INTERVIEW: Sanjay Nigam TVS Automobile Solutions' CEO
TVS Automobile Solutions' CEO speaks to Karthik Habout how he plans to drive growth in tough times, expand the network across India and abroad, and also why tying up with technology partners makes business sense for the company.
How do you see TVS Automobile Solutions growing in the next few years?
I think this is the beginning of a very exciting phase for a couple of reasons. If you look at the new car sales, there’s a slowdown globally. For us, that brings in a tremendous opportunity in our business. Strategically, we are preparing ourselves to be a company which straddles the entire spectrum of the automobile aftermarket. For me, 2014-15 will be about strengthening ourselves. We have an insurance vertical, a workshop vertical where there are 76 workshops at present, and we’ll open 20-25 more before the end of the year. We have authorised workshops that are both branded by an OEM (for Tata Motors) and multi-brand. Our intention is to grow both. We are in dialogue with OEMs to set up their authorised workshops, especially the premium brands. We also have an active roadside assistance team with 4,000 service technicians. Finally, a tools and garage equipments vertical under which we help set up workshops.Tyre repair is an area where we have maximum customer interface. We are trying to bring in the state-of-the-art technology in this front by tying up with an American company that will bring in the technology. We may consider setting up a quick repair or service check bay at some of the petrol pumps run by our parent company. That can be supported by a hub-and- spoke model with a larger workshop nearby. We are also looking at telematics, again tying up with American business. Car tracking, geo fencing and engine immobilisers are basic. We are getting into more evolved technology where we use telematics to prevent pilferage of fuel. We can add an instrument that will, in real-time, monitor fuel levels. When it falls suddenly, you can show that it is being pilfered. Temperature control can also be done via telematics. We’re already doing pilot projects. Going forward, there will be huge growth in this area. We are creating the necessary infrastructure for all of this. Our servers will be based in the US and we are building call centres. We are assembling the hardware in Bangalore with the technology coming from the US. We should come out with this in 2-3 months. We will take a case-by-case basis and customise the hardware and software, according to each customer. We are also looking to tie up with OEMs to come up with a model where we will provide additional warranty from the launch of the car. The OEM will outsource the servicing to our outlets. What excites me most is not the individual businesses. The challenge was to create synergy between all of these individual businesses.
Given the increasing number of players in the organised multi-brand service segment, how do you plan to position MyTVS?
There are two or three areas where I’d differentiate things. Some players have come up in the belief that the bigger they are, the more viable they will be. I think sometimes being smaller helps in spreading your reach. If you had a huge workshop 20km away, not many would go there. Too many workshops also reduce the catchment area and wooing the customer can’t happen without proximity. Keeping our pricing competitive is another thing I look at. We are also tying up with a lot of fleet operators and manufacturers. The Indian customer is usually very thorough. He/she knows what is happening globally. So we are investing in technology, training people, offering products that are globally the best. The challenge is to get the pricing right.
One of the biggest players in this segment is a component manufacturer. How would you tackle such competition?
If you go to a dealership, you are mandated to buy only OEM parts. In our multi-brand stores, we sell both OEM and OES parts. We have warehouses to help us do this. We tie up directly with parts manufacturers. OES parts are comparatively less expensive. As long as we are satisfied with the quality of these parts, we pass on the margin or price advantage to the customer.
Given how quickly the roadside garages are getting obsolete, do you think the growth of the organised sector is fast enough to close the gap?
We want to grow much faster. One of the biggest roadblocks for premium car sellers is that their workshop network isn’t wide enough to penetrate Tier 2 cities. So it’s right to think that the sale of new cars is restricted by the lack of this network. That is where we come in. We are in talks with OEMs to dedicate some bays in our service shops for them. That’s how we are not running into any contradictions with our multi-brand stores. Just like our agreement with Tata Motors, we can do it for others too. It will indirectly increase the sales of new cars. There is no general formula here. No amount of spreadsheets can guarantee any success here. I try to spend a lot of time on the field to find a very practical solution.
Is finding quality workorce tough in this environment?
Finding people with enough skillsets is a huge problem. There is a lot of poaching in this industry. We’ve got a training institute in Madurai. We try and get people and train them from scratch because poaching means higher salaries. When it is an authorised service centre, the OEM takes care of the training.
How has the foray into Gujarat been for you?
We have tied up with the promoters of the Gujarat-based ABC Bearings Group for expanding its multi-brand car servicing venture. We inaugurated our service centres in Vadodara in December last year. Our earlier plan was to get into Ahmedabad and Surat too. But we would rather concentrate in one city and establish ourselves with this hub-and-spoke model, rather than open centres in Ahmedabad and Surat because the economies of scale don’t work. We would like to have at least two or three outlets in Vadodara before we go to other cities. For me, the local strategy is more important than a pan-India strategy.
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