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Analysis of the car service market in India

Release date 19.01.2021

Number of pages 57

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The relevance of research

The list of operations that are carried out in a car service center depends on the type of vehicles serviced, the equipment available and the qualifications of the staff. In general, the whole range of works can be divided into diagnostic, preventive and repair. The main profit of a car service is brought by after-sales service and sale of spare parts.

Purpose of the study

Analysis of the state of the market for car services, assessment of the market size, analysis of competitors, as well as identification of factors affecting the market for car services

Content

Part 1. Overview of the Indian auto services market

1.1. Definition and Characteristics of the Indian Auto Service Market
1.2. Dynamics of the volume of the Indian market of auto services, 2015-2019
1.3. Market structure by type of service provided in India
1.4. The structure of the car service market in the Union Territories
1.5. Assessment of current trends and development prospects of the studied market
1.6. Assessment of factors affecting the market
1.7. Analysis of sectoral indicators of financial and economic activity
1.8. Estimation of the number of buyers and their financial capabilities
1.9. The pace of technological change and product innovation
1.10. Sales channels

Part 2: Competitive Analysis in the Automotive Services Market in India

2.1. Major players in the market
2.2. Market shares of the largest competitors
2.3. Profiles of major players

Part 3. Analysis of the consumption of car services

3.1. Estimation of the volume of consumption of car services per capita
3.2. Market Saturation and Estimated Market Potential in India
3.3. Description of consumer preferences
3.4. Price analysis

Part 4. Assessment of factors of investment attractiveness of the market

Part 5. Forecast for the development of the car service market until 2024

Part 6. Conclusions on the prospects of creating enterprises in the study area and recommendations for existing market operators

Research excerpt

Part 1. Overview of the Indian auto services market

1.1. Definition and Characteristics of the Indian Auto Service Market

The object of this study is the maintenance and repair of motor vehicles, car washing and tire fitting services. It is expedient to unite these services under the general name ""services of car service"".
The list of operations that are carried out in a car service center depends on the type of vehicles serviced, the equipment available and the qualifications of the staff. In general, the whole range of works can be
divided into diagnostic, preventive and repair. The main profit of a car service is brought by after-sales service and sale of spare parts.
...

The agency … evaluates the existing capacity of the car services market at … Rs., traditionally highlighting the market potential in the capacity structure: … Rs. according to the results of 2019 - car repair and maintenance works (performed personally by car owners or private mechanics) in monetary terms.

1.1. Market structure by type of service provided in India

According to the agency …, in the total set of car services (not including car service works performed personally by car owners or private mechanics), more than …% of the market is accounted for by … Services … account for …% in the total of car services. Tire fitting occupies the smallest share – only …%.

Diagram 2. Market structure by types of services provided, 2019, %

1.2. The structure of the car service market in the Union Territories...

Diagram 3. The structure of the provision of car services in India by Union Territories, %

1.3. Assessment of current trends and development prospects of the studied market

Trends:
- Falling loyalty to official dealer networks: the older the car becomes, the less the car owner turns to the official dealer;

- High competition, in connection with which the importance of the level of quality of services provided increases;

- Growing civilized market of car services: comfortable waiting areas for customers, complexity in solving problems, promotion of scheduled inspections and repairs;

- Development of car services on a franchise model;

- The increasing complexity of automotive technology, the use of advanced technologies in mechanical engineering, which imposes increased requirements on the qualifications of car service personnel, and also dictates the need for its differentiation (mechanics, electricians, body repair specialists, etc.);
...

1.4. Assessment of factors affecting the market

Consider the main factors affecting the market and, accordingly, demand.

Economic

GDP dynamics
GDP is a macroeconomic indicator that reflects the market value of all final goods and services produced in a year in all sectors of the economy on the territory of the state for consumption, export and accumulation.
The dynamics of India's GDP is decisive in the vector of development of the entire economy of the country and determines the key trends in consumer effective demand and economic activity.

In 2012-2014 the GDP growth rate was positive, but constantly declining, and in 2015 it was less than zero. In 2015, which was the peak of the crisis in the state, the decline in GDP amounted to …% compared to the previous year of 2014, and since the dynamics of GDP is directly proportional to the well-being of citizens, this indicates a drop in family incomes, a reduction in demand, and an increase in prices. It also led to a decline in production and employment.

In 2016, GDP stagnated, at the end of 2017, this indicator shows … dynamics, namely, an increase of …% compared to the previous year.
According to the results of 2017-2019, the dynamics of GDP is positive, but, contrary to optimistic forecasts, it is not high, which indicates the revival of business processes in the country, but not constructive changes at the macroeconomic level. According to Rosstat, in 2019 the GDP growth rate was 1,3%.

