A car or motorcycle purchase also has another factor involved with it which is overlooked by a consumer for a considerable period of time, after sales and service. Once the warranty period, free service intervals or both of a vehicle are over, the owners look at the unorganised local workshops. However, there are aspects such as availability of genuine spare parts and getting a service quality equivalent to that of an authorised dealership crops up worrying the customer. We recently interacted with Navneet Pratap Singh, CEO, CarXpert and Col YS Katoch, Director, CarXpert to understand how their concept will organise the unorganised workshop sector thereby offering the reliability an authorised dealer offers, but at a higher cost.
The authorised dealership controls 46 percent of the market share whereas 53 percent is the unorganised local workshops, according to CarXpert. The leftover share is where the organised multi-brand workshops come in which will eventually grow and contribute to offer good quality service of a vehicle without the exorbitant cost that authorised outlets charge. “The reason for the high cost of paid service at authorised dealerships is the high capital as well as operational expenditure which they have to bear,” said Col YS Katoch. In a price-sensitive market like India, despite the fact that there is fear of not getting a good service from a local workshop, customers go there to save costs. CarXpert is a platform for these local mechanics/workshops to offer a good quality service without the additional cost to cover the operational costs of a facility. In addition, these local workshops will also be able to cater to more than one brand which also leads to the flexibility of these facilities.
Col YS Katoch, who headed a large dealership of a manufacturer in North India also stated that about 50 percent of the customers come back for the paid service schedule after their free services are over. “This means that an authorised workshop has to rely on the leftover customers to cover up for their operational cost,” added Col Katoch.
What about insurance claims
The company is already working out tie-ups with various insurance companies who have also expressed interest in the CarXpert concept. It not only benefits them but also the end user. “Let us take an example of a fender damage which costs Rs 5,000 for replacement. Depending on the depreciating value on the car, a certain sum would be given by the customer while the rest would be borne by the insurance company. Our focus would be inclined more towards repair if a part can be repaired. Now the cost of repairing would undoubtedly be less, say Rs 2,500, which would incur a lower cost to be paid by the customer and the insurance company. A win-win situation for both ” said Col Katoch.
Since insurance companies do not tie-up with local workshops, a platform such as CarXpert would not only make insurance claims for customers easier, but also inexpensive through its 'repair if no need to be replaced' theory.
While there is a knowledgeable set of people in the local workshop business, there is a higher share of people who have a traditional approach and are unaware of how turning their garage into a multi-brand showroom with CarXpert will help, according to Navneet Pratap Singh, CEO, CarXpert. Proper training sessions along with exposure to a SAP system wherein these mechanics can calculate their profit/loss, inventory etc will be done by the organisation. This would not only familiarise such workshops with new technologies, it will also give them a fair amount of idea and forethought with respect to their growth. People who enrol with CarXpert will also have to go through a proper scrutiny of the infrastructure and regular audits to maintain a quality standard.
Also, most cars which would come to CarXpert showrooms would have already crossed approximately four years of their life cycle as this platform would be considered by customers only after warranty or extended warranty of a vehicle is over. By that time, the company would already be prepared with any new technologies which would be used. In addition to this, the company also suggests the use of Korean spare parts, especially for luxury cars as they bring down the cost by around 50 percent while maintaining the quality standard.
According to CarXpert, the current organised multi-brand sector sits at one percent which is expected to grow by eight percent by 2020. The company is expecting a fair share in this sector with their current penetration of in North India after which the next phase for them would be Central and West India. This sector would not only organise the unorganised sector but also reassure a customer about the quality of service and reliability of a spare part as well as consumables.