The rupees 55,000-crore automobile aftermarket industry has been going through a transition. Although, key players such as Mahindra & Mahindra and Carnation have moved out of the business; other hand, original equipment manufacturers (OEMs) such as Groupe PSA and Toyota are entering the business.
In between, the 12-year-old aftermarket service provider TVS Automobile Solutions Ltd (TVS ASL), in which the TVS group holds a 59.8 per cent stake, is trying to consolidate its position by building a strong technology solution and supply chain. The $175-million (around Rs 1,200 crore) company is aiming at around $500 million (Rs. 3,600 crores) in three years and plans to open one new franchisee every day in 2021-2022.
Five years before, the firm had gone in for a major rejig of its brand – myTVS – and last November it acquired Mahindra First Choice’s service business. Mahindra First Choice was a multi-brand car and two-wheeler service workshops and part of Mumbai-headquartered Mahindra & Mahindra secured a 2.76 per cent stake in TVS ASL.
With this incorporation, the MyTVS brand is the only organised pan-Indian aftermarket multi-brand network of this scale and size with 650 franchisees across 270 towns, said G Seinivasa Raghavan, managing director, TVS ASL.
By the end of 2021-22, it means to have around 1,000 outlets, of which 20 per cent would be company-owned.
“With that, we should be the largest in this part of the world,” said Raghavan, adding that TVS ASL currently services close to a million vehicles in its network and it will double it with the proposed growth. The company has also created a supply chain base by partnering with around 85 suppliers across the country and has set up 80 “fulfilment centres” to ensure that spares are available between two and 24 hours.
The physical formats are backed by new-age technologies. For example, the company partnered with Google to create a “Super Platform”, which will be set up in India by next month and will be scaled up to other parts of the world, including developed market such as Europe and neighbouring markets of Sri Lanka and Bangladesh.
Subsequently, TVS ASL has formed a digital ecosystem with tyre manufacturers, battery makers, and paint companies and parts producers. “From repair, we moved to break down and now we are moving to dull vehicle management,” said Raghavan, whose company created a digital catalogue that has more than 10 million parts and provides the choice to customers and franchisees.
The company of scale and technology has helped myTVS become price-competitive by 15-20 per cent, which not only attracts the retail customers, but also the OEMs. The company has already signed with two OEMs, Mitsubishi and Nissan, for a service partnership.
In India, nearly 60 per cent of vehicles are serviced outside the OEM service centres after the warranty period. Around 500,000 garages cater to a highly disjointed industry. So TVS ASL is banking on its technology and strong supply-chain for profitability. Raghavan benchmarks its interface with Swiggy, Ola and other applications.
As per India Ratings & Research, TVS ASL is well diversified on the supply side with its single-largest component supplier contributing less than 20 per cent of the total purchases.
It added that with the wholesale APD (auto parts business which the company calls “PartSmart”) business reaching a generous revenue level, the company is technologically integrating all its business, other than wholesale parts distribution.
This, the agency believes, is likely to drive the synergies between the different touchpoints in its retail distribution network and, thus, can potentially accelerate the shift from the unorganised to the organised aftermarket sector.
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