Research-based Consultancy for B2B and technology Markets BIRD 1 Study to Size the Counterfeit...

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Research-based Consultancy for B2B and technology Markets

BIRD

Study to Size the Counterfeit Market for Auto Components in India

July 2006

Prepared For: Prepared By: Business & Industrial Division, IMRB International

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BIRDReport flow

• Background of the Study– Need for Research– Definition of Counterfeits– Study Objectives– Research Methodology & Sampling

• Approach to determine counterfeit market size in India– Estimation of vehicle population – Total expenditure on servicing– Size of counterfeit component market in India

• State transport authorities • Profile of respondents met

– Private vehicle owners– Commercial vehicle owners

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BIRDReport flow (contd….)

• Detailed information on vehicle servicing– Amount spent on last service– Choice of service destination– Break-up of amount spent in the last service

• Information on channel members met– General profile– Key counterfeit hubs in India– Stocking of counterfeits

• Attitude towards auto component replacement• Attitude towards counterfeit components• Annexure

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BIRDBackground

• India has been known for its large ‘unorganized’ market which

exists across industry segments

• A large part of this market caters to not just unbranded but also

counterfeit products

• Auto components is one such segment where it is estimated that a

large proportion of the market is invaded by counterfeit products

• Such low quality products have a negative impact on the brand

equity of automobile & automotive component manufacturers

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BIRDNeed for Research

• Therefore, Indian automobile manufacturers wanted to understand

and size the counterfeit market to:– Develop intervention to curb this market

– Provide quality products to their consumers

– Curb the negative impact on their brands

– Curb the revenue losses suffered due to this market

• Under the aegis of Society of Indian Automobile Manufacturers

(SIAM), automobile majors formed a task force to address this

need

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BIRD

Before outlining the methodology used it is imperative to understand how we defined counterfeits for the purpose of this study…

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BIRDSeveral products from ‘unorganized’ sector

exist in the market today…

Type of Part Examples

Genuine Imports Bosch spark plugs not meant for Indian models

Genuine Discards Parts discarded from industrial products, ocean vessels, railway wagons etc

Used Parts Parts refurbished and reused in vehicles by mechanics

Unbranded Parts Parts with no markings or brand names

Branded Duplicates 1. Brands in original or copied packaging of OEM2. Brands with similar sounding names like ‘Assahi’ vs. Asahi3. Parts with fake markings for ISI/BIS/EN etc

Cross Category Duplicates

Fenner clutch levers when Fenner does not make clutch levers

These are the ones we have focused

on for purpose of this research

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BIRD

Research Objectives

Primary Objective of the study was to size the counterfeit market for auto components in India

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BIRDObjectives of the research

• Estimate the total repair and servicing aftermarket in India: Authorized Vs other service stations– By vehicle category– Br geographies– By age of the vehicle

• Estimate the total market of counterfeit auto components – By vehicle category

• Understand the buying behavior of vehicle owners– Reasons for choice of a service station– Number of trips to a service station per annum – Level of influence of the channel member– Brand of auto component purchased most often

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BIRDObjectives of the research (contd…)

• Gain an understanding of the market from the channel members– Motivators for selling counterfeits– Key counterfeit hubs in India– Most counterfeited components

• Map the attitude of owners towards vehicle servicing and counterfeit components– Awareness about counterfeit components– Knowledge about the damages caused by such components– Actions to curb this menace

• Suggestions and Recommendations– To reduce the menace caused by counterfeit auto components

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BIRD

Research Methodology & Sampling

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BIRDKey stakeholders covered

• Supply side: Automobile and auto-component manufacturers and associations

• Demand side: Private and commercial vehicle owners– Private vehicle owners

• Two and four-wheeler owners

– Commercial vehicle owners• HCV, LCV, Three-wheeler, buses and taxies

• Auto component channel members – Distributors– Retailers/Wholesalers– Roadside mechanic– Authorized service stations– Other service stations

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BIRDInformation gathered from each stakeholder

Supply Side:

1. Automobile Component Mfrs

2. MORTH/RTO/Associations

Supply Side:

1. Automobile Component Mfrs

2. MORTH/RTO/Associations

1. Registered vehicle population

2. Volumes & value of auto components in the after market

Demand Side:

1. Private Vehicle Owners

2. Commercial Vehicle Owners

Demand Side:

1. Private Vehicle Owners

2. Commercial Vehicle Owners

1. Components Bought & their details

2. Purchase Cycle for Parts

3. Motivators & Barriers to Purchase Counterfeits

Channel:

1. Distributors, Dealers & Retailers

2. Mechanics

3. Service Stations

Channel:

1. Distributors, Dealers & Retailers

2. Mechanics

3. Service Stations

1. Type of brands stocked

2. Key components being counterfeited

3. Motivators & Barriers to sell counterfeits

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BIRD

Therefore, the research methodology involved meeting each of these stakeholders to gauge extent of counterfeiting…

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BIRDModule I – Supply Side

• Desk Research– Collation of information on industry available in public domain like

publications, websites etc

– Product portfolio of large organized auto component manufacturers

– Collation of information on initiatives taken by automobile and auto component manufacturers to curb counterfeit menace

• Expert Interviews: Depth Interviews with the following– Associations & Experts like SIAM, ACMA, Ministry of Road Transport &

Highways (MORTH) etc

– Manufacturers of Automobiles & Auto components

– State Transport Authorities

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BIRDModule I – Sample size covered

These interviews helped us understand:

• Fast moving & frequently replaced parts

• Universe of automobiles (2-wheeler, 4-wheeler etc)

• Size of organized auto component market

• Expert opinion on size of counterfeit market & its drivers

Segment SampleAutomobile Manufacturers 10

Associations & Experts (SIAM, ACMA, MORTH etc) 2

State Transport Authorities Workshops 2

OEM Auto Component Manufacturers 10

Total 24

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BIRDModule II – Demand Side

• In this module, both private and commercial vehicle owners were met across various identified locations mentioned below:-

Population Classification CitiesMore than 40 lakhs Metros Delhi, Mumbai, Chennai and Kolkata

10 – 40 lakhs Non-metros Pune, Lucknow, Ludhiana and Kochi

5 – 10 lakhs Other NM Chandigarh, Trichy, Guwahati and Jamnagar

1 – 5 lakhs Small Towns Chapra and Gulbarga

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BIRDModule II – Demand Side

• Private and commercial vehicle owners were grouped by type of vehicle owned

• Face to face structured interviews were conducted with:-– Private Vehicle Drivers & Owners

• Cars (Across various segments)• Motorcycles• Scooters

– Commercial Vehicle Drivers & Owners• Trucks• Buses• Three Wheelers• Light Commercial Vehicles• Taxis

– Four Wheeler

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BIRDModule II – Demand Side: Segment of Private

cars covered during the survey

Vehicle Category Type of Vehicles

Segment A Maruti 800, Premier Padmini

Segment B Santro, Zen, Wagon R, Alto, Indica, Uno

Segment C Esteem, Indigo, Palio, Ikon, Getz

Segment D Opel Astra, Honda City, Lancer, Optra etc

Segment E Mercedes, BMW etc

MUVs/SUVs Tata Safari, Tata Sumo, Honda CRV, Chevrolet Tavera, Maruti Omni

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BIRDSampling for Vehicle Owners – Module II

• As service related information was to be gathered only those vehicle owners were met whose vehicles were no longer under original warranty

• Thus, interviews were conducted with the following vehicle owners:– Private vehicles >3 years age

• Vehicle owner

• Vehicle Driver

– Commercial Vehicles > 1 years age • Fleet Owners

• Vehicle Drivers

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BIRDModule III – Auto component channel members

• The channel members covered during the study are:– Distributor– Wholesaler/Retailer– Authorized service station– Other service station– Roadside mechanics

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BIRD2321 private vehicle owners were met across

