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Supportive regulatory environment and compliance with BS-VI norms set to drive market development

India is emerging as an attractive market for commercial vehicle engine remanufacturing (reman). Rising awareness about the value of reman—vehicle engines and parts rebuilt to the specifications of the original using a combination of reused, repaired, and new parts—together with the increasing number of vehicles older than 7 years in North America and Europe will fuel global demand. Against this backdrop, a supportive regulatory environment will provide a boost to India’s reman engine market, finds new research on the “Indian Commercial Vehicle Reman Engine Market, 2018–2023.”

In addition to India, China and the U.S. will continue to be strong centers for engine reman. While China will benefit from improved market awareness about their value proposition, steady demand and a robust core collection mechanism will underpin the U.S.’s leading position as a hub for engine reman.

Strong Prospects for India, China, and the U.S.

In 2018, revenues for the total remanufactured automotive aftermarket for light vehicles were estimated at $35.19 billion. With a share of about 41.6%, the U.S. is the largest reman market, globally. China is expected to experience the strongest growth with a 15.3% CAGR over 2018-2023.

At present, the Indian reman market is growing at a relatively low rate compared to its more developed counterparts in Western Europe and North America, since it is still at an embryonic stage. Key participants include TATA and Ashok Leyland in the commercial vehicle segment and Cummins in the off-highway segment.

Although China and Brazil account for 15% of the global remanufacturing plants, their share is set to expand in the future. China’s share of global reman plants, in particular, is poised to surge due to the activities of OEMs like Volvo, Mercedes-Benz, and General Motors.

BS-VI Norms to Provide Filip to Market Prospects

India has a significant number of trucks, with their average product lifecycle being about 10 years. This creates huge demand potential for reman engines. Growth prospects will be reinforced by the implementation of BS-VI emission norms.

There are a large number of BS-III and BS-IV trucks currently in operation. The need to reman BS-IV engines to BS-VI engines, on account of pre-buying to comply with BS-VI norms from mid CY 2019, will create demand for engine reman. Accordingly, the market is projected to grow at a CAGR of 4.6% over the 2018-2023 period.

Apart from engines, engine aggregate parts such as power steering pumps, brake components, clutch, and gear box also offer high growth potential. While 4 cylinder engines will register steady growth, 6 cylinder engine, which are predominantly used in medium and heavy commercial vehicles, are expected to grow faster.

Exploring New Growth Avenues

Such promising trends notwithstanding, market participants confront several challenges. These range from the remanufacture of technologically advanced electronic controls to the threat posed by low-cost new parts and used parts with competitive warranties. Moreover, legislation in India prohibits the import of cores or used parts.

Nevertheless, the future looks bright. Indian truck manufacturers can fully explore the potential of reman engines as a new business model, while evaluating a shift from B2B to B2C sales. An emphasis on quality and cost-effectiveness, coupled with the ability to offer customized solutions directly to customers, will encourage customers to shift from local mechanics to OEMs.

Truck OEMs, such as Tata, Ashok Leyland, Mahindra, VECV, and Bharat Benz, can foray into reman engine aggregates, offering them to customers at economical prices. A focus on converting BS-IV engine stock into BS-VI will add further momentum to market development.

For more information on Indian Commercial Vehicle Reman Engine Market, 2018–2023, please write to Ankush Katailiha, Consultant – Mobility at Ankush.Katailiha@frost.com

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