Former Maruti Suzuki-chief Mr Jagdish Khattar was among the first to recognise the untapped potential of allied businesses around the booming domestic auto-market with his Carnation Auto. But now, the auto-growth story seems to be luring Indians back from overseas to tap into the opportunities at home.

Hyderabad-based CarZ, is one such company started a year ago by Mr Venu Donepudi and Mr Vijay Gummadi, both of whom returned after a stint in the US auto industry. With the number of cars on the roads touching 20 million and over two million being added every year, CarZ is following Carnation and Mahindra First Choice in the multi-brand car-servicing business.

“Only a third of the vehicles go back to the dealer after the warranty period, so there is huge opportunity. Though there is a large unorganised market for servicing, the more complicated cars of today cannot be dealt by these small shops. Training, parts and equipment is needed, which we can deliver at a cheaper cost than the authorised service centres of the carmakers,” said Mr Donepudi, Co-Founder and Managing Director, CarZ.

Multi-brand car-servicing, already popular in markets such as the US and Europe, is now believed to be bridging the gap between limited authorised outlets offered by carmakers and the huge demand for cheap car-servicing from domestic customers. CarZ, which got its first round funding (of $5 million) from IndoUS Venture Partners in May this year, now has extensive growth plans. Its models includes an ‘express' format shop for quick service and a ‘Grande' format for body repairs.

This firm currently has only four outlets in Hyderabad, compared to Carnation's around 20 workshops, but the target is to have 14 outlets by March next year and a total of 300 across the country by 2016.

“Today, there are FDI (foreign direct investment) restrictions on foreign companies entering multi-brand car servicing. But with the Government indicating that all that may change, many global players are likely to enter. In the next five years, this will be necessary to effectively cater to all the vehicles on the road,” said Mr Abdul Majeed, Auto Practice Leader at PricewaterhouseCoopers.

Other potential industries that are poised to take off due to the growing auto market include scrap sales for old vehicles, parking business in crowded cities, a variety of new financial products such as insurance policies, and leasing business.

“As the market grows and more cars come in, pushing older ones out, environmental issues will become important. Here, scrap sales and waste-management industries will see a huge potential. These are done through proper channels in other markets,” said Mr Majeed.

> roudra.b@thehindu.co.in

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