14 cities spread across 11 Indian states

S m a ll6 %

O th e r N M

1 2 %

N o n -m e tr o3 3 %

M e tr o4 9 %

Distribution of sample by town class

Base: 2321 private vehicle owners

1 6 % 1 3 % 2 0 % 2 0 % 1 3 %

5 8 %

2 8 %2 9 %3 4 %3 3 %

5 1 % 5 3 %5 1 % 5 2 %

2 9 %

T o t a l M e t r o N o nm e t r o s

O t h e r N M S m a ll

O n ly 2 - w h e e le r O n ly 4 - w h e e le r B o t h

Distribution of sample by vehicle ownership

• Equal percentage of respondents representing metro and non metro (including Small towns) locations across the country were covered

• Over 51% of all private vehicle owners met owned a four-wheeler only as compared to 33% owning only a two-wheeler – Around 16% of the respondents met owned both vehicle types

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HCV20%

3-wheeler

19%

Taxis22% LCV

20%

Buses19%

N o n - m e t r o2 8 %

S m a l l5 %O t h e r N M

9 %

M e t r o5 8 %

1089 commercial vehicle owners were met covering over 2390 commercial vehicles of all types


Distribution of commercial vehicle owners by vehicle type

• Over 58% of the commercial vehicle owners were covered in metropolitan cities– About 28% belonged to non-metros

– Another 9% belonged to other NM and rest 5% to small towns

• Equal representation of owners owning different types of commercial vehicles in the sample covered– HCVs and taxis were further divided into categories based on the axle load and care segment respectively

Base: 1089 commercial vehicle owners

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Broad approach used for determination of counterfeit components market size

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BIRD

Total expenditure on vehicle servicing in India- Private vehicles

- Commercial vehicles

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BIRDAssumptions for calculation of vehicle

population• Total number of registered vehicles in India till 2003 were collected

from MORTH• Calculation of number of running vehicles

– Private 2 wheelers & 4 wheelers• 80% of the vehicles purchased in last 20 years are still running

• 10% of the vehicles registered before that are still running

• Based on recent data estimates 10% of the 4 wheelers running are taxies (IMRB in-house data)

• Almost 34 lakh 4 wheeler purchased in last two years not considered in the calculation

– Commercial vehicles• 80% of the vehicles purchased in last 10 years are still running

• 10% of the vehicles registered before that are still running

• The number of running vehicles thus are…

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BIRD

All Nos in Thousands

Estimated number of running vehicles in India - By Geography

North South East WestTransport

Multi-axled/ articulated trucks and lorries

230 219 230 198 878

LMV Goods 98 185 30 177 491Buses 62 65 36 46 209Taxis 92 210 108 126 536

LMV Passenger 94 338 86 311 829Total 576 1018 491 858 2943

Non-transportTwo-wheeler total 9339 6866 2930 8121 27255

Scooters 6724 2197 1172 3654 13747Motorcycles 2615 4669 1758 4466 13508Cars/Jeeps 1846 1324 671 1272 5113Omni buses 8 44 1 5 58

Total 11192 8190 3602 9393 32376

Total

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BIRD

Combined after-sales market for repair in India for both private and commercial vehicles is in excess of Rs.26000 crores

S e g D0 . 0 0 4 %

M o to r c y c l e s3 7 % S e g B & C

1 4 %

S e g A1 3 %

S c o o te r s 3 6 %

Private vehicles* = Rs.8542 crores

*Note: Universe estimates for Segment E cars is not available

** Universe estimates of three-wheelers is not available

L C V2 0 %

T a x i e s1 5 %

B u s e s1 9 %

H C V4 6 %

Commercial** vehicles = Rs.17970 crores

Total service aftermarket – By vehicle type

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BIRD

North, South and Western regions have almost equal share in the total service aftermarket of private vehicles however Eastern region is lagging far behind

E a s t1 3 %

S o u th2 8 %

W e s t2 9 %

N o r th3 0 %

Private vehicles = Rs.8542 crores

Total service aftermarket – By geographies

• Only 13% of the total service aftermarket is contributed by the Eastern region– This can be as a result of low automobile sales in the east

• Close to 30% of the service aftermarket is contributed by other 3 regions of the country

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BIRD

Around 60% of the total aftermarket service expenditure for private vehicles is on components as compared to 48% in case of commercial vehicles

L a b o u r1 8 % C o n s u m a b l e s

2 2 %

C o m p o n e n ts6 0 %


L a b o u r2 0 %

C o n s u m a b l e s3 2 %

C o m p o n e n ts4 8 %

Commercial vehicles = Rs.17970 crores

Break-up of aftermarket service – By vehicle ownership

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BIRDBreak-up of aftermarket service expenditure by

vehicle type

5 9 % 5 7 %6 3 % 6 3 %

5 7 %4 6 % 4 8 % 5 0 % 4 6 %

1 9 % 1 9 %1 8 % 1 7 %

1 5 %

1 9 % 2 1 % 2 1 %2 2 %

2 3 % 2 4 % 1 9 % 1 9 %2 8 %

3 4 % 3 1 % 2 9 % 3 2 %

S c o o t e r M o t o r c y c le S e g A S e g B & C S e g D H C V L C V B u s e s T a x ie s

C o m p o n e n t s L a b o u r C o n s u m a b l e s

Private vehicles Commercial vehicles

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BIRD

Thus, combined expenditure on aftermarket component purchase for both private and commercial owners is more than Rs.13500 crores

S e g D 0 . 0 0 4 %

M o to r c y c l e s3 6 %

S e g B & C1 4 %

S e g A1 4 %

S c o o te r s3 6 %


L C V2 0 % T a x i e s

1 4 %

B u s e s2 0 %

H C V4 6 %


Total expenditure on components – By vehicle type

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BIRD

At the same time share of authorized stations among private vehicle owners is around 22% as compared to 15% of commercial vehicles

O th e r s ta ti o n s7 8 %

A u th o r i z e d s ta ti o n s

2 2 %


O th e r s ta ti o n s8 5 %

A u th o r i z e d s ta ti o n s

1 5 %


Total expenditure on components – By vehicle ownership & service destination

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BIRD

No major variation across regions for private vehicle owners in choice of service station for component purchase

2 1 % 2 7 % 2 5 %1 7 %

7 9 % 7 3 % 7 5 %8 3 %

N o r t h E a s t W e s t S o u t h

A u t h o r i s e d s e r v i c e s t a t i o n O t h e r s e r v i c e s t a t i o n s

Private vehicles

• The share of authorized service stations across regions is in the range of 17% to 27%– Highest share of 27% is in the eastern region– Lowest share of 17% is in the southern region– In the case of northern region it is close to 21% and about 25% in the case of western region

Total expenditure on components – By geography

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BIRDBreak-up of component expenditure in authorized

vis-à-vis other service stations – By vehicle type

1 1 % 1 6 %2 8 %

5 4 %6 5 %

1 5 % 1 0 % 1 5 %2 2 %

8 8 % 8 3 %7 2 %

4 6 %3 5 %

8 5 % 9 0 % 8 5 %7 8 %

S c o o te r M o to r c y c le s S e g A S e g B & C S e g D H C V L C V B u s e s T a x ie s

A u t h o r i s e d s e r v i c e s t a t i o n O t h e r s e r v i c e s t a t i o n s

Private vehicles Commercial vehicles

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BIRD

Counterfeit auto components market in India- Private vehicles


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BIRDDefinition of counterfeits?

