Right now the automotive sector is in recession as NBFCs which finance as many as 30% of new cars, 55%-60% of commercial vehicles, and 65% of two-wheelers have slashed lending. However, the car servicing and repairs industry is growing.

Right now the automotive sector is in recession as NBFCs which finance as many as 30% of new cars, 55%-60% of commercial vehicles, and 65% of two-wheelers have slashed lending. However, the car servicing and repairs industry is growing. Indian consumer's love affair with cars may have taken a back seat for now, but in 2017-18 4.01 million passenger cars were manufactured in India and the numbers in the years before weren't much different. Owners of the tens of millions of passenger cars on Indian roads take advantage of a robust car servicing and repair infrastructure. The car and service repair infrastructure consists of organised single brand service centres, organized multi-brand service centres, and unorganised multi-brand service centres. The features of each are outlined below. 

Organised Single Brand Service Centres 

An organised single brand service centre only services and repairs cars of one brand. After a car is bought from a showroom, customers take it for servicing to a single brand service centre whenever servicing is needed. There is a good reason for doing so. Every car sold comes with 4 years of warranty during which it makes perfect sense to have it serviced at a single brand service centre. Such centres have authentic parts and well-trained mechanics. They also have certified equipment and because a car is under warranty having it cared for by a single brand service centre is relatively inexpensive. 

Insurance companies also find it easy to tie up with organised single brand service centres because they are connected to the formal financial infrastructure. This connectivity allows insurance companies to offer cashless facility to car owners, something they love. Of the share of revenues generated among the 3 categories of servicing and repair centres, approximately 46% are generated by organized single brand service centres. 

There are drawbacks to having a vehicle serviced at an organised single brand service centre as well. These are that an organised single brand service centre emphasises replacing faulty parts instead of repairing them making it substantially costlier than unorganised service centres. This is why when the warranty on a vehicle expires a whopping 65% of buyers who had their car serviced at an organised single brand service centre, switch to having it serviced at an unorganised multi-brand service centre. 

Unorganised Multi-brand Service Centres 

In contrast with organised single brand service centres, multi-brand service centres service cars of virtually any make. Because these service centres are unorganised, they are substantially cheaper than organised single brand service centres. They command approximately 53% of the automobile servicing market yet because they are unorganised, they are not part of the formal financial infrastructure and hence insurance companies cannot offer cashless services at such centres. 

When cars need routine work like an oil change or minor repairs their owners often take them to local service centres because they have experienced workers and are inexpensive. Furthermore many local service centre owners establish a rapport with car owners; this is a part of the value addition they offer car owners. Their advice is often sought by car owners because they offer more options than an organised service centre. For instance, they can offer to have a part repaired or replaced and present car owners quotes for both options. 

Formal Multi-Brand Service Centres 

Although less than 2% percent of all service centres in the country, formal multi-brand service centres share is growing and expected to reach 8% by next year. Formal multi-brand service centres offer the advantages of both organised single brand service centres and unorganised multi-brand service centres. They service cars of many different brands at a lower cost than organised single-brand players. 

Because they are formal players, they are connected to the formal financial infrastructure allowing them to offer cashless facility from insurance companies. Furthermore, they are less expensive than organised single brand service centres and offer a wider array of options than organised single-brand players can. 

The Indian automobile service centre industry, especially in urban regions, is becoming more organised and better connected with other service providers such as automobile insurance providers. While the transition from a large number of unorganised players to a larger number of organised players will be gradual it will shape the automobile service centre industry in the years ahead. During this journey, the organised multi-brand players will grow in size. 

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house