Diagram 4. Dynamics of India's GDP, 2012-Q3 2020, % to the previous year

Rosstat estimates the fall of the Indian economy in the 2nd quarter. 2020 by 8,0%. The decline was smaller than in other countries, due to a less developed service economy and a low share of small businesses.
In 3 sq. In 2020, the fall in India's GDP slowed to 3,6% year-on-year.

Under the circumstances that currently (November-December 2020) negatively affect the size of GDP in the short and medium term, we indicate the opinions of experts.
...

Dollar rate
In 2015, the change in the dollar exchange rate is oscillatory. In February of the following 2016, the maximum dollar exchange rate was 76,1 Rs., And then there is a gradual decrease in this indicator and in December this value is 63,8 Rs.

In 2017, the dynamics of the dollar exchange rate is oscillatory, but without sharp increases or falls compared to 2015-2016. For the period from January to December 2017. the maximum value of the dollar exchange rate is 60,2 Rs., and the minimum is 56,2 Rs.

In 2018, there is a gradual increase in the dollar exchange rate, which indicates a negative impact on the economy and its industries. Only in October you can see a slight decrease to 65,6 Rs. per dollar. In 2019, the average exchange rate was 64,7 Rs.
...

The growth of the secondary car market
In 2020, Indians are more likely to opt for used cars. The ratio of transactions for the purchase of used and new cars for the first time in the history of the Indian car market has reached
5 to 1. Against this background, the demand for repair work and auto parts is growing. In addition, demand is spurred by the fact that drivers who have abandoned the purchase of a car in 2020 are investing in the repair of an existing vehicle.
...

Population decline
During 2012-2017 India's population has shown a positive trend. However, in 2018, the vector changed - the population decreased due to the natural population decline in 2016-2019.
The current demographic situation in India is characterized by natural population decline (since 2017), which is accelerating, and migration growth, which does not compensate for natural decline.
...

According to …, the natural decline in 2019 was …, and net migration to the country was … … predicts that the birth rate (the number of children per woman) will decrease from current … to … by 2025.
...

From the … data, it follows that the real money incomes of Indians grew by …% in 2019. The peak value was reached in 3 sq. – …%, in the 4th quarter. the growth rate of the indicator slowed down to …%.

During the self-isolation regime, the share of Indians with an average monthly income below ... increased from …% in February 2020 to almost …% in June.

According to the forecasts of ACRA analysts and economists of Alfa-Bank, real money incomes of the population will decrease by more than …% in 2020. The decline will be the highest since 2014. The reason will be quarantine restrictions, rising unemployment and the devaluation of the rupee.

The Ministry of Economic Development (does not take into account the second wave of covid-19) expects that the real disposable income of the population will decrease by …% by the end of 2020, and in 2021 it will grow by …% and maintain a positive trend above …% in 2022–2023.

The Ministry of Labor of India is going to reduce the unemployment rate in the country to pre-crisis levels by the end of 2021. The Ministry of Labor is developing an additional package of measures to support employment: it monitors the labor market, organizes additional education for the unemployed and those at risk of dismissal. For 2021, officials have planned to create an online showcase of internships and practices for students and graduates.

In addition, temporary jobs have already begun to be created in the regions. In July, the government allocated more than ... for these purposes, funds were sent to ... states.

Until the end of 2024, the national project ""Productivity and Employment Support"" will be implemented in India. In total, it will ... The project is aimed at increasing labor productivity, optimizing the processes of enterprises and reducing their costs, reducing costs and improving product quality, improving the skills of employees and ensuring efficient employment.

The reduction in real disposable incomes of the population has a negative impact on the car service market.

Uneven demand
Car services are subject to seasonal recessions and gains. So, for example, in January-February, there is a decrease in demand, in February - an increased demand for body repairs and engine repairs, but even February ""clients"" often try to wait until spring. March-April are considered the most active in the first half of the year. It is at this time that most car owners prepare the car for the summer period. According to research, during this period, the profit of service stations increases by 30-50% of the average annual rate. In tire shops, November-December, as well as March-April, are periods of excitement, as all motorists change tires. For car washes, spring and autumn are favorable in terms of demand.

In general, the uneven demand has a negative impact on the car service market.

technological

Dominance of imported equipment

The Indian government … import substitution policy, but the Indian market, for objective reasons, is not yet ready to take on the task of mass production of spare parts and equipment for car services.

The reasons are ... a sufficient number of production facilities in the country, as well as more ... for foreign cars (and, as a result, spare parts for them) compared to the domestic auto industry. Also, foreign manufacturers are not inferior in … and keep … prices. Therefore, the idea of substitution for the time being ..., therefore, in the near future, foreign spare parts and materials will continue to be a priority at service stations.

In combination with fluctuations in the exchange rate, the factor has a sharp … impact, since the … cost of imported spare parts and equipment for car service in ruble terms is significant, which is … the cost of general maintenance.