• Counterfeit components are the illicit duplicates of genuine

components being manufactured by unorganized sector players

illegally

• Counterfeit manufacturers do not pay any:

– Excise duties

– Sales tax/VAT

• Cater to the after market replacement demand across the country

• They infringe the IPR of organized sector component manufacturers

• Have limited capital and technological knowledge

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BIRDAssumptions used for estimation of counterfeit

component market

• Vehicles going to Authorized service stations buy only genuine components

• It is assumed that private vehicles in first three years and commercial vehicles in

the first year are under warranty and/or free service contract and hence, usually

do not visit unauthorized service station (this was also used as the pre condition

for interviewing)

• A user with similar running habits and having vehicle of same age would be

spending similar amount on maintenance

• A user will be purchasing similar brand of auto components each time he visits a

service station of his choice

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BIRD



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BIRDCase Study: Counterfeit auto component

market size estimation for scooters in IndiaTotal expenditure on vehicle repair by private vehicle

owners in the last service (normal or accidental)

Percentage break-up on Components vs. Servicing

% break-up at Unauthorized Service Stations (non OEM approved) vs. Authorized

Total number of trips to any service station (Unauthorized or authorized) by vehicle owner per annum

Market Size for Counterfeit = % Vehicles serviced at unauthorized service stations x Average spend on components x Estimated spent on counterfeits x Total number of trips/annum x Vehicle Population


Likelihood of buying a genuine component Vs a counterfeit

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BIRD Expenditure per trip on service by scooter

owners – Authorized Vs Other service stations

Components

Labour

Consumables

Authorized service stations Other service stations

Rs. 369

Rs. 154

Rs. 112

Rs. 338

Rs. 97

Rs. 125

Rs. 635 Rs. 542Source: IMRB research

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BIRDPercentage of scooter owners visiting

Authorized Vs Other service stations

1 0 % 1 1 % 4 %1 4 % 9 %

9 0 % 8 9 % 9 6 %8 6 % 9 1 %

T o ta l N o r th E a s t W e s t S o u th

A u t h o r i s e d s e r v i c e s t a t i o n N o n - a u t h o r i s e d s e r v i c e s t a t i o n s

• In case of scooters, only 10% of the vehicles were taken to company authorized service station in the last service– Highest percentage of 14% being in West followed by 11% in North– Only 4% of the scooter owners in the East took their vehicle to company authorized service station for last repair

• Scooter owners preference to other service stations is clearly highlighted by the above figures

Source: IMRB research

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BIRDTotal number of trips to service station in a

year - Authorized Vs Other service stations

3 . 63 . 2

5

3 . 3

4 . 44 . 1

4 . 4 4 . 3

3 . 4

4 . 2

T o ta l N o r th E a s t W e s t S o u th


Observation: Not only the owner buying components from un-authorized service stations

makes additional trips but also spend 3% higher on components in a typical years!

Source: IMRB research

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BIRDLikelihood of buying a genuine component

Statement describing the type of component purchased Code

A genuine (original/certified by the manufacturer) component was refitted such as Maruti Genuine Parts (MGP) in case of Maruti

1

A duplicate/refurbished/local component was fitted 2

A few were genuine components and rest were local/other brands 3

I am not too sure if the original/genuine component was fitted 4

• Respondent was asked to describe the component fitted in the last service

• The following statements were exposed to the respondent:

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BIRDWeight-age given to each statement in order to

determine the market of counterfeit components

Statement describing the type of component purchasedScenario Analysis

Lower Realistic Higher

A genuine (original/certified by the manufacturer) component was refitted 0% 25% 50%

A duplicate/refurbished/local component was fitted 100% 35% 100%

A few were genuine components and rest were local/other brands 50% 50% 50%

I am not too sure if the original/genuine component was fitted 100% 100% 100%

• Scenario analysis: The following 3 scenarios have been developed based on variation in weight-ages:– Higher estimate– Realistic estimate– Lower estimate

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BIRD…and the counterfeit market is about …

C F S h a r e o f t o t a l A f t e r m a r k e t ( R e a l i s t i c e s t i m a t e )

R s . 1 8 0 9 C r

G e n u i n e M a r k e t ,

5 9 %

C F S h a r e ,

4 1 %

C F S h a r e o f n o n A u t h o r i z e d A f t e r m a r k e tR s . 1 6 2 8 C r

G e n u i n e M a r k e t ,

3 5 %C F

S h a r e , 6 5 %

The counterfeit market for scooters could be anything between 40-60% of the total aftermarket i.e. Rs. 746 -1060 Crores

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BIRDCounterfeit components constitute about 35% -

51% of private vehicle components after market

Lower Realistic Higher Lower Realistic Higher

2 Wheelers Scooter 1809 611 746 1061 34% 41% 59%Motorcycle 1819 550 666 1008 30% 37% 55%

CarsA 690 140 207 299 20% 30% 43%B+C 733 80 129 199 11% 18% 27%D 23 2 3 5 8% 14% 21%

EUniverse estimates

not available

5074 1383 1751 2572 27% 35% 51%

Total Component Aftermarket (in

Rs. Crore)

Vehicles type

Total

Demand Estimation for CF components

CF Market (in Rs. Crore) % of market that is CF

The counterfeit market can be anywhere between Rs 1750 – 2572 crores which constitutes around 35% - 51% of the total component aftermarket

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BIRD



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BIRD

Almost similar methodology was used for computation of counterfeit market for commercial vehicles

Average annual expenditure on vehicle repair by commercial vehicle owners (normal or accidental)



Market Size for Counterfeit = % Vehicles serviced at unauthorized service stations x Average spend on components x Estimated spent on counterfeits x

Vehicle Population

Market Size for Counterfeit = % Vehicles serviced at unauthorized service stations x Average spend on components x Estimated spent on counterfeits x

Vehicle Population


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BIRDOnly difference was capture of monthly service

expenditure against amount spent on the last service

• All the assumptions specified earlier for computation of counterfeit components market of private vehicles are applicable in the case of commercial vehicles also

• Average monthly expenditure on service was captured and annual maintenance expenditure was calculated for:

– Authorized service station users

– Non-authorized service stations

• Respondents were then asked to recall last few component purchases and give an approximate break-up of amount spent on the following brand of components

– OEM approved genuine parts

– Other brands

– Local brands

– Duplicate brands

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BIRDWeight-age given to each component brand for

determination of counterfeit market

Brand of auto component purchasedScenario Analysis

Lower Realistic Higher

OEM approved genuine parts 0% 25% 25%

Other brands 50% 50% 100%

Local brands 50% 50% 100%

Duplicate brands 100% 100% 100%

• Scenario analysis: The following 3 scenarios have been developed again:– Higher estimate– Realistic estimate– Lower estimate

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BIRDIn case of commercial vehicles, counterfeit components

account for almost 1/3rd of the total component aftermarket!

The counterfeit market can be anywhere between Rs 2644 – 3750 crores which constitutes around 31% - 44% of the total component aftermarket of commercial vehicles


CVsHCV 3852 682 1202 1689 18% 31% 44%

LCV (p) 1740 323 571 815 19% 33% 47%Private Buses

1692 258 498 713 15% 29% 42%

Taxies 1229 228 373 533 19% 30% 43%8513 1491 2644 3750 18% 31% 44%


Rs. Crore)

Vehicles type

Total



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BIRD

The counterfeit component market in India could be contributing more than 1/3rd but less that half of the total aftermarket component sales

The counterfeit market can be anywhere between Rs 4395 – 6322 crores which constitutes around 32% - 47% of the total component aftermarket !


