At their post-earnings investor calls, company executives attributed this to the market for such items becoming more organised and buyers giving preference to branded spares over non-branded ones. Additionally, a superior product mix - higher contribution of premium models in the sales mix and an expansion in the product portfolio in the aftermarket segment - also helped companies boost revenue and profitability, they said.
At Hero MotoCorp, revenue from spare parts and accessories increased nearly 80% in five years to a record INR 5,087 crore in FY24 from INR 2,836 crore in FY19. The share of this sub-segment in the company's revenue rose to 13.6% from 8.7% in this period, show its filings. Encouraged by the growth potential, the maker of the Xpulse and Splendor motorcycles will be expanding its Global Parts Centre.
"Our parts, accessories, merchandise (PAM) business continues to grow. It grew double digits in the last three to four years; we've doubled the whole revenue size of the PAM business," Hero MotoCorp chief executive Niranjan Kumar Gupta said on an investor call last week. There is scope in even expanding this, which is what the teams are working on, he added.
The addition of premium motorcycles in the company's line-up will increase the scope of business from merchandise and premium parts, he added. The company has added to tyre and bike care products and that too helped boost revenue from the segment.
"Post Covid, organised spare part sales have picked up rapidly as many unorganised players got wiped out prompting manufacturers to increase focus on the high margin spare business in the last three-four years," said DAM Capital Advisors analyst Mitul Shah.
He expects revenue contribution from this business segment to the total revenue of these companies to increase to mid-to-high teens.
Royal Enfield, the market leader in the middleweight motorcycle segment, has also been a beneficiary of the premiumisation trend in the market. The motorcycle-making arm of Eicher Motors, which also sells branded apparels, jackets, caps and t-shirts apart from accessories and spares, has seen the non-motorcycle revenue touch INR 2,439 crore - the highest in the company's history, managing director Siddhartha Lal told reporters during an earnings call over the weekend.
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