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2 TABLE OF CONTENTS 1. Executive Summary Segments and Consumer Profiling Potential of India Multi Brand Car Service Market Major Failure Case Studies in Sector Recommendation on Where to Position in Market Entry Barriers and Pre-Requisites Challenges in the Sector 1.1. Market Definitions 1.2. Abbreviations 1.3. Market Size and Modeling Consolidated Research Approach Market Sizing Multi Brand Car Service Market Market Sizing Approach OEM Car Service Market Limitations Final Conclusion 2. Market Size of India Organized Car Service Market Passenger Vehicle Sales in India Number of Used Cars, FY FY India Organized Car Service Market Segmentation by Choice of Dealer- OEM s or Multi Brand Service Centers, India Multi Brand Car Service Market Size by Revenues, FY 2013-FY India Multi Brand Car Service Market Segmentation 5.1. By Age of Car, FY By Regional Segmentation, FY By Car Split, FY By Booking Mode, FY By Service Split, FY Competitive Landscape of Major Players in India OEM Service Center market 7. Pricing Packages of OEM Car Service and Multi Brand Car Service 7.1. Pricing Packages of Major OEM Car Service Companies 7.2. Pricing Packages of Major Multi Brand Car Service Companies 8. Franchise Requirements for Multi brand Car Service Centers in India 9. Comparative Analysis of OEM's Service Centers and Multi Brand Service Centers 10. Key Decision Making Parameters for Car Servicing- OEM Car Servicing V/S Multi Brand Car Servicing 11. Major Failure Case Studies in Sector Carnation Auto Company Overview Failure Case Study-Carnation Auto Financial Performance, FY 2010-FY MyTVS Company Overview Business Model Failure Case Studies-MyTVS Financial Performance, FY 2013-FY Other Major Companies in India Multi Brand Car Service Market Mahindra First Choice Services Company Overview Financial Performance, FY 2010-FY CarZCare Company Overview 2

3 12.3. Bosch Car Service Business Overview 13. Porter s Five Forces Model for India Multi Brand Car Service Market 14. Issues and Challenges in India Multi Brand Car Service Market Diminishing Tendency to Spend Limited Customers from Luxury Car Segment Focus towards Sales-Service Ratio Efficient Marketing Strategy Training and Education for Employee Retention Emerge in Tier 1 Cities and Later Expand towards Tier 2 and Tier 3 cities Disclaimer Contact Us Limited availability of Skilled Sets and Employee Retention Procurement of Spare Parts Inventory Maintenance Ensuring Service Quality for Customer Retention Reducing Car Maintenance Intervals Reduction in Number of Road Accidents Increase in Quality of Spare Parts Recommendations to Deal with the Issues and Challenges in India Multi Brand Car Service Market 15. India Multi Brand Car Servicing Future Outlook and Projections, FY 2015-FY Recommendations on Where to Position in the Market Ideal Business Model Integration of CoCo and FoFo Pre-Requisites with Recommendations in India Multi Brand Service Market Finding Investments to Finance Asset Heavy Business Model Government Regulations to Establish Service Centers Focus on Specific Less Complicated Services Procurement of Spare Parts Widespread Service Network Ensuring Efficient Inventory management 3