2 Wheelers Scooter 1809 611 746 1061 34% 41% 59%Motorcycle 1819 550 666 1008 30% 37% 55%

CarsA 690 140 207 299 20% 30% 43%B+C 733 80 129 199 11% 18% 27%D 23 2 3 5 8% 14% 21%

CVsHCV 3852 682 1202 1689 18% 31% 44%

LCV (p) 1740 323 571 815 19% 33% 47%Private Buses

1692 258 498 713 15% 29% 42%

Taxies 1229 228 373 533 19% 30% 43%13587 2874 4395 6322 21% 32% 47%


Rs. Crore)

Vehicles type

Total



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BIRD

• Size of auto components industry in India : Rs.38200 crores (approx)

• Share of OE sales and exports ~ Rs. 28000 crores (approx)

• Share of replacement/after market ~ Rs. 12000 crores (approx)

– 30% of total replacement market ~ Rs 3600 crores

– 40% of total replacement market ~ Rs. 4800 crores

• So according to the experts, the market of counterfeit components in India

should be somewhere between

Rs. 3600 to Rs. 4800 crores• The primary research estimates are slightly higher probably because older

vehicles are not going to authorized service stations

Also according to experts, counterfeit components should constitute not more than 30%-40% of the total replacement market in India Source: Depth Interviews

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BIRDFactors causing high penetration of counterfeit

components in the replacement market

• Higher margins from counterfeit components– Margins can be as high as 40% – 50% in case of some brands– No pressure on the margins in future

• Short supply of OE components– Irregular supply of components– Higher turnaround time

• Aggressive pricing policy of the organized sector– Price difference can be as high as 70% as counterfeit manufacturers evade

government taxes and use inferior material– Mechanics and garages also gain as a result of selling counterfeit and earning

higher margins

• Lack of awareness among customers– Inability of customers to differentiate– Lack of education among the customers

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BIRDFactors causing high penetration of counterfeit

components in the replacement market (contd)

• High trust placed on other service stations– Blind trust on other service stations who tend to push counterfeit components

• In case of commercial vehicles, lack of options available on highways supplying genuine components– Commercial vehicle owners have no option but to trust their drivers about the

brand of component purchased

• Easy availability of cheap scrap – Partially destroyed components rejected by quality team of the OEM– In case of commercial vehicles, scrap sales from STC and other government

institutions through auction

• Availability of second hand high quality printing presses – Easy to copy any type of packaging

• Inadequate government regulations and norms

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State Transport authorities – Are counterfeits entering institutional sales also?

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BIRDIt seems that even state transport authorities are not

totally shielded from counterfeit components

State Transport Authorities

Auto component/ Automobile manufacturers

ASRTU (Association of State Road Transport

Undertakings)

70 – 80% 20 – 30%

• Components are broadly divided into 2 categories– CFT : Critical function and safety related– NCFT: Non-critical function related

• The former type are sourced directly from the automobile/auto component manufacturer– Latter is sourced from vendors chosen by ASRTU on rate contracts– ASRTU has fixed norms for choosing the vendor

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BIRD

In case a commercial vehicle breaks down on a highway, the driver has the authority to purchase the component…the money can be taken from conductor

• Purchase process of components– Through tenders for 18 month period

• Includes 6 month buffer stock

– Monthly delivery of components– Random checks on components to check the quality of material– In case of non-availability of components the regional spares in-charge has

the authority to arrange for components from outside• Generally it happens in 1-2% of cases and counterfeit components can enter in

such cases

– In case of a sudden breakdown the driver can purchase the components from outside and show the bill to reimburse expenses

• Although a mobile van facility is most often

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BIRD

Profile of the respondents 1. Private Vehicle Owners - Two-wheeler owners - Four wheeler owners

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BIRDMotorcycles contribute to over 54% of the total two-

wheeler vehicle ownership…with scooters having the rest 46% share

S c o o t e r4 6 %

M o t o r c y c le s

5 4 %

Base: 1288 two-wheelers

• For the purpose of the study:– All types of scooters, scooterettes were clubbed under one broad head as scooters– Mopeds were not covered

• Share of first hand and second hand ownership is almost similar in the case of scooters as well as motorcycles

Distribution of sample by two-wheeler segment

Distribution of sample by ownership type

F ir s t h a n d8 0 %

S e c o nd h a n d

2 0 %

F ir s t h a n d8 6 %

S e c o nd h a n d

1 4 %

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BIRDThis is because in recent past, the share of

motorcycles in the two-wheeler segment has increased substantially

1 0 %

2 8 %

2 3 %

1 6 %

7 %

1 6 %

2 5 %

1 3 %

7 %4 % 5 %

4 6 %

A f t e r 2 0 0 2 2 0 0 0 - 0 2 1 9 9 7 - 9 9 1 9 9 4 - 9 6 9 1 - 9 3 B e fo r e 1 9 9 1

S c o o t e r

M o t o r c y c le


• In the last 5 year period, the ownership of motorcycles has overtaken the ownership of scooters by a huge margin – In 2000-02 period, the ownership of motorcycles was more than 150% of the scoter ownership

– After 2002 the percentage difference has increased to more than 250%

• The findings are in line with the change in trends in the last 5 year period in the automotive two-wheeler industry

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BIRDAs anticipated average age of the primary user of

scooter is much higher than a motorcycle user

3 7 3 6 3 73 9

3 7

3 2 3 2 3 2 3 33 1

T o t a l M e t r o N o n - m e t r o s O t h e r N M S m a l l

S c o o t e r M o t r o c y c le s

• Motorcycles are a vehicle for the young. This statement is vindicated by the fact that:– Average age of the primary user of scooter is 37 years as compared to just 32 years in the case of motorcycle– The trend is similar across different town classes

• Can age of the primary user have some significant impact on the type and source of auto component purchased. We will try to find it out during the course of this presentation?


69


BIRD

As a result average distance travelled by motorcycle users per weekday is significantly higher as compared to scooter users….

2 7 . 43 0 . 8

2 5 . 92 4 . 2

1 9 . 8

3 3 . 83 5 . 9

3 0 . 9

4 2 . 3

2 2 . 3

T o t a l M e t r o N o n - m e t r o O t h e r N M S m a l l

S c o o te r s

M o to r c y c l e s

• Average distance covered by a scooter per weekday across locations is 27kms/day but in case of motorcycles it jumps to 34kms/day

– The average distance covered by a scooter is highest in case of metro cities at 31kms/day and lowest in case of Small cities at 20 kms/day

– In case of motorcycles the average distance covered is highest in case of other NM cities at 42kms/day and lowest in case of small cities at 22 kms/day


70


BIRD…also on weekends motorcycles cover higher

distance as compared to scooters

2 5 . 3 2 5 . 52 8 . 1

2 3 . 4

1 4 . 9

2 9 . 5 2 9 . 7 2 9 . 7

3 8 . 4

1 6 . 2


S c o o te r s


• Average distance covered by a scooter per day on weekends across locations is 25kms/day but in case of motorcycles it jumps to 30kms/day

– The average distance covered by a scooter is highest in case of non-metro cities at 28kms/day and lowest in case of small cities at 15kms/day

– In case of motorcycles the average distance covered is highest in case of other NM cities at 38kms/day and lowest in case of small cities at 16 kms/day


71


BIRD


72


BIRDFair representation of various four-wheeler

segments in the sample achieved

E2 %

B2 6 %

D1 0 %

M U V / S U V1 6 %

C2 2 %

A2 4 %

Base: 1659 four--wheelers

S m a l l3 %

O t h e r N M

1 3 %

M e t r o5 0 %

N o n -m e t r o3 4 %

Distribution of sample by four-wheeler segment

Distribution of sample by city type

• Segment A, B and C constituted over 70% of the sample

– 10% of the vehicles covered belonged to Segment D

– 16% of the vehicles belonged to SUV/MUV segment and rest 2% of the vehicles belonged to Segment E

• Over 50% of all four-wheelers covered belonged to Metro cities and 34% to Non-metros

73


BIRD

Weekend travel in case of four-wheelers is significantly higher as compared to travel on weekdays….except in small cities

2 6

3 1

2 1 2 2

3 73 5

3 7

1 9

M e t r o N o n - m e t r o O t h e r N M S m a l l

W e e k d a y

W e e k e n d


• In case of metros, average distance covered by a four-wheeler per weekday is 26kms as compared to 37kms in case of weekends

• In non-metros, average distance covered per weekday is 31 kms as compared to 35 in case of weekends

• In Other NM cities, weekday travel is at 21 kms/day compared to 37kms/day on weekends

• In small cities, weekday travel is at 22 kms/day compared to 19kms/day in case of weekends

In Kms/day.

