Auto Servicing Market In India To Be Worth Rs 34,000 Cr By 2020: CarXpert
Colonel Y. S. Katoch, co-founder CarXpert, talks about OEM-run workshops and more
The auto servicing market, currently pegged at Rs. 20,000 crore, is expected to be worth Rs. 33,000-34,000 crore by 2020. In an interview with BW Businessworld, Colonel Y. S. Katoch, co-founder CarXpert, talks about OEM-run workshops and more.
How different is your business model vis-à-vis OEM-run workshops?
65 per cent of the car owners switches away to unorganised players like us post warranty. As the costs of repairs and maintenance go up, the percentage of such off-warranty car owners may go up to 75 per cent. Why will this happen? There is one major factor is that the cost of repairs in the organised single brand in the OE workshops is very high. Moreover, the paid service penetration of most of the manufacturers is just about 52-55% and the balance is free services. When it comes to accidental repairs, car owners move into an organised auto solutions providers like ours. The reason is that there is a cashless repairs facility offered by insurance companies to them. For minor repairs too, people will come to us because we will charge only nominal costs for parts and services rather than ask them to replace the entire portion of the car. That is where multi-brand service offerings by CarXpert come in by offering high-quality services at low costs and thus minimising our customers' operational expenses.
Will your chain of service outfits be eliminating these unorganised ones?
On the contrary, we are planning to have many of them integrated with our ecosystem. There are many such outfits which have a decent infrastructure but don't have anyone to handhold them. So we are encouraging them to be our franchisees provided they raise the bar and adhere to certain quality standards. What we get in return is a certain percentage of royalty from their business. In five years' time, we are aiming to have a franchisee network of 500 across the country. This year, we are already having 80 such outlets in the northern part of India. This is in addition to COCOs that we would be setting up in each zone.
Do you intend to diversify into two-wheeler and CV segments?
We want to go one step at a time. We will be getting into the pre-owned car business in the future.
What potentialities do you foresee in the auto servicing market?
The auto servicing market is expected to grow by over 65 per cent over the next few years. Industry data pegs the car servicing market to be worth Rs. 20,000 crore and by 2020; it is expected to reach Rs 33,000-34,000 crore. There are two major categories of players in the market. One is the single brand authorised workshops run by OEMs' dealers and the other one is the unorganised players running multi-branded local garages. While the former accounts for 46 per cent of the (car servicing) market, the latter contributes around 1 per cent of it. The balance 1 per cent is generated from multi-branded auto solution hubs run by organised players like Carnation, My TVS, Mahindra First Choice and CarXpert. The contribution of organised multi-branded solution providers may go up to 8 per cent by 2020.