4 LIST OF FIGURES Figure 2-1: India Passenger Car Services Market Size by Revenues, in INR Billion, FY'2010-FY'2015 Figure 2-2 Passenger Vehicle Sales in India in Millions, FY'2010-FY'2020 Figure 2-3: Number of Used Cars in India in Millions, FY'2010-FY'2020 Figure 3-1: India Organized Car Service Market Segmentation by OEMs Service Centers and Multi Brand Service Centers by Revenue in Percentage, FY'2015 Figure 4-1: Structure for Car Servicing Industry in India Figure 4-2: India Multi Brands Service Center Market Size on the Basis of Revenues in INR Million, FY'2013-FY'2015 Figure 5-1: India Multi Brand Car Service Market Segmentation by Car Age on the Basis of Number of Cars Serviced in Percentage, FY'2015 Figure 5-2: Multi Brand Service Center Market Segmentation by Regional Distribution on the Basis of Revenue in Percentage, FY'2015 Figure 5-3: India Multi Brand Service Center Market Segmentation by Car Split on the Basis of Revenue in Percentage, FY'2015 Figure 5-4: Customer Profile in India Multi Brand Car Service Market by Booking Mode on the Basis of Number of Cars Serviced, FY'2015 Figure 5-5: India Multi Brand Service Center Market Segmentation by Service Split on the Basis of Revenue in Percentage, FY'2015 Figure 11-3: Financial Performance of MyTVS on the Basis of Gross Revenues and Net Loss before Tax in INR Million, FY''2013-FY'2014 Figure 12-1: Business Model for Mahindra First Choice Services Figure 12-2: Financial Performance of MFCS on the Basis of Gross Revenues in INR Million and Growth Rate in Percentage (%), FY'2013-FY'2015 Figure 13-1: Porter's Model for India Multi Brand Car Servicing Market Figure 14-1: Consumer Preferences for Car Service Retention by OEMs Dealers Figure 14-2: Consumer Preferences on the Basis of Proportion of Customers using Authorized OEM Dealership in Post-Warranty Period Figure 14-3: Comparison of Manpower Availability with the Skilled Workforce in India Car Service Market, FY'2015 Figure 14-4: Skilled Manpower Availability in India Multi Brand Car Service Market in Different Service Operations, FY'2015 Figure 14-5: Procedure of Spare parts Supply in India Multi Brand Car Service Market Figure 14-6: Major Factors for Multi Brand car service centers to Retail Customers along with the weight age posed by Consumers in Percentage (%) Figure 14-7 Total Number of Road Accidents in India in Thousand Units, FY'2010-FY'2020 Figure 16-1: Franchisee Operations for Carnation Auto, Mahindra First Choice Services and MyTVS in INR, FY'2015 Figure 11-1: Business Model for Carnation Auto Limited Figure 11-2: Financial Performance of Carnation Auto on the Basis of Gross Revenues and Net Losses in INR Million, FY'2010-FY'2015 Figure 11-3: Financial Performance of MyTVS on the Basis of Gross Revenues and Net Loss before T i INR Milli FY''2013 FY'2014 4

5 LIST OF TABLES Table 1-1: Sample Composition for Market Sizing Approach Table 1-2: Sample Composition for Market Sizing Approach Table 5-1: India Multi Brand Service Center Market Segmentation by Regional Distribution on the Basis of Revenue in INR Million, FY'2015 Table 5-2: India Multi Brand Service Center Market Segmentation by Car Split on the Basis of Revenue in INR Million, FY'2015 Table 5-3: India Multi Brand Service Center Market Segmentation by Service Split on the Basis of Revenue in INR Million, FY'2015 Table 6-1: Competitive Landscape of Major OEM's Service Centers by Number of Service Centers, Average Ticket Size of a Car Serviced, Number of Cars Serviced, FY'2015 Table 7-1: Pricing Scenario of Maruti Suzuki, FY'2015 Table 7-2: Pricing Scenario of Honda, FY'2015 Table 7-3: Pricing Scenario of Hyundai, FY'2015 Table 7-4: Pricing Scenario of Chevrolet, FY'2015 Table 7-5: Pricing Scenario of Ford, FY'2015 Table 7-6: Pricing scenario of Carnation, FY'2015 Table 7-7: Pricing scenario of MyTVS, FY'2015 Table 7-8: Pricing scenario of Bosch, FY'2015 Table 7-9: Pricing scenario of Mahindra First Choice, FY'2015 Table 7-10: Pricing scenario of Carz, FY'2015 Table 8-1: Carnation Franchise Requirements Table 8-2: My TVS Franchise Requirements Table 8-3: Mahindra First Choice Franchise Requirements Table 8-4: Carz Franchise Requirements Table 9-1: Comparative Analysis of OEM's Service Centers and Multi Brand Service Centers Table 10-1: Key Decision Making Parameters Table 10-2: Decision Making Matrix for OEMs and Multi-Brand Service Centers Table 11-1: City Wise Carnation Auto Service Centers in India Table 11-2: Cost Analysis for One Single Carnation Auto-Franchisee Table 11-3: Revenues Analysis for One Single Carnation Auto-Franchisee Table 11-4: Profitability Analysis for Carnation Auto- Franchisee Table 11-5: Failure Case Study for Carnation Auto Table 11-6: Key Performance Indicators for Carnation Auto Table 11-7: Key Performance Indicators for MyTVS Table 11-8: Failure Case Studies for MyTVS Table 12-1: Cost Analysis for One Single Mahindra First Choice Services-Franchisee Table 12-2: Revenues Analysis for One Single Mahindra First Choice Services-Franchisee Table 12-3: Profitability Analysis for One Single Mahindra First Choice Services-Franchisee Table 12-4: Franchisee Requirements for Mahindra First Choice Services Table 12-5: Key Performance Indicators for Mahindra First Choice Services Table 12-6: City Wise Mahindra First Choice Service Centers in India Table 12-7: Number of Service Centers for Carz on the Basis of Major Cities Table 12-8: Franchisee Requirements for CarzCare Table 12-9: Key Performance Indicators for Bosch Car Service Table 14-1: Availability of Spare Parts in the Aftermarket on the Basis of Major OEMs Table 14-2: Major OES with Reasons for Growth Table 14-3: Recommendations to Deal with the Issues and Challenges in India Multi Brand Car Service Market Table 15-1: India Multi Brand Car Service Market Size on the Basis of Revenues in INR Million, FY'2015-FY'2020(F) Table 15-2: Cause and Effect Relationship Analysis between Industry Factors and Expected Industry Prospects in India Multi Brand Car Service Market 5

