Notes for owners · Channel and customer growth
Aftermarket or OEM: choosing where to sell your auto parts on cash and capacity
Selling to vehicle makers and selling to the spare parts market differ in volume, margin, payment and relationships. Decide by the cash gap you can carry and the kind of capacity you have free.
The GullySales team · Updated 17 Oct 2026 · 6 min read
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You make oil and air filters that fit tractors and light trucks. A tier-1 has asked you to quote for a new engine programme, and a distributor in Akola wants your own brand for the counter. Both look like growth, but they are different businesses. Supplying vehicle makers brings a schedule, thin margins, long approvals and payment on the buyer's terms. The aftermarket can bring better margins and your own brand, but you fund the stock, the catalogue and the credit until a mechanic picks your box. Decide on two things you can measure today: the cash gap you can carry, and the kind of capacity you have free.
Two markets that pay in different ways
The OEM route means selling to vehicle makers and to the tier-1s that supply them. You make a few part numbers to their drawings, in long runs, against a schedule. The buyer is a purchase and quality team that approves you once and then measures you on every delivery.
The aftermarket means selling replacement parts under your own brand, through distributors, retailers and the mechanics who fit them. You make many part numbers in short runs, to fit vehicles already on the road. Nobody approves you. The mechanic tries your part on one vehicle, and either reorders or does not.
The two routes side by side
| Vehicle makers and tier-1s | Aftermarket | |
|---|---|---|
| Part numbers | A few, to the buyer's drawings | Many, to fit vehicles already on the road |
| Runs | Long, on a schedule | Short, with a changeover for each |
| Margin | Thin, and pressed down again at each contract renewal | Distributor margin comes off first; the rest is yours only on part numbers that sell through |
| Before the first rupee | Development, samples and approval | A catalogue, packing and opening stock |
| How you are paid | On the buyer's terms, after delivery | On credit to distributors, collected by you |
| What you fund | Tooling share, development time, the payment cycle | Stock across part numbers, credit, returns |
| Who you deal with | Purchase, quality and development engineers | Distributors, retailers and mechanics |
| What ends it | Quality or delivery failures, a model going out | A bad fit, empty shelves, a slow claim |
Read each column against your own books. If one row is a cost you cannot fund, that route waits.
Decide on cash first
Write down, for each route, how long your money is out. For the OEM route, count from the day you start development, through samples and approval, to the first payment against a scheduled delivery. For the aftermarket, count from the day you buy material for opening stock, through the distributor's credit days, to the day the distributor's payment actually reaches you.
Then compare each gap with the working capital you can set aside without starving your current customers. Choose the route whose gap you can carry with room left for one bad month. If neither fits, take neither yet, or take the smaller version of one.
Use a sheet like this, with your own figures in place of these illustrative ones. In the Halol example below, the ₹5 lakh is made up of a tooling share of ₹2.5 lakh, sample material of ₹1 lakh and ₹1.5 lakh for engineers' time. The ₹8 lakh is forty part numbers at about ₹20,000 of opening stock each, which is the Halol range after the cut.
| Illustrative | One OEM part | Aftermarket opening range |
|---|---|---|
| Cash out before the first sale | ₹5 lakh: your share of the tool, plus engineers' time on samples | ₹8 lakh: stock across forty part numbers, a catalogue and packing |
| Last rupee out | Approval of the sample lot | The reorder that follows a distributor's first sell-through |
| First rupee back | Payment after the first scheduled delivery | The distributor's cheque, after the credit days |
| Spare cash needed on top | One month of the schedule held ready as finished stock | Returns and slow lines taken back |
If a route asks for more cash, or for longer, than your reserve can carry, that route waits.
The aftermarket swallows cash quietly. A distributor wants the range to look complete, so the part number list keeps growing, and each new number is stock on a shelf. The OEM route swallows it slowly, in the months between quoting and the first scheduled payment.
Then decide on capacity
Look at what your machines do well. A filter line set up for long runs of one element loses hours on every changeover. Fifty aftermarket part numbers in small batches can eat a week that one OEM part number would fill without a stop.
The reverse holds too. An OEM schedule reserves capacity whether the vehicle sells or not, and a missed delivery can stop the buyer's line. If your free capacity comes in irregular gaps, an OEM schedule will crowd out everything else on the floor. If you have a spare line that suits short runs, the aftermarket may use it better.
For example: a filter maker in Halol
Imagine a maker of oil, fuel and air filters in Halol, near Vadodara, supplying one tier-1 with a few elements. The details are illustrative. The owner said yes to both routes in the same season, launching an aftermarket brand with a long catalogue covering most tractor and light truck models and also taking on development samples for the tier-1's new engine programme.
By the time the brand reached distributors, cash was tied up in stock for part numbers nobody had asked for. Worse, the pleating line was changing over so many times for short aftermarket runs that the tier-1's samples went late. The tier-1's development engineer noted the delay in the supplier file.
The owner cut the aftermarket range to the part numbers for tractor models common in the distributors' districts, and made them in planned runs on fixed days. Pleating line hours for the OEM programme were blocked first in the plan, and the samples were resubmitted on the date promised. Payments from both routes went into one cash plan with their real dates. The shorter catalogue sold through faster, and the distributor reordered. The tier-1 still pressed for a lower price at renewal, and the owner had little room to give, so the aftermarket range stayed small to protect cash for that negotiation. The shorter catalogue also meant some distributors went to a brand with a wider range.
Doing both, and the tooling question
Running both routes can work. Treat them as two plans, with separate stock, separate capacity bookings and separate people chasing payment. The aftermarket chain itself is covered in selling auto parts through distributors and mechanics. The catalogue it runs on is in a product catalogue for an auto parts maker.
One question comes before any aftermarket launch. If the vehicle maker or tier-1 paid for a tool, or owns the drawing, you may not be free to sell that part under your own brand. Read your supply agreement, and have your lawyer check it before you print a box.
Fill in the second table for the route you are leaning towards, using your own stock, credit days and reserve, and see whether the reserve survives one bad month. Choosing the route and its order is route-to-market and distribution strategy, and the trade as a whole is on the automotive component makers page. If you are weighing a tier-1 quote against a distributor's offer right now, tell us what you need.
