New Delhi: A fledgling, independent chain of auto repair shops, Carnation Auto India Pvt. Ltd is getting set to take a stab at the attractive market for servicing and repairing the most expensive cars in the country.
By April, Carnation expects to be equipped to work on cars that sell for Rs10 lakh or more. These include brands such as Mercedes-Benz, Volkswagen, Skoda, Toyota and Honda, said managing director Jagdish Khattar, a former chief executive of Maruti Suzuki India Ltd.
Bigger bills: Carnation Auto managing director Jagdish Khattar. Ramesh Pathania / Mint
Carnation has tied up with Magneti Marelli, a Fiat group firm, to source spare parts and provide training to its technicians. By the end of 2010, the two companies plan to set up a joint venture firm to sell spare parts for all cars available in India.
Until now, third-party chains such as Carnation, Reliance AutoZone, part of Mukesh Ambani’s Reliance Retail Ltd, and MyTVS had been hamstrung by the non-availability of spares as auto makers have been reluctant to sell parts outside their dealer network.
Dealers make most of their money by selling spares and on denting jobs, where margins can be as high as 40-50%.
As a result, Carnation, which started operations in February, had been able to service only mass market brands such as Maruti, Hyundai and Tata Motors.
The average bill for servicing premium cars is double that for small cars. V.G. Ramakrishnan, senior auto analyst at Frost and Sullivan, said servicing jobs for sedans cost Rs10,000-12,000, compared with Rs3,500-4,500 for small cars.
And typically, Ramakrishnan added, around 30% of the premium cars in the country are sent to non-dealer workshops after the free service period.
“For a venture like Carnation, asset utilization is key. Servicing premium cars will help Carnation become profitable faster,” he said.
Other third-party service firms are staying away from entering the premium car market. Chennai-based MyTVS, part of the TVS group, had considered it but decided against it. The firm feared it would not be able to compete with illegal imports that evade duty, said R. Srivatchan, president, customer-centric business, TVS and Sons Ltd.