle and Scooter India, TVS Motor Co. and Bajaj Auto. It derives nearly 40% of its revenue from exports and rest through domestic sales. The company has 14 state-of-the-art plants in India and four warehouses overseas through which parts are supplied on the just-in-time (JIT) basis to its global customers.
MEETING THE COUNTERFEITING CHALLEN
Talking about the emerging market trends, Kulshrestha said, “You witness some very good examples and learnings in the automobile space due to the presence of a large number of competitors, distributors and other people who can guide you based on their own experiences.”
For instance, in West and South India, motorcycle users have started going in for replacement of the entire assembly while changing clutch plates to save on time as well as maintain the vehicle’s on-road efficiency. With the clutch assembly becoming a lot more affordable, the cost factor has become irrelevant.
“We are now making approximately 50,000 assemblies per month. It is expected to soon increase to over 100,000. Given this projection, we are planning to dedicate a couple of more production lines to assemblies,” said Kulshrestha.
He maintains that counterfeiting of parts is one of the most severe challenges currently faced by the Indian companies in the aftermarket segment. For its part, RICO has hired certain agencies to identify such operators and initiate legal action against them. However, he feels that it is the root cause that needs to be addressed by the market players.
“The only mantra here is effective communication with the end user. Towards that objective, RICO has been doing awareness activities across states where we teach both our retailers and mechanics on how to differentiate between original and duplicate products,” he remarked.
The awareness programmes have yielded positive results and plenty of useful data for the company.
Commercial Vehicle And Tractor Verticals
RICO Auto Industries
TVS Motor Co
Onda Motorcycle And Scooter India
Changing Clutch Plates
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