Against this background, the buyer tries to perform a certain car service ..., for example, washing or changing the oil.
...

According to the results of the performed STEP-analysis, macro-environment factors have a negative impact on the development of the car service market to a greater extent.
...

1.5. Analysis of sectoral indicators of financial and economic activity

According to the … data, the gross margin in the field of car services in 2019 amounted to …%, which is much lower than the level of similar financial ratios in the economy of all industries as a whole. In 2016-2019 Gross profit margins of the automotive services industry tend to fall.

For the 1st half of 2020, the gross margin amounted to …%, which is by … p.p. higher than the same period in 2019.
...

Diagram 10. Current liquidity (total coverage) in the field of car services for 2015-Jun. 2020, times

For Indian companies, the normative value of the absolute liquidity ratio is within Kal > ... Absolute liquidity shows what part of short-term liabilities can be repaid in the shortest possible time. In the period under review, absolute liquidity in the field of car services is above the normative value. In 2016-Jun. 2020 the indicator of absolute liquidity of the automotive services industry is higher than that of all sectors of the Indian economy.
...

At the end of 2019, the financial stability of the car service industry amounted to …%.
...

In general, the analysis of industry financial ratios in the field of car services shows declining gross margin and margin before tax, low current liquidity, which may be a consequence of growing competition in the industry. At the same time, indicators of sectoral values of absolute liquidity, business activity and financial stability indicate the ability of most enterprises to repay current debt at the expense of existing current (current) assets.

1.6. Estimation of the number of buyers and their financial capabilities

In India, you can drive a car from the age of 18. The core of the target audience of car services are car owners aged ... years. About …% of car service customers are men. The most active clients are married citizens, as well as Indians aged 25-34. Representatives of older generations are less likely to give cars to a car service, preferring to fix breakdowns on their own.

Also, the most active users of car services are urban residents. In 2019, the able-bodied population in cities amounted to … people, which is …% lower than the number in 2013.

Diagram 13. Dynamics of the urban working-age population, 2015-2019, thousand people

It is also worth noting the dynamics of obtaining a driver's license by the population.

According to the traffic police, in 2018, in total, … driver’s licenses were issued to citizens, of which more than … were category B. In 2017, … drivers received licenses. At the same time, according to the results of 2016, ... people received certificates, and in 2015 - ...
...

In 2019, the number of people who received a driver’s license decreased by almost 17 thousand compared to the period in 2018. Thus, in 2019, … one million driver’s licenses were issued.
...

1.7. The pace of technological change and product innovation

Today, the economy is undergoing a new wave of the industrial revolution, closely related to the processes of digitalization and business robotization. Among the technologies of wide application of this stage, cloud technologies, additive technologies, artificial intelligence and others are noted. Changes occurring due to the development and implementation of the mentioned technologies and processes entail a change in the production and management process, the final product.
...

Сбор данных
Thanks to barcode marking, it is possible to collect a history of parts installed on a car, control their quality and give a timely signal about the need to repair equipment that produces a particular part. This minimizes manufacturing defects and reduces the number of recalls.

Connected Car Technology
Smart Driving Lab turns cars into connected gadgets with a range of digital services. In five years, the company has made Connected Cars technology mainstream.

In India, a fairly high accident rate on the roads is a serious problem that needs a comprehensive solution. By warning drivers about the riskiness of their driving behavior, the number of dangerous incidents can be reduced. To do this, the solution developed by the Laboratory includes driving safety scoring. The driver in the application can see how safely he drives the car and try to improve his performance, including with the help of integrated gamification elements.

After the introduction of the Element system, the average safe driving index in less than six months increased from … to more than … points, the number of accidents decreased by …%, the share of fines received decreased by …%, and fuel consumption — by more than …%.
...

The team also recently released a new module ... based on ... with a commercial profile - now any car manufacturer can integrate the Connected Car system already at the production stage. Now the company is considering options for cooperation with different brands, while developing new markets - plans to expand coverage in Latin America and launch solutions in a number of Asian countries.

Thus, the intensive change and introduction of new technologies in the automotive industry places increased demands on the equipment and qualifications of car service personnel.
...

1.8. Sales channels

Customers turn to the service station when they have a need for car repair, money and urgency. In the implementation of their services, car services use both online and offline channels.

Table 4. Sales channels

There is a specificity of promoting car service services on the Internet, which must be taken into account:
...

–– In many cases, information on car service services is searched directly in the car, that is, using mobile devices. Accordingly, a website adapted for all mobile devices is required.
...

Part 2: Competitive Analysis in the Automotive Services Market in India

2.1. Major players in the market
...

2.2. Profiles of major players
...

Part 3. Analysis of the consumption of car services

3.1. Estimation of the volume of consumption of car services per capita

Estimation of the volume of consumption of car services per unit of the total car fleet in India was made by GidMarket on the basis of the ratio of the volume of the car services market to the number of the total fleet of vehicles. The data presented does not include the cost of spare parts and consumables.