74


BIRD

Last Service Details of

Private vehicles

75


BIRD

Maximum percentage of 4-wheeler owners preferred company authorized service station for last service …however 2-wheeler owners preferred other garages

1 4 %

4 3 %

3 0 %

1 2 %

1 % 1 %

4 0 %

2 5 %

8 %

2 6 %

C o m p a n y A S S S o m e o th e r g a r a g e R o a d s i d e m e c h a n i c L a r g e g a r a g e S e lf

2 - w h e e le r 4 - w h e e le r


• Over 40% of the four-wheeler owners took their vehicle to company ASS for last service as compared to just 14% owners in case of two-wheelers– Maximum percentage of 2-wheeler owners i.e. 43% preferred small/other garage for last service as compared to just 25% in the case of four-wheeler owners

• After company ASS, over 26% of four-wheeler owners gave preference to large garages as compared to just 12% of the two-wheeler owners• Almost 1 out of every 3 two-wheeler owners took their vehicle to roadside mechanic for last service as compared to just 8% of the four-wheeler owners

76


BIRD

Now lets look at the service destination choice of two-wheeler owners by region…a high percentage of owners in Western India prefer company ASS

1 5 % 1 2 %2 2 %

9 %

5 1 %1 6 % 8 %

2 4 %

2 3 %

5 2 %4 3 % 6 0 %

1 0 %1 7 %

2 5 %5 %

2 %3 %1 % 2 %



• There is a startling difference in the choice of service stations between two-wheeler owners from different regions of the country– In North, although 15% of the owners went to company ASS for last service but more than 50% of the owners preferred road side mechanic and another 23% went to other/small garage – In East, the situation is a lot different. Over 52% of the respondents took their vehicle to small/other garage for repair and just 16% preferred road side mechanics. Only 12% went to

company ASS– In South, only 9% of the owners went to company ASS and about 60% went to small/other garages. Around 24% of the owners went to road side mechanics for repair

Base: 635 2-wheeler owners

77


BIRDIn case of four-wheelers, the variation between

regions is not as high as two-wheeler owners

4 4 % 4 6 %3 0 %

4 2 %

1 4 % 7 %

1 %

6 %

2 4 %2 5 %

2 1 %

3 1 %

1 8 %2 0 %

4 6 %

1 8 %

2 %2 % 3 %



• An equal percentage of four-wheeler owners went to company ASS in the last service across regions except in West where the percentage drops by 12% - 14%• In North, 24% owners preferred small/other garages and 18% went to large garages for servicing and the rest 14% went to mechanics

– The above trend is very much similar in case of Eastern and Southern four-wheeler owners• However, the four-wheeler owners in the Western region seem to be behaving differently from their counterparts in rest of the country. More than 46% of

Western owners went to large garages for servicing and just 30% in company ASS

Base: 954 four-wheeler owners

78


BIRD

Preference of company ASS decreases with the increase in the vehicle age in case of two-wheeler owners

2 1 %

3 9 %

2 5 %

1 4 %

1 % 1 %

8 %

3 1 %

1 2 %

1 %

9 %

4 4 %

3 5 %

1 1 %

4 7 %


2 0 0 0 - 0 2 1 9 9 7 - 9 9

B e fo r e 1 9 9 7

• About 21% of the two-wheeler owners who had purchased their vehicle between 2000-02 preferred company ASS for last service as compared about 8%-9% owners having purchased their vehicle before 2000

• Preference given to other garages and road-side mechanics is highest in case of owners having purchased their vehicle before 2000

• Above findings clearly indicate the decreasing interest of two-wheeler owners in availing the services of company ASS with the increase in vehicle age


79


BIRD

Although in case of four-wheelers high percentage of owners prefer company ASS but the preference decreases drastically with the increase in vehicle age

4 7 %

2 1 %

7 %

2 3 %

2 % 2 %

2 3 %

8 %

3 4 %

2 %

3 3 %2 9 %

9 %

2 7 %

3 3 %


2 0 0 0 - 0 2 1 9 9 7 - 9 9

B e fo r e 1 9 9 7

• About 47% of the four-wheeler owners who had purchased their vehicle between 2000-02 preferred company ASS for last service as compared about 33% owners having purchased their vehicle between 1997-99 and just 23% in case of owners owning a vehicle made before 1997

• Preference given to large garages is complete opposite to the preference given to company ASS by four-wheeler owners

• Use of road-side mechanics for servicing is very low among the owners of any vehicle type


80


BIRD

Drive transmission and engine related problems have been cited as the Top 2 reasons for last service by both 2-wheeler and 4-wheeler owners

3 1 %

3 0 %

2 5 %

3 0 %

1 5 %

1 3 %

9 %

7 %

1 6 %

1 7 %

4 %

3 %

2 - w h e e le r s

4 - w h e e le r s

D r iv e T s n E n g in e S u s p e n s io n / B r a k in g E le c t r ic a l E q u ip m e n t s O t h e r s

• An equal percentage i.e. 30% of four-wheeler owners have cited drive transmission and engine related problems for the last service followed by 17% of the owners who faced suspension problems– About 13% of the owners had electrical problems and the rest 10% faced equipments or other problems

• About 31% of two-wheeler owners have cited drive transmission problems as the reason for the last service followed by 25% who faced engine related problems– Close to 16% of the owners faced suspension and electrical problems respectively– About 9% owners faced equipment problems and the rest 4% faced other issues


81


BIRD

Both 2-wheeler and 4-wheeler owners spent 65% of their total expenditure on purchase of components in the last service

L a b o r1 5 %

C o n s u ma b le s2 0 %

C o m p on e n ts6 5 %

Two wheelers

• The above figures include both accidental as well as normal repair

• The percentage expenditure on labor and consumables in case of both two-wheeler and four-wheeler owners is almost similar

• Further break-up of service expenditure in company ASS Vs. other service stations for both two-wheelers and four-wheelers is given later in the presentation

Rs. 797/-

L a b o r1 6 %

C o n s u ma b le s1 9 %

C o m p on e n ts6 5 %

Four wheelers

Rs. 3759/-


82


BIRDIn case of two-wheelers, the average expenditure on

service decreases with the increase in the vehicle age

5 6 0 5 3 64 5 5

1 5 61 1 5

1 7 21 2 2 1 2 3

1 1 5

2 0 0 0 - 0 2 1 9 9 7 - 9 9 B e f o r e 1 9 9 7

C o m p o n e n ts L a b o u r C o n s u m a b le s


Rs. 838/- Rs. 806/- Rs. 742/-

• This can be as a result of decrease in owners interest towards vehicle servicing with the increase in vehicle age– Also, more preference is given to other service destinations such as road side mechanics, small garages etc as the age of the

vehicle increases

• Expenditure on components is the highest in case of vehicles purchased between 2000-02 and lowest in case of vehicles purchased before 1997

– However, the expenditure on consumables is highest in case of vehicles purchased before 1997

83


BIRD

The trend is absolutely same in case of four-wheelers also…expenditure on consumables is highest in case of vehicles purchased before 1997

2 4 5 7 2 4 1 41 8 4 5

6 1 9 6 6 7

6 8 96 0 2 5 7 5

4 6 2

2 0 0 0 - 0 2 1 9 9 7 - 9 9 B e f o r e 1 9 9 7


Rs. 3678/- Rs. 3656/- Rs. 2996/-

• This again can be attributed to the decrease in owners interest towards vehicle servicing with the increase in vehicle age

– Also as indicated earlier more preference is given to other service destinations such as large and small garages etc as the age of the vehicle increases

• Expenditure on components is almost similar in case of vehicles purchased between 2000-02 and 1997-99– However, the expenditure is lowest for vehicles purchased before 1997


84


BIRD

In two-wheelers, although the expenditure in company ASS is the highest but the percentage difference w.r.t other service destinations is not very high

5 6 9 5 3 84 3 0 3 9 0

1 5 4 1 2 8

1 8 01 4 2

1 3 7 1 5 2

1 2 09 4

C o m p a n y A S S L a r g e g a r a g e O t h e r g a r a g e R o a d s id e m e c h a n ic

C o n s u m a b le s

L a b o r

C o m p o n e n t

Rs. 860/- Rs. 818/- Rs. 626/-

• For two-wheeler owners who went to company ASS, the average expenditure on last service was Rs.860/- out of which Rs.569/- was spent on purchase of components

– In case of large garages, the average expenditure was Rs.818/- out of which Rs.538/- was spent on components which is just 5% less than average expenditure on components in company ASS