6 Table 15-3: Future Strategies for Major Multi Brand Car Service Chains in India Table 16-1: Consolidated Recommendations for India Multi Brand Car Service Market Table 16-2: Marketing Strategies for Multi Brand Car Service Companies Table 16-3: Certified Auto Service Training Institutes in India along with Course Structure and Fees 6

7 Licenses: Single User: USD 1100 Hard Copy: USD 1500 Enterprise wide: USD 1900 Pages: 108 Related Reports Mahindra First Choice Wheels Limited - Company Analysis India Self Drive Car Rental Market Outlook to Rising Customer Aspirations and Easy Availability of Renting Options to Boost Future Growth India Used Car Market Outlook to Growing Preference and Emergence of Web Aggregators Key Highlights of the Report - Discussed leading players, profile, and product portfolio - Industry statistics from 2010 to 2015 and forecast from 2016 to 2020 in value terms - Detailed discussion of the market segments - Regulatory and macro economy environment - Opportunities led by industry developments HOW IS THE INDIA MULTI BRAND CAR SERVICING MARKET POSITIONED? In India, trend have been witnessed that after the completion of warranty on a new car (generally after 4 years), around ~% of consumers migrate to local service workshops. These local service workshops provide economical car services, closer to home advantage and personalized services. However, some other critical factors such as service quality, original spare parts and technical skills of the mechanic are not ascertained. Hence, trust remains an important concern while getting car service done at a local car service workshop. The multi-brand service companies are targeting this uncertainty in the unorganized domain as their target area. Organized multi brand car service companies such as Carnation, MyTVS, Mahindra First Choice Services, Bosch Car Services and few others are targeting to improve the customer experience by offering them better services which can develop trust coupled with economical service packages. The car after-sales market has witnessed a significant growth during the FY FY The market has been growing majorly due to increase in passenger car sales, inclining numbers of service centers and intensifying awareness of customers towards their vehicle. The car after-sales market has been valued at INR ~ billion during FY 2015 and the market has grown remarkably from INR ~ billion in 2010 at a CAGR of ~% during the review period FY 2010-FY The growth was also driven by the improving perception of the consumers towards the sustainability of the environment backed by the stricter CO2 emission regulations. This prompted the consumers to get their cars serviced at shorter time intervals. This along with the shift in the industry specifics with an increase in the average age of cars i.e. they are being used longer ages on the road which has increased the possibility of the need of bigger repairs despite the improvement in their overall quality. The emergence of organized players in multi brand car service market came into the field owing to the attractiveness of huge potential in passenger car service market. The market size for organized multi brand car service centers, evaluated at INR ~ million in FY The market is currently dominated by organized authorized OEMs workshops and independent small garages and multi brand car service providers are placed between these two segments Figure: India Multi Brands Service Center Market Size on the Basis of Revenues in INR Billion, FY'2010-FY'2015 INR Million FY'2010 FY'2011 FY'2012 FY'2013 FY'2014 FY'2015 India Multi Brand Car Service Market Revenues Growth Rate 7