Consumption of car services in 2016-2017 shows ... The increase in demand for car services is associated with ... the economic situation, the realization of pent-up demand (...), which arose against the backdrop of a sharp decline in the level of real incomes of the population in 2015. In 2018-2019, the indicator ... to the level of 2016 At the end of 2019, consumption amounted to ... Rs./unit.

3.2. Market Saturation and Estimated Market Potential in India

The potential of the car service market in India is estimated by GidMarket experts to be no less than “plus” …% to the existing market volume, or more than … Rs. in 2019 prices. Achieving the potential of the market and its qualitative development is constrained by the low level of real incomes of the population, the unformed culture of applying for a comprehensive car service, passing scheduled technical inspections, and the preference to perform simple operations for servicing your own car on your own.

The main point of market growth is the complication of modern cars, due to which the share of motorists who prefer to maintain and repair their equipment on their own is steadily decreasing.

Also … the level of reaching the potential market capacity is possible by offering the market a service of a fundamentally new level: prompt diagnostics, high-quality repairs, professional recommendations, honesty and transparency of cost formation and at the same time maintaining a democratic level of prices, honesty and transparency in the formation of the final cost of the service. The transition of a comprehensive high-quality car service from the premium segment to a standard car service package.

Additional ways for the development of the auto service market will be recording through mobile applications, a comprehensive approach to solving the problem, and promoting scheduled inspections and repairs.
...

List of diagrams

Diagram 2. Dynamics of the volume of the car service market, 2015-2019, billion Rs.
Diagram 3. Market structure by types of services provided, 2019, %
Diagram 4. The structure of the provision of car services in India by Union Territories, %
Diagram 5. Dynamics of India's GDP, 2012-Q3 2020, % to the previous year
Chart 6. Expert forecasts for a decline in real GDP in India in 2020 (baseline/neutral scenario), %
Diagram 7. Monthly dynamics of the US dollar against the rupee, Rs. for 1 US dollar, 2015-Dec. 2020
Diagram 8. Dynamics of the population of India, million people, as of 01 Jan. 2012-2020
Diagram 9. Dynamics of real incomes of the population of India, % to the previous year, 2012-Q3 2020
Chart 10. Profitability before tax (profit of the reporting period) in the field of auto services in comparison with all sectors of the Indian economy, 2015-Jun. 2020,%
Diagram 11. Current liquidity (total coverage) in the field of car services for 2015-Jun. 2020, times
Diagram 12. Business activity (average term of receivables turnover) in the field of car services, for 2015-Jun. 2020, days days
Chart 13. Financial sustainability (security of working capital) in the field of auto services, in comparison with all sectors of the Indian economy, 2015-Jun. 2020, %
Diagram 14. Dynamics of the urban working-age population, 2015-2019, thousand people
Diagram 15. Dynamics of issued driver's licenses in India, 2015-2019, million people
Diagram 16. Dynamics of average per capita income of the population, 2015-2019, Rs.
Diagram 17. Shares of the largest competitors in the car service market in 2019, %
Diagram 18. Dynamics of the total revenue of the largest operators of the auto services market (TOP-5) in India, 2015-2019, %
Chart 19. The volume of consumption of car services per unit of automotive equipment in India, 2015-2019, thousand Rs./unit
Diagram 20. Criteria for choosing a car service, 2020, points
Diagram 21. Forecast of the volume of the car service market, 2020-2024 – under the scenario of one quarantine, billion Rs.
Diagram 22. Forecast of the volume of the auto services market, 2020-2024 – under the scenario of two quarantines, billion Rs.

List of tables

Table 1. STEP-analysis of factors influencing the car service market
Table 2. Auto Service Industry Gross Margin vs. All Industries in India, 2015-Jun 2020, %
Table 3. Absolute liquidity in the automotive services industry compared to all sectors of the Indian economy, 2015-Jun. 2020, times
Table 4. Sales channels
Table 5. Main companies participating in the car service market in 2019
Table 6. Basic information about participant No. 1 of the car services market
Table 7. Basic information about participant No. 2 of the car services market
Table 8. Basic information about participant No. 3 of the car services market
Table 9. Basic information about participant No. 4 of the car services market
Table 10. Basic information about participant No. 5 of the car services market
Table 11. Consumer price indices in the auto service market in India in 2015-Oct. 2020, %
Table 12. Average prices in the car service market by Union Territories, Oct. 2020, Rs./service
Table 13. Assessment of factors of investment attractiveness of the car service market
Table 14. Assessment of the impact of recent crises on the industry
Table 15. Analysis of the impact on the industry of the state aid proposed as of April 04.12.20,

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