– In case of other garages the % difference in spent on components w.r.t. to company ASS is around 24% whereas the difference in total expenditure is just 15%. In case of mechanics, it is 32% and 27%

Rs. 730/-


85


BIRD

Detailed information on the last

service for Two-wheelers - Scooters

- Motorcycles

86


BIRDAround 69% of two-wheeler users have cited

normal breakdown as reason for the last service

A c c i d e n t a l6 %

N o r m a l6 9 %

N e v e r2 5 %

7 %

7 1 %

2 2 %

Met

ro

6 %

6 0 %

3 4 %

Non

- M

etro

5 %6 9 %

2 6 %

Oth

er N

M 1 %

8 6 %

1 3 %

Sm

all

All

• In case of metro cities, over 71% of the users have cited normal breakdown as reason for the last service followed by 7% of the users who took their vehicle for service as a result of accidental break down

– In non-metros, 60% cited normal breakdown and 6% as accidental breakdown– In other NM, 69% cited normal breakdown and 5% as accidental– In small cities, 86% cited normal breakdown and just 1% as accidental

• Over 25% of all two-wheeler owners claim to have never experienced any type of breakdown


87


BIRD

In scooters, drive transmission problems has been the primary nature of repair across all locations followed by engine related issues

3 8 %

3 0 %

4 4 %

2 9 %

3 4 %

3 8 %

2 4 %

1 7 %

3 0 %

2 7 %

1 4 %

1 8 %

1 3 %

1 6 %

1 5 %

5 %

9 %

1 6 %

1 6 %

1 4 %

1 2 %

9 %

5 %

7 %

3 %

5 %

6 %

3 %

1 %

2 %

S m a l l

O t h e r N M

N o n - m e t r o

M e t r o

T o t a l

D r iv e T s n E n g in e E le c t r ic a l S u s p e n s io n / B r a k in g E q u ip m e n t s O t h e r s

Base: 327 scooters

• In case of metro cities, more than 30% of the vehicles were serviced last time as a result of engine related problems as compared to just 17% in non-metros– But in metros only 29% of the vehicles were serviced due to drive transmission problems as compared to over 44% vehicles in NM

• In case of other NM cities, around 24% of the vehicles were serviced due to engine problems compared to 38% in small towns – In case of other NM around 30% of the vehicles were serviced due to drive tsn problems compared to 38% in small

88


BIRD

And in case of motorcycles also drive transmission problems has been cited as the primary reason for repair

3 4 %

3 1 %

2 4 %

2 7 %

2 8 %

2 6 %

3 1 %

1 4 %

2 5 %

2 4 %

1 4 %

1 4 %

9 %

1 7 %

1 4 %

9 %

8 %

1 1 %

1 3 %

1 1 %

9 %

4 %

3 %

9 %

1 4 %

3 7 %

1 6 %

2 0 %

3 %

3 %

S m a l l

O t h e r N M

N o n - m e t r o

M e t r o

T o t a l

D r iv e T s n E n g in e S u s p e n s io n / B r a k in g E le c t r ic a l E q u ip m e n t s O t h e r s

• In case of non-metro cities, maximum number of vehicles i.e. 37% have cited suspension/braking problems as the primary reason for repair last time– In case of metro cities this percentage is only 16% and ranks fourth in reasons cited for last service

• In case of other NM cities and small cities, drive transmission and engine related problems are the top 2 problems cited for last service– Electrical and suspension/braking related problems rank 3rd and 4th respectively

Base: 315 motorcycles

89


BIRD

In case of scooters, percentage of users who took their vehicle to Company ASS for the last service is just 10%...highest being in non-metros

8 1 %

3 4 % 2 9 %5 6 %

1 8 %

1 4 %1 0 % 8 % 1 4 % 1 2 %

5 %

4 3 % 4 6 %2 1 %

5 2 %

1 2 % 1 6 % 8 %

1 %1 %1 %

T o ta l M e t r o N o n m e t r o s O th e r N M S m a ll

S o m e o th e r g a r a g e R o a d s i d e m e c h a n i c L a r g e g a r a g e C o m p a n y A S S S e lf

Base: 327 scooters

• In case of metros, only 8% of the vehicles were taken to company ASS for last service as compared to 14% in case of non-metros– In case of other NM cities it is 12% and just 5% in case of small cities

• In case of metro cities, maximum number of vehicles i.e. 46% went for repair to small garages compared to 21% in case of non-metro cities– Because over 56% of the non-metro users preferred road-side mechanics for repair as compared to 29% in case of metros

• In case of other NM cities and small cities, a very high percentage of users preferred small garages for repair

90


BIRD

…and Year of Make of the scooter has very less bearing on the servicing destination chosen by the vehicle users

4 2 % 4 0 %5 3 %

4 0 % 4 3 %

4 4 %3 1 %

3 6 %

1 6 %

9 % 1 0 %1 6 % 1 0 %

1 6 % 6 % 4 % 8 % 1 0 %1 %

3 6 %2 6 %

1 %2 %

2 0 0 0 - 0 2 1 9 9 7 - 9 9 1 9 9 4 - 9 6 1 9 9 1 - 9 3 B e f o r e 1 9 9 1

S o m e o t h e r g a r a g e R o a d s id e m e c h a n ic L a r g e g a r a g e C o m p a n y A S S S e l f

Base: 327 scooters

• Year of make of the vehicle has very little bearing on the selection of the service destination:– Around 16% of vehicles made in 3 year period of 2000-02 were taken to Company ASS for repair as compared to 10% of vehicles made before 1991 – Over 9% of vehicles made in 3 year period of 1997-99 were taken to large garages for repair as compared to 10% of the vehicles made in 1994-96– Again over 36% of vehicles made before 1993 were taken to road side mechanics for the last service

91


BIRD

But in case of motorcycles, the percentage of vehicles serviced at Company ASS is comparatively higher… however not as high as other service options

8 3 %

2 5 % 2 1 %4 4 % 2 8 %

3 %1 9 % 2 0 % 1 9 %

1 9 %

8 %6 %

4 2 % 4 4 %2 3 %

2 8 %

1 3 % 1 4 % 1 0 %

4 %1 %1 %

T o ta l M e t r o N o n m e t r o s O th e r N M S m a ll

S o m e o th e r g a r a g e R o a d s i d e m e c h a n i c C o m p a n y A S S L a r g e g a r a g e S e lf

• In case of metros, over 20% of the vehicles were taken to company ASS for last service as compared to 19% in case of non-metros– In case of other NM cities it is 19% and just 8% in case of small cities

• In case of metro cities, maximum number of vehicles i.e. 44% went for repair to small garages compared to 23% in case of non-metro cities– Because over 44% of the non-metro users preferred road-side mechanics for repair as compared to 21% in case of metros

• In case of other NM cities all the service options were given almost equal importance but in small cities more than 83% users preferred small garages


92


BIRD

In case of motorcycles, the age of the vehicle has some impact on the decision of taking the vehicle to company ASS for servicing

3 7 %4 8 % 4 5 % 4 3 %

6 5 %

2 0 % 2 7 % 2 4 %

1 2 %1 4 % 1 4 % 1 9 %

1 2 %1 4 %

2 % 4 %

2 3 %

2 5 %

1 4 %1 4 %2 4 %

2 0 0 0 - 0 2 1 9 9 7 - 9 9 1 9 9 4 - 9 6 1 9 9 1 - 9 3 B e f o r e 1 9 9 1

S o m e o t h e r g a r a g e R o a d s id e m e c h a n ic L a r g e g a r a g e C o m p a n y A S S S e l f

• Around 24% of vehicles made in 3 year period of 2000-02 were taken to Company ASS for repair as compared to none in the case of vehicles made before 1991• For rest of the service destinations the weight-age given is almost equal

– Over 48% of vehicles made in 3 year period of 1997-99 were taken to small garages for repair as compared to 45% of the vehicles made in 1994-96– Again over 24% of vehicles made before 1993 were taken to road side mechanics for the last service


