Within the company's automotive technology business sector, the automotive aftermarket division is responsible for the supply, sales, and distribution of automotive parts for vehicle servicing, diagnostics equipment for workshops, i.e. testing equipment, technical information, training, and consulting, technical aftersales service for Bosch automotive products and systems. In addition, it is responsible for the Bosch Service workshop concepts. Each Bosch Service partner guarantees excellent quality in the workshop services they provide and high-quality vehicle maintenance.
Despite the market slowdown, the aftermarket division has registered robust growth not only in the previous fiscal but also in the first quarter of this year. K Ravi, vice-president, Automotive Aftermarket, says: “Last year we registered a 22 percent growth. The first two months of this year saw sales increase by 25 percent. I am confident that we will do well in the next three months, thanks to the forthcoming elections. There will be plenty of vehicle movement, resulting in an increase in parts requirement. During this time, we expect 15 percent growth. Due to the economic problems in the late 1990s, we had a bad phase up to 2004. From then on, we have had good growth. In 2005 we had 5.6 percent growth which jumped to 11 percent the next year and touched 13.9 percent in 2007.”
Elaborating further on the growth of aftermarket business, Ravi adds, “This year, our overall growth is about 25.3 percent in the aftermarket. Even if the market slumps in June-July after the elections, it will still end up with more than 10 percent. The growth is happening proportionately across the country. We are divided into four regions and four regional managers control the business in these regions. All of them are positive as regards double-digit growth.”
According to him, the growth as of December 2008 in various products were: diesel 47 percent (+15.9 percent); filtration 20 percent (+14.4 percent); spark plugs four percent (+17.2 percent); energy supply/starters four percent (+40.7 percent); lighting technology two percent (+24.9 percent); diagnostics three percent (+33.2 percent); comfort electronics one percent (+16.8 percent), batteries seven percent (+31.3 percent) and wiper systems 0.40 percent (+77.6 percent).
This commendable performance despite the downturn in the economy is the result of a team effort covering new product introduction, diagnostics, aftersales, logistics, marketing and exports. It is also due to an in-depth analysis of market trends in India and an acute understanding of consumer behaviour. Also the fact that Bosch is partnering itself successfully with wholesalers and workshops, bringing about a change in the way in which cars are maintained and serviced in India.
Fast-growing India network
Talking about Bosch Ltd’s sales and service network, Ravi says: “We have 583 first trade level partners, eight Bosch Diesel Centres, 258 Bosch Car Service Centres, 833 Bosch Diesel Workshops and 223 Bosch Auto Electrical Workshops. In Mumbai we have 32 Bosch Car Service workshops, seven in Chennai and 30 in Tamil Nadu. Likewise, in each district of Kerala, we have a Bosch Auto Electrical workshop. In fact, Kerala is the only State where we have presence in every district. We want to replicate the same in all the 576 districts in the country.”
Yeshwant Kumar PV, Country Manager, Sales – OE Services, says: “Last year, we grew by around 13 percent and this year too we are growing at a healthy rate. We are supplying parts to Tata Motors for its Nano (engine management system, starter motor, alternator, and the braking system). Besides the supply of fuel injection parts for diesel as well as petrol engines, we also supply filters for four-wheelers, tractors, trucks and even buses. Last year we did about Rs 43 crore worth of business. This year, we have targeted Rs 50 crore.”
Marketing the aftermarket business
The company markets a range of diagnostic products in India including emission testers, wheel aligners, wheel balancers, tyre changers, diesel pump test equipment, air-conditioner test equipment, scanning tools (like KTS), battery test equipment (load tester, battery charger), engine analysers, brake testing equipment, lifts and body repair equipment. Of this, demand for wheel aligners, balancers, tyre changers, scan tools and AC rechargers is particularly high in India.
Pushing products in an overall market downturn and convincing wholesalers and workshops to stock parts can prove to be a challenging task for most marketers. But Bosch seems to have its marketing plan all sorted out. According to S Srinivasa, in charge of channel management and development and respnsible for aftermarket product pricing and brand protection: "In the diagnostics products business, channels play a key role through the mantras of availability, affordability, acceptability and awareness."
Srinivasa explains: “In channels, we have broadly two classifications. The first trade level is basically customers with whom we have interaction and transaction, to whom we sell against certain pre-agreed commercial terms. The second trade channel is related to us because we are the ones who appoint the entire Bosch Service (BS) network, Bosch Car Service (BCS), semi-wholesalers and big retailers. They are independent bodies but on a selective basis we also engage around 5,000 to 6,000 of them into our fold and give them appointment, recognition, signage and some sort of performance-based incentive, whom we call as a stockist.”
Bosch has 150-odd big distributors across the country. “We have established our network after five to six years and it was not easy. The big or traditional distributors are exclusive to Bosch and they don’t deal with any other products. In the two-wheeler segment, because of the size of the business is small, you cannot afford to have exclusive distributors and they need to chug along with the other products which are not directly in competition with our products. So it is a non-exclusive entity. We really saw very good growth last year and we almost grew by more than 35 percent in the two-wheeler segment,” claims Srinivasa.
A number of new products for the two-wheeler segment are in place. “In addition to spark plugs, we have the entire range of lights starting from headlamps to the tail-lamps. Also clutch plates, brake pads, lube oil, belts etc. We also have auto electrical parts for three-wheelers. We are also focusing on the three-wheeler business. It holds good potential because it is more maintenance-prone due to
its high level of commercial activity and a tendency to overload vehicles. As a result,
repair requirements become more frequent,” says Srinivasa.
Doing business differently
The big business at present for Bosch, which has four manufacturing plants in India (Bangalore, Nashik, Naganathapura and Jaipur) is from the fuel injection segment. Filtration is another very big product basket. Srinivasa says, “In the auto electrical segment, we have a market share of 35 percent in the OE segment. In addition we have lights, brakes and lubes. In the lighting segment we have a full spectrum of products for trucks, passenger cars and multi-utility vehicles.”
The component major is also bringing about a change in the manner in which vehicle air-conditioners are serviced. According to Saravanan of the ACS Department, “The air-conditioners in cars and buses have to go for reconditioning at least once in a year which involves removal and refilling of new gas. Plus oil for lubrication and removal of accumulated dirt. The conventional process of doing this in India is manual but using our units, the whole service is done automatically. All you have to do is key in the air-conditioner model in the machine database, connect the two points emanating from the machine to the car and within half-an-hour the air-conditioner is serviced. As soon as the servicing is done, a printout shows exactly how much gas has been refilled, how much recovery of oil has been done and how much oil has been refilled. In European countries, after assessment of the air-conditioner, the gas can be refilled according to the customer’s budget.”
Clearly, the onus is on changing customer
and workshop perceptions on vehicle maintenance. K Ravi affirms: “Our job is to give good quality of spares and services to our customers all over the country. As most modern vehicles have become computers on wheels today, we have developed diagnostics for all vehicles around the world. After diagnosing the problem area, we eplace it with our genuine spare parts. We have over 12,000 part numbers in India and worldwide we have more than 200,000 part numbers.”
“We had targetted a Rs 1,000 crore turnover in 2010, but we have achieved that in 2008 itself. In Asia-Pacific, we are the number one in the Bosch world. In fact, we won the Champions Trophy in Asia-Pacific and we brought in the highest growth in terms of contribution to the Bosch world in the aftermarket division. But the greatest thrill was in reaching this Rs 1,000 crore turnover and it came from across the country,” Ravi concludes.