8 Table: India Multi Brand Service Center Market Segmentation by Service Split on the Basis of Revenue in INR Million, FY 2015 Car Type INR Million, FY 2015 Remarks General Repair & Car Wash Mechanical & Electronic Repairs Denting/Painting Total The age group of years has been considered as the key target group by Multi Brand service centers in India. This age group consists of young married couples and educated professionals who are very well aware about the prevailing market scenarios. Moreover, in India the years of age group people were observed to be very vigilant about their driving habits and concerned about their vehicle s performance. Indian customers with the age group of years have contributed almost ~% of total customer group of Multi Brand service centers in the FY It has been observed that the out of the consumer group for the multi brand service centers, ~% of the consumers were in amongst the professional class while the business class consumers have contributed the remaining ~%. The professional class has been provided with various corporate discounts and offers which has led to higher proportion of professional class in the overall consumer group. The post-warranty cars have acquired a larger share of multi brand car service centers with ~% of the revenues; the cars under warranty have contributed only ~% of the total market revenues of multi brand service centers. It has been observed that as soon as the cars are out of warranty, the customers either move to an unorganized service shop or the organized multi brand car service providers. It has been estimated that Southern region has largely contributed towards the overall revenue generated by the Multi Brand service centers. During the FY 2015, Southern region has contributed almost ~% of the total revenues. This enormous contribution by this specific region was backed by the increasing demand by the customers for passenger car service and also investors sought to capitalize the existing opportunity by associating with the big brands. Moreover, most of the multi brand service centers have started their operation from South India and some of them still operate in South India only. The escalating demand for car service was majorly due to the increase in number of road accidents in the region. Major states that have contributed to the increasing number of road accidents were Andhra Pradesh, Tamil Nadu, Karnataka and Kerala with a total of 191,763 road accidents as of

9 Table: Pricing Scenario of Carnation, FY 2015 Major Services Hatchback Sedan SUV General Service(Maintenance & Repair) Car Washing & General Inspection Denting/ Painting Wheel Balancing Wheel Alignment A/C Repair(Complete Servicing) Table: Key Decision Making Parameters for Car Servicing- OEM Car Servicing V/S Multi Brand Car Servicing Basis Impact Comments Car Warranty Period Price Charged For Service Value Added Services Lower Turnaround Time By OEMs Availability of Spare Parts Location Type of Car Table: Comparative Analysis of OEM's Service Centers and Multi Brand Service Centers Parameters OEM s Service Center Multi Brands Service Center Price Services Turnaround Time Procurement of Spare Parts Network Coverage Offers & Discounts Post-Warranty & Pre-Warranty 9

10 WHAT ARE THE MAJOR CHALLENGES AND ENTRY BARRIERS IN INDIA MULTI BRAND CAR SERVICING MARKET? Section Review Finding investments is a critical issue for an incumbent, since operating into this sector requires massive investment Government is looking to promote these organized multi brand car service centers by promoting them to add more service workshops as it is anticipated to add value to the exchequer, since the revenues receipts for the government from unorganized workshops is minute. Beyond the warranty period the propensity to spend towards the car maintenance reduces especially for smaller car segment The customer having luxury cars still prefers to approach OEMs car dealers even in the post warranty period owing to their expertise Procurement of original spare parts has been the major hindrance to the development of multi brand car service market in India. Majority of the OEMs supply their spare parts only to their OEM car network, with the major objective to constrain the growth of local and multi brand car service outlets. ENTRY BARRIERS AND PRE REQUISITES Finding investments is a critical issue for an incumbent, since operating into this sector requires massive investment. There has been no significant revenue generation from this market. While some companies like Carnation had been on a perpetual loss making spree, others are barely able to break even in the wake of rising inventory cost for spare parts and stiff competition from unorganized market. Given the situation, investors possess a negative outlook towards growth of this market. Capacity constraint and costly purchase of equipments remain another impediment that is a major pre-requisite for this market. As far as Government is concerned, there are as such no barriers apart from regular compliances that every company has to fulfill. On the contrary, the Government is looking to promote these organized multi brand car service centers by promoting them to add more service workshops as it is anticipated to add value to the exchequer, since the revenues receipts for the government from unorganized workshops is minute. Managing high levels of manpower churn emerged as the single biggest challenge for the multi brand car service companies in India. It has been estimated that across major players, average manpower attrition rate has been estimated to be ~% across different levels. High manpower churn impacts players in different ways... CHALLENGES IN THE SECTOR During the first 3-4 years of car purchase, passenger cars are covered under the warranty. In that time span, the car owners have all the labour costs covered under paid services. However, this is the period when the propensity to spend towards the service repair and maintenance of the car remains at the peak due to the belongingness to the car. Beyond that period, the propensity to spend towards the car maintenance reduces especially for smaller car segment Multi brand car service have witnessed that majority of their customers pertains to smaller car segment that includes hatchback and Sedan. However, the customer having luxury cars still prefers to approach OEMs car dealers even in the post warranty period owing to their expertise Procurement of original spare parts has been the major hindrance to the development of multi brand car service market in India. Majority of the OEMs supply their spare parts only to their OEM car network, with the major objective to constrain the growth of local and multi brand car service outlets Quality of service is regarded as the major touch point for the car user. The primary objective of approaching to a multi brand car service company is the quality of service which can be trustworthy along with lower service charges relative to OEMs authorized dealers 10

