Chennai, Jan. 1 Multi-brand car after-sales service appears to be insulated from the recessionary trend and witnessed a growth during the last quarter of 2008.
Leading players in this segment have announced plans to expand their networks.
Mr Srivatchan, President, TVS & Sons Ltd, told Business Line that in the last three months MyTVS, the multi-brand car service arm of the company, saw a 10 per cent increase in customers opting for minimum maintenance service. “We are doing better than what was budgeted earlier,” he said.
Another trend is a swing towards multi-brand car service from the vehicle manufacturers’ authorised service centres for post-warranty services.
Mr K. Ravi, Regional Director, Automotive Aftermarket (India and SAARC), Bosch Ltd, said the recent trends indicate that beyond the warranty period, customers look for a reliable alternative to the OE service centres. They expect value for money and the general perception is that the OE service is expensive.
The multi-brand car service market is estimated at about Rs 13,500 crore with 6.5 million cars. Going by current volumes, vehicle manufacturers who service the cars during two-year warranty period will have to maintain about 2.5 million cars during the warranty period.
Impetus for entrants
Since it is a difficult task for the authorised service centres to support a large population of cars under warranty besides servicing vehicles in post warranty period, the multi-brand car service business emerged.
Car users look for proximity, pick up and drop service, which is more prevalent in multi-brand car service. This has been the impetus for new entrants and noted among the few are the former Hyundai Motor India President, Mr B.V.R. Subbu and former Maruti Managing Director, Mr Jagdish Khattar.
According to industry sources, though spare parts cost remains the same, labour costs at multi-brand car service centres are about 20 per cent cheaper than authorised service centres. This is the key driver for the surge in customers opting for general maintenance after warranty period.
More than 90 per cent of the spare parts are available as genuine parts, which are not supplied by the vehicle manufacturer but manufactured as per their specifications by organised component manufacturers. Some parts, including bumper and skin panels, have to be sourced only from the authorised service centres, due to lower volumes.
According to a KPMG report, though OEMs focus on improving the reach and quality of their service networks most customers do not depend on the service network for vehicles older than seven years. Multi-brand service chains have a significant presence in developed economies, but are virtually non-existent in India. Hence there is a huge opportunity.
According to Mr Rajeev Dubey, President (After market), Mahindra & Mahindra, car owners look for an alternative service option, especially after the warranty period.
Under current market conditions, buyers are putting off purchases and there is greater emphasis on maintaining the existing cars. Organised workshops get a preference because modern cars cannot always be handled by the unorganised garages.
Mr R. Dinesh, Joint Managing Director of TV Sundaram Iyengar & Sons, recently said after-sales service supports the growth of the automobile industry since one job created in manufacturing results in eight jobs in the after market and service industry.
Manpower capability is a critical enabler for automotive servicing but there is huge gap in technical skills. However, this sector can employ people who are otherwise not employable in knowledge-based industries.
In order to leverage the emerging trend, multi-brand car service networks are planning to expand faster. Bosch Car Service has over 250 outlets and it hopes to double the numbers by 2010.
MyTVS has 45 franchises in Tamil Nadu and Kerala and plans to venture into new regions this year. Mahindra First Choice has six outlets now and plans to open at least 12 more by March and in the next six years plans to set up 350 outlets.