India has the largest number of two-wheelers in the world. Over 33.3% of Indian households own a two-wheeler and the market is thriving with more and people adopting the two-wheeler route, primarily due to traffic congestions, growing economy and easy access to loans.
But the automobile is not just about sales, equally important is its maintenance and up-keeping.
For the sake of hassle-free ownership, increasing its shelf-life, and for keeping emissions under control.
While there are new economy channels being developed for sales, both online & offline, can the aftersales market be left as is?
Did you know, the aftersales market across authorized and unauthorized segment employs 60% of the total manpower deployed in automobile industry??
The old economy two-wheeler aftersales market comprises of dealer workshops and local garages with the latter commanding 80% market share! While the former lacks good Customer experience due to expensive billing, the latter lacks trustworthiness. India prefers the market of local garages because when you have two un-happy choices, you prefer to choose one that costs less!
The market of local garages is uncontrolled & unregulated; 95% of them usually roadside/footpath based bro & pop stores where many are fly-by-night operations and highly unreliable. A market where fake parts are over-penetrated and the quality of the mechanic can be ascertained only & only by the no of vehicles lying in the garage (popular demand).
- The growing shared mobility demands tech-savvy service market that can catch-up to their pace
- Urbanization is forcing the local garages to either legalise the business or shut shop and shift further away
- The evolution of vehicle technology like BS-VI is going to result in outmoding these local garages who have no access to skill upgrades
Will the old economy market be capable of handling the challenges brought in by Shared Mobility, Urbanization, BS-VI etc.? What is the future of this market that commands 80% market share but is highly unorganized and fragmented?
The unorganized two-wheeler aftersales market never experienced what
- Meru did to cab market before Ola & Uber
- Croma & Vijay Sales did to electronics market before Flipkart & Amazon
- Big Bazaar & Reliance Retail did to retail market before Big Basket & Grofers
So, we say the opportunity is fresh and large. But the challenges are going to be larger because it will be the first attempt at organizing a market so large.
Is there a new economy developing? Yes, there is. India has seen the rise of several marketplaces, so why should the automobile aftersales market be left behind?
Startups are cropping in several segments, leveraging technology to address the needs of the industry in the form of:
Garage Aggregators: Lead provider model helping garages generate incremental revenue and support them with the supply chain of spares? But does this address the Customer’s concern around the quality of services delivered by the Garage?
Pick & Drop: Models deploying manpower at dealer workshops, who offer the convenience of picking & dropping the vehicle, as there is nothing productive about visiting a garage. But then does this change the Customer’s concern about the billing practises followed by dealerships?
Managed Marketplaces: Models which are changing the way industry operates; the decision making is owned by them either by adopting the garages or enabling mechanics to operate through a doorstep model. Primarily focussed on Customer experience and enabling an enriching experience by offering convenience and transparency in workmanship.
We do believe the future of the massive Indian two-wheeler after-sales market (estimated at 9 bn$ by 2025) lies in the hands of ‘managed marketplaces’ who can leverage technology to:
- operate within the legal framework of the business
- assure as well as validate delivery of quality services
- cope-up with the needs of new-age Customers & technology
But, all without significantly increasing the cost to the Customer.