Multi-brand service outlets the next trend for car owners, Indian auto sector: Mahindra study

Mumbai: The automobile industry has witnessed a massive slowdown over the past couple of quarters. According to a recent study auto manufacturing giant Mahindra, the reason behind the slowdown can be attributed to weak consumer sentiments in both urban and rural areas. As per a recent report, the industry has witnessed a downward trend in car sales due to low demand, increased insurance cost by 2-5% and revised higher pricing of vehicles. In such a scenario the demand is gradually shifting towards pre-owned cars or maintaining of existing vehicles. Most people prefer to invest in their existing vehicles and maintain it instead of buying a new car. In current scenario, one can foresee more demand for car servicing workshops that offer service support to multiple brands, i.e. multi-brand outlets (MBO).

This is the sweet spot where multi-brand outlets (MBOs) or specialised workshops for all brands under one roof come into the picture. According to Mahindra, for those who own cars of different brands and have to scramble around to various service stations to have their vehicles serviced, MBOs are the answers to their one-stop requirement, offering service, delivery, spares and skilled and trained technicians.

The study says that as a car owner, some of the biggest worries would be service and maintenance at the right price, quality spare parts, as well as a service station not far from the place of work or residence. If the car owner gets their car serviced from an MBO, they would pay 20% lesser than what they pay for their OEM, says Mahindra, adding that the MBO uses spares from both, OEMs as well as quality substitutes sourced from reputed suppliers.

At present, the car maintenance needs of customers in the country are taken care of by dealer workshops of Original Equipment Manufacturers (OEMs), which constitute approximately 32% of the market, and Independent Garages (IGs) that have a majority 64% market share. (Data Source: ACMA report on India Automotive Aftermarket study 2016).

To put the numbers in perspective, the car servicing industry in India is growing rapidly with the overall car service market currently valued at Rs. 30,500 crores annually. The total estimated car parc in India is at 31.3 million cars and expected to grow to 44.7 million cars by 2020, with 36% of these vehicles being between 4-8 years old. (Data Source: ACMA report on India Automotive Aftermarket study 2016). These figures show that there is a great potential for entrepreneurs to take up a franchise of multi-brand servicing business, the study claims.

MBOs currently occupy a minuscule 4% market share – a small, insignificant number one is likely to think. (Data Source: ACMA report on India Automotive Aftermarket study 2016). However, one would be surprised at how fast this trend of MBOs is picking up among top brands, says Mahindra.

MBOs are now being looked at as the next emerging mega trend of the Indian auto aftermarket because they are perfectly positioned between OEMs who offer quality service albeit at a high cost and IGs who might offer a cheaper service but have unskilled technicians who are not up to date with the latest technology.

According to Mahindra, the factors pushing customers towards MBOs are:

  1. Servicing of any brand of car
  2. Quality service through skilled and trained technicians
  3. Availability of quality spares from reputed suppliers
  4. On time delivery of the car post repairs
  5. Repair over replacement

The study finds that post warranty, the larger share of business for MBOs comes from brands like Maruti, Hyundai, Mahindra and Tata.

The Edge over OEMs and IGs

While OEMs offer quality service – though at a price – and guaranteed original spare parts, they mostly replace defective parts rather than repair them, thus costing a car owner more. This leaves owners reeling from a lack of transparency and convenience. Independent garages on the other hand offer convenience of access and an informal process but are often characterised by unskilled technicians, a lack of expertise and more often than not, the threat of spurious spare parts usage. Trust is often an issue here, the study states.

MBO pioneers in India

In India, multi-brand service companies are constantly investing in technology and manpower to up the skill and service levels in India. They are targeting this uncertainty in the unorganised domain and improving customer experiences with appointment-based service packages for periodic maintenance. They’re also building trust with consumers through warranty-based service packages such as Road Side Assistance (RSA) and Annual Maintenance packages at attractive prices, finds the study.

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The ID Staff

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