New Delhi: A chain of auto repair shops servicing multiple car brands, Carnation Auto India Ltd, plans to at least triple its number of outlets across the country by the end of this fiscal year, aiming to acquire a share from an unorganized auto service market estimated at some Rs9,000 crore.
Primed by former chief executive of Maruti Suzuki India Ltd Jagdish Khattar, the company has, at present, nine service stations across the country. Carnation was launched in September. With an investment of Rs30 crore already, Khattar said on Wednesday he plans to scale up to 30 outlets by March.
Third-party service shops that give consumers a credible alternative to dealer workshops are slowly gaining acceptance among Indian consumers, six among 10 of who get their vehicles serviced in workshops that are not licensed or run by auto makers.
Big plans:With an investment of Rs30 crore already, Carnation’s Jagdish Khattar says he plans to scale up to 30 outlets by March. Ramesh Pathania / Mint
In developed markets such as the UK and France, one-third of cars tend to come to branded third-party workshops such as Carnation.
MyTVS, of the Chennai-based TVS Group, which makes motorbikes through TVS Motor Co. Ltd, first seeded the business in 2004, and now has 62 outlets in Kerala, Tamil Nadu, Andhra Pradesh and Karnataka. It aims to go national by next year. “We realize we have to be a national player to succeed in this business,” said R. Srivatchan, president, customer-centric business.
In the last 12 months Reliance AutoZone, part of Mukesh Ambani’s Reliance Retail Ltd, and Carnation have entered the market. Reliance AutoZone, present in Jamnagar, Gurgaon and Mumbai, plans to launch another outlet this week, the company said in reply to emailed questions.
While Carnation and AutoZone plan to service cars and sell accessories such as tyres, seat covers and batteries, MyTVS has also tapped into the growing market for anytime roadside assistance that an increasing number of car buyers are willing to pay for. MyTVS, which has tied up with companies such as Tata Motors Ltd and Oriental Insurance Co. Ltd, aims to offer this service to 1.1. million customers by the end of the year.
Rising acceptance among consumers has resulted in a brisk increase in revenue. Carnation said it expects to clock Rs75 crore this fiscal. MyTVS, which did business worth Rs28 crore last fiscal, is targeting Rs50 crore annual sales in the next two years.
At present, customers mainly come to third-party outlets for, in addition to getting their cars serviced, small jobs such as carwashes, headlamp fitting and wiper replacements. They are still not comfortable with entrusting denting and paint jobs outside of dealer-owned shops. Srivatchan of MyTVS expects that to change in the next few years: “Once consumers get educated, 80% of jobs will begin to flow to third party outlets.” Third party outlets are usually 15-20% cheaper than dealer workshops.
These firms now plan to expand into selling insurance and more, over the years. Carnation, for instance, plans to sell used cars. At present, only 10% of used-car sales take place through organized channels such as Maruti True Value and Mahindra First Choice.