11 WHAT ARE THE FUTURE PROSPECTS INDIA MULTI BRAND CAR SERVICING MARKET? For the multi brand service centers to succeed, a proper business model, value added & cost effective service and a decent attitude of the service advisor along with the rising sales of used cars can surge the revenue in the coming years. Rising awareness amongst the masses towards genuine spare parts, proliferation of the passenger cars market in the tier 2 and 3 cities, leveraging of service from online aggregators and consumer avoidance of high services charges at the authorized stores have been regarded as the leading growth drivers for the market. In the forecasted period till FY 2018, the market is poised to grow with the number of multi brand service center likely to reach around ~ by FY In terms of revenues, the sector is likely to report revenues worth INR ~ million during FY 2018, with a CAGR growth of ~% in FY 2015-FY It is expected that a new vehicle owners will tend to go to OEM authorized workshops for most of the services except the least complex jobs such as wheel, accessories and car detailing. Figure: India Multi Brand Car Service Market Size on the Basis of Revenues in INR Million, FY FY 2020(F) INR Million Revenues in INR Million Growth Rate Percentage (%) Combined with the factors driving growth of the industry revenues in FY 2015-FY 2018, there are other factors as well which would lead to the growth of industry. These factors can be pointed as Increasing demand for fleet and company cars and thus inclining demand for corporate plans offered by the Multi Brand service centers Slower new car sales volume as compared to old cars leading to lesser customers loyal to OEM s service centers due to their high cost. Stricter CO2 emission rules and regulations along with strengthened government machinery to keep a check of such rules. Improvement of relationships between Multi Brand service providers and car manufacturers and thus easier availability of genuine spare parts Improvement in infrastructure leading to lower congestion on roads These reasons will provide an impetus to the growth of market revenues in the longer term. The Multi Brand Car Service market is expected to reach the levels of INR ~ million by FY Organized car service companies such as Carnation and MyTVS primarily have showcased failure in terms of their operations. These companies have altered their business model frequently to make their business profitable. For this, they integrated various services such as car insurance, car inspection, home assistance car services which are managed by their franchisees, as the average transaction charges are expected to decline in the coming years. Figure: Franchisee Operations for Carnation Auto, Mahindra First Choice Services and MyTVS, FY 2015 Company Security Deposit (Refundable One Time Startup Fee Royalty Fee Carnation Auto Mahindra First Choice Services MyTVS 11

12 COMPANIES CITED IN THE REPORT Particulars Companies Mentioned Products Mentioned Market Positioning Carnation Auto Mahindra First Choice MyTVS Carz Care Bosch Car Services Maruti Suzuki Hyundai Honda Tata Motors Ford Chevrolet Car Servicing, Road assistance, Car Insurance, Buy/Sell Used Cars Appropriate business model selection is amongst major decision that a business has to make before starting its operations. Until now, there has been no established model for success of these service providers. An ideal business model should be the combination of CoCo and FoFo service centers which can help the company to maintain their cash flow while extending their network presence in different regions through franchisee KEY FACTORS CONSIDERED IN THE REPORT Comprehensive analysis of the India multi brand car servicing market and its organizational structure Industry is presented by revenues of the companies in the market. Listed major players and their positioning in the market Identified major industry developments in last few years and assess the future growth of the industry Government role in Multi Brand Car Servicing Market and Porter s model help to understand investment opportunities and complexity involved 12

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