93


BIRD

In scooters, average expenditure on components is highest in non-metros….as a result of higher percentage of vehicles being serviced in Company ASS

2 1 % 2 0 %

1 7 %1 8 %

4 %1 1 %

5 1 % 5 1 %7 2 % 6 4 %

1 4 % 1 2 %5 % 7 %7 %3 %

3 %1 3 %7 %

M e t r o N o n m e t r o s O t h e r N M S m a ll0 - 2 0 0 2 0 0 - 4 0 0 4 0 0 - 6 0 0 6 0 0 - 8 0 0 > 8 0 0

Rs.332 Rs.388 Rs.227 Rs.235

Base: 327 scooters

In Rs

• In case of metros and non-metros, over 51% of the users spent less than Rs.200 on purchase of components in last service– But in case of non-metros over 13% of the users spent more than Rs.800 on purchase of components compared to just 7% in the case of metros

• In case of other NM, over 72% of the users spent less than Rs.200 on auto components as compared to 64% in the case of small– Also in case of small cities more than 11% of the users spent more than Rs.800 on components compared to just 3% in the case of other NM

94


BIRD

As scooter users spend approximately 50% higher on components in company ASS as compared to other service options

5 1 7

3 4 43 1 1 2 9 6

1 5 41 1 5

9 4 8 7

1 6 11 1 3

1 3 71 1 0

A u t h o r is e d S S L a r g e g a r a g e s S o m e o t h e r g a r a g e s M e c h a n ic

C o m p o n e n t s L a b o u r C o n s u m a b le s

Base: 327 scooters

• Users who took their vehicle to company ASS for last service spent on an average Rs.517 on purchasing components as compared to:– Rs.344 in case of large garages– Rs.311 in case of small garages– Rs.296 in case of road side mechanics

• Expenditure on labor and consumables is also highest in case of company ASS– This might be a big deterrent for scooter users to avail the services of company ASS

Might be a very big deterrent to price sensitive Indian vehicle users.

In Rs.

95


BIRD

But in case of motorcycles, the average spent on components is highest in other NM….followed closely by metros and non-metros locations

3 2 % 2 1 %1 8 %

2 1 %

8 % 4 %

5 0 %5 7 %4 8 %

4 3 %

8 %4 %1 2 %9 % 3 %7 %1 7 %9 % 1 1 % 1 8 %

M e t r o N o n m e t r o s O t h e r N M S m a l l0 - 2 0 0 2 0 0 - 4 0 0 4 0 0 - 6 0 0 6 0 0 - 8 0 0 M o r e t h a n 8 0 0

Rs.484 Rs.486 Rs.496 Rs.381

In Rs• In case of metros over 43% of the users spent less than Rs.200 on purchase of components in last service as compared to 48% in case of non-metros

– And in case of non-metros over 11% of the users spent more than Rs.800 on purchase of components compared to just 9% in the case of metros• In case of other NM, over 57% of the users spent less than Rs.200 on auto components as compared to 50% in the case of small

– Also in case of other NM more than 18% of the users spent more than Rs.800 on components compared to 17% in the case of small cities


96


BIRD

As there is very little gap between the average expenditure on components in Company ASS Vs other service stations in case of motorcycles

4 4 84 1 8

4 3 5

3 0 0

1 2 7 1 3 31 0 6 9 1

1 4 8 1 4 4 1 3 7 1 2 4




• Expenditure on labor and consumables in case of company ASS is almost comparable with other service options– As a result the average expenditure on components is higher in Other NM and non-metros as compared to metros


In Rs.

97


BIRD

A large percentage of all two-wheeler users claim to have purchased genuine components in last service…but did they?

6 0 %

1 2 %1 2 %

1 2 % 1 3 % 2 0 %

9 % 7 %1 0 % 1 0 %

1 6 %8 % 1 8 %

4 %

6 0 %6 3 %7 2 %6 7 %

1 5 %1 0 %2 % 2 %

T o t a l M e t r o N o n m e t r o s O t h e r N M S m a ll

G e n u in e F e w g e n u in e a n d r e s t lo c a l D u p l ic a t e / R e f u r b is h e d N o t s u r e O t h e r s

• In case of metros over 72% of the users claim to purchase genuine components in last service as compared to 63% in case of non-metros– And in case of non-metros over 10% of the users purchased duplicate components compared to 7% in the case of metros

• In case of other NM and small cities, over 60% of the users claim to purchase genuine components – Also in case of small cities more than 16% of the users purchased duplicate components compared to 10% in the case of other NM


98


BIRD

Last Service Details for

Four-wheelers

99


BIRD

Owner of the vehicle is the primary decision maker about service requirements…only 6% of the vehicles are taken by driver for repair

U s e r3 %

F a m i ly m e m b e r s

2 %

O w n e r9 5 %

Primary decision maker about repair and service requirements

U s e r5 %

F a m i ly m e m b e r s

4 %

D r iv e r6 %

O w n e r8 5 %

Who takes the vehicle for servicing?


• Over 95% of the vehicle owners take the decision about repair and servicing requirements– In case of 3% of the vehicles, primary users take the decision about servicing

– And in only 2% of the vehicles, family members are responsible for service decisions

• Again when it comes to taking the vehicle for servicing a majority i.e. 85% of the owners do it themselves– 6% of the vehicles are taken by the driver for servicing and 5% by the users

– Only 4% of the vehicles are taken by family members

100


BIRD

Around 57% of four-wheeler users have cited normal breakdown as reason for the last service…followed by 10% accidental cases

A c c i d e n t a l1 0 %

N o r m a l5 7 %

N e v e r3 3 %

1 0 %6 1 %

2 9 %

Met

ro

1 2 %

4 3 %4 5 %

Non

- M

etro

6 %

7 6 %

1 8 %

Oth

er N

M6 %

5 1 %

4 3 %

Sm

all

All

• In case of metro cities, over 61% of the users have cited normal breakdown as reason for the last service followed by 10% of the users who took their vehicle for service as a result of accidental break down

– In non-metros, 43% cited normal breakdown and 12% as accidental breakdown– In other NM, 76% cited normal breakdown and 6% as accidental– In small cities, 51% cited normal breakdown and just 6% as accidental

• Over 33% of all four-wheeler owners claim to have never experienced any type of breakdown


101


BIRDNormal break-down frequency in case of four-

wheelers ranges between 5.5 – 6.5 months

5 2 %4 2 % 4 4 %

2 1 %

2 9 %3 2 % 3 4 %

3 9 %

6 % 8 %

1 4 %

1 0 %1 5 %

1 3 %5 % 1 2 %

6 % 1 4 %

1 %3 %

M e t r o N o n - m e t r o O t h e r N M S m a l l4 - 6 m t h s 1 - 3 m t h s 6 - 9 m t h s 9 - 1 2 m t h s > 1 2

5.74 mths 6.04 mths 5.45 mths 6.46 mthsBase: 961 four--wheelers

• In case of metro cities, over 52% of the users have reported 4-6 months as frequency of normal breakdown as compared to 42% in the case of non-metros– Around 30% of the vehicle owners in both metros and non-metros have reported 1-3 months as frequency

• In case of Other NM cities, over44% of the users have reported 4-6 months as frequency as compared to just 21% in the case of small– Over 12% of the vehicle owners in small towns have reported more than 12 months as frequency

102


BIRD

Like in the case of two-wheelers, engine and drive transmission related problems were the primary reason for repair in four-wheelers also

3 6 %

2 8 %

2 2 %

3 3 %

2 9 %

1 8 %

2 7 %

2 5 %

2 4 %

2 5 %

7 %

1 6 %

1 6 %

1 8 %

1 7 %

1 0 %

1 8 %

1 2 %

1 3 %

1 0 %

1 3 %

9 %

1 0 %

9 %

4 %

6 %

1 1 %

6 %

2 8 %S m a l l

O t h e r N M

N o n - m e t r o

M e t r o

T o t a l

E n g in e D r iv e T s n E le c t r ic a l S u s p e n s io n / B r a k in g E q u ip m e n t s O t h e r s

