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A chance meeting, a brainwave and CarZ
Founded in 2008, car servicing company Carz, which has recorded annual revenue growth of 200%, plans to optimise its resources
By : Praveen Bose | Published : February 11, 2013
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A chance meeting, a brainwave and CarZ
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When Lenish Kumar Peter wants to have his sedan serviced, it’s not the dealer he approaches. Often, inconsistency in the quality of service by the dealer has led to his car’s problems remaining unresolved.

He now brings his car to CarZ, a multi-brand car service chain.

Madhu M S, whose Honda CRV has clocked about 1,00,000 km and needs a bit of an overhaul, says, “I am more happy with this place (CarZ), as it’s cleaner and I am allowed to see what exactly is going on with my car. It is not at the mercy of mechanics. Also, my house is just across the road.”

In most countries, growth in passenger cars has been closely followed by the development of independent service centres. Globally, only a third of cars go back to dealers after the expiry of the manufacturer warranty. The car servicing market has companies such as Carnation, promoted by Jagdish Khattar, former chairman and managing director of Maruti Suzuki. It also has TVS Group’s MyTVS and Mahindra First Choice.

While these companies are known names or have brand names backing them, CarZ has only its performance to rely on. “We have built a model that focuses on three core principles — great service, budget price and convenience,” says Vijay Gummadi, chief executive and co-founder.

“CarZ’s service centres are small, equipped to handle up to 20 cars a day. They are located in the vicinity of residential or commercial neighbourhoods. We provide a full range of electrical and mechanical repairs, accident repairs and wash and detailing services for all brands of vehicles, in addition to extended warranties and insurance renewals.”

Says Venu Donepudi, managing director and co-founder: “Our focus is on providing car repair with the expertise of your dealer and the comfort of your local mechanic.”

CarZ has stuck to its small size; this has helped the company optimise infrastructure and resources. Its bigger rivals, however, are said to be struggling to optimally utilise their facilities.

CarZ was founded by two US-based engineers, Gummadi and his cousin, Donepudi, in 2008. It commenced operations in 2010. After opening a branch each in 2009-10 and 2010-11 (both in Andhra Pradesh), it launched 15 outlets in 2011-12 across Andhra Pradesh, Karnataka, Tamil Nadu and Kerala. Now, the company is on a consolidation drive. So far, it has invested Rs 26 crore.

Since it started operations, the company has recorded revenue growth of about 200 per cent (compounded annual growth rate). By 2015, it projects this at about Rs 100 crore.

Dealers view this rapid growth with trepidation. For dealers, much of their income is accounted for by after-sales service. “Customer perception, costs, services and winning the consumer’s heart and mind are vital in this business. Word of mouth is very rapid. The problem is, no one is consistent. While one may be good, one may also be extremely bad,” said the owner of a 20-year-old authorised Maruti Suzuki service station, on condition of anonymity.

Says Abdul Majeed, partner and national automotive leader, PricewaterhouseCoopers: “Car owners’ concerns about going back to dealers usually relate to the quality of service, pricing and transparency.”

“This business model is just like that of a supermarket. It’s all about convenience and location.” If professionals took care of vehicles, even if one had to pay more, he/she got value for money, Majeed said.

Khattar says with barely one per cent of cars going to organised multi-brand networks, “There is ample scope for growth for all the players in the market.”

“OEMs (original equipment manufacturers) can focus on manufacturing. So, they don’t need to focus on after-sales service. As margins in sales are very thin, dealers make their money from after-sales service,” said a senior official at an automobile major.

“The challenge is of spare parts. When service centres need parts, they are asked to approach dealers. If they supply directly, we have to face the ire of dealers,” said another official at an automobile manufacturer.

 

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