• In case of metro cities, more than 33% of the vehicles were serviced last time as a result of engine related problems as compared to just 22% in non-metros– Also in metros around 24% of the vehicles were serviced due to drive transmission problems as compared to over 25% vehicles in NM– Suspension/braking and equipment problems were the other key areas of concern

• In case of other NM cities, around 28% of the vehicles were serviced due to engine problems compared to 36% in small towns – In case of small cities, over 28% of the vehicles were serviced as a result of other problems


103


BIRD

Maximum percentage of vehicles across locations were serviced at Company ASS…use of road side mechanics for servicing is minimal

4 1 % 3 7 % 4 2 % 5 0 %

2 5 %

2 6 % 3 2 % 1 9 %1 9 %

2 5 %

5 0 %

8 % 7 % 1 0 % 1 0 %

2 5 % 2 4 % 2 9 %2 1 %

T o t a l M e t r o N o n m e t r o s O t h e r N M S m a l l

C o m p a n y A S S L a r g e g a r a g e S o m e o th e r g a r a g e R o a d s i d e m e c h a n i c


• In case of metro cities, more than 37% of the vehicles were serviced at company ASS as compared to 42% in the case of non-metros– Over 32% of metro vehicles were serviced at large garages compared to 19% in non-metros

• In case of other NM cities, around 50% of the vehicles were serviced at company ASS compared to 25% in small towns – Also in case of other NM cities, equal percentage of vehicles were serviced at large and small garages– But in case of small towns, more than 50% of the vehicles were serviced at small/some other garages

104


BIRDPercentage of vehicles serviced at company ASS

increases as we move up the four-wheeler category

2 8 %4 6 % 4 9 % 5 3 %

6 7 %

2 9 %

3 0 %

2 5 % 2 5 % 2 1 %

3 0 %

1 9 % 2 7 %

8 % 6 % 6 % 8 % 1 4 % 1 4 %

3 4 %2 3 % 2 0 % 1 8 %

S e g A S e g B S e g C S e g D S e g E M U V / S U V



• Only 28% of segment A vehicles were serviced at company ASS compared to 67% in case of Segment E vehicles– Gradual increase in percentage of vehicles being serviced at company ASS when we move from Segment A to Segment E

• In case of segment E, after company ASS the next preferred service destination is small garages and road-side mechanics– None of the Segment E car owners availed the services of a large garage– Thus, it can be said that owners either prefer spending heavy amount by taking the vehicle to company ASS or prefer saving money completely by availing the services of mechanics and small garages

105


BIRDAs a result average expenditure on last service also

increases as we move up the four-wheeler category

1 8 2 1

2 4 4 6

3 8 6 3

5 4 1 4

2 4 1 3

A B & C D E M U V / S U V

In Rs.

• All the figures include both accidental and normal repair• Average expenditure in last service for Segment A cars is Rs.1821 and in case of Segment B & C cars it jumps by 35% to reach a figure of Rs.2446

– Average expenditure for SUVs/MUVs is around Rs.2413 which is very similar to the figures of Segment B & C cars • In case of segment D cars the average expenditure is more than 50% higher as compared to four-wheelers belonging to Segment B & C• As expected the average expenditure in case of Segment E cars is the highest at Rs.5414


106


BIRD

Average expenditure on components is more than 50% higher in company ASS as compared to the other service options


2 9 6 4

1 8 8 9 1 8 2 31 5 9 4

7 2 34 2 9 4 5 0 3 7 3

9 2 06 8 7

4 4 1 3 3 1



In Rs.


• Expenditure on labor and consumables is also highest in case of company ASS– This acts as a deterrent to price sensitive owners who own lower segment four-wheelers

107


BIRD

Additional Regular Service Details for

Four-wheelers

108


BIRD

Awareness about various maintenance and service contracts is lacking….especially in the case of small cities

3 9 %

4 7 %

3 0 %

2 %

2 0 %

3 3 %

1 3 %

3 2 %

4 7 %

2 2 %

M e t r o N o n - m e t r o O t h e r N m S m a l l

A M C E q u i p m e n t c o n t r a c t s E x t e n d e d w a r r a n t y


• In case of metro cities, over 39% of the users are aware about AMCs and over 32% are aware about extended warranty– Around 20% of the users are also aware about equipment contracts

• In case of non-metro cities, over 47% of the users are aware about AMCs and extended warranty– Around 33% of the users are also aware about equipment contracts

• In case of other NM cities, over 30% of the users are aware about AMCs and over 22% are aware about extended warranty– Around 13% of the users are also aware about equipment contracts

109


BIRDOut of those who are aware only 16% have

subscribed to such contracts across locations

1 6 % 1 8 % 1 5 % 1 3 %

8 4 % 8 2 % 8 5 % 8 7 %

T o t a l M e t r o N o n m e t r o s O t h e r N M

H a v e c o n t r a c ts D o n ' t h a v e c o n t r a c tsBase: 612 four--wheelers

• In case of metro cities, over 18% of the users have subscribed to either of the maintenance contracts

• In case of non-metro cities, over 15% of the users have subscribed

• In case of other NM cities, over 13% of the users have subscribed

• In case of small cities, none of the users had subscribed to such maintenance contracts

110


BIRD

Assurance of genuine spares and low hassle of maintenance are the top 2 motivators for subscribing to a maintenance contract

3 1 % 3 0 % 2 9 % 2 8 % 2 7 %3 1 % 3 1 %

3 7 % 3 6 % 3 5 %

4 3 %4 6 %

6 5 %

2 7 % 2 8 %

2 1 %2 2 %

1 3 %

2 4 %

1 7 %

G e n u in e s p a r e s L o w m a in t e n a n c e T r a in e d m a n p o w e r T r u s t o n O E M V a lu e f o r m o n e y

A ll M e t r o N o n - m e t r o O t h e r N m

Base: 174 four—wheeler users

• In case of metro cities, over 31% of the users have given assurance of trained man-power in company ASS as the most important for entering into a maintenance contract– In case of non-metros, the percentage of such users increases 43%– In case of other NM, it is 17%

• Assurance of trained man-power, trust on OEM and value for money are the other important motivators

Top Box score

111


BIRD

Expensive contracts and costly genuine spares are the key de-motivators preventing users from subscribing to such contracts

3 7 %

2 9 % 2 7 % 2 6 % 2 5 %

4 2 %3 9 %

3 4 % 3 3 % 3 3 %2 9 %

2 5 %

1 5 % 1 7 % 1 7 %1 7 %2 0 %2 2 %

1 8 %

4 2 %

E x p e n s iv e c o n t r a c t s G e n u in e s p a r e s a r ee x p e n s iv e

U s e d f o r g e n e r a lp u r p o s e s

E x is t in g r e la t io n s h ip P r o m p t n e s s o fs e r v ic e

A ll M e t r o N o n - m e t r o O t h e r N m

Base: 600 four—wheeler users

• In case of metro cities, over 42% of the users perceive such contracts to be expensive and hence do not subscribe– Another 39% of the users consider genuine spare parts being used in company ASS to be expensive

• In case of non-metro cities, over 29% of the users perceive such contracts to be expensive and in case of other NM cities this percentage increases to 42%• Use of vehicles for general purpose, existing relationship with OSS and promptness of service are other key de-motivators cited by the respondents

Top Box score

112


BIRD

Profile of the respondents 2. Commercial Vehicle owners

- Buses- HCVs and LCVs- Taxis- Three-wheelers

113


BIRD

N o n - m e t r o2 8 %

S m a l l5 %O t h e r N M

9 %

M e t r o5 8 %

1089 commercial vehicle owners were met covering over 2390 commercial vehicles of all types


H C V2 0 %

3 - w h e e le r1 9 %

T a x is2 2 % L C V

2 0 %

B u s e s1 9 %


Distribution of commercial vehicle owners by vehicle type

• Over 58% of the commercial vehicle owners covered belonged to metropolitan cities– About 28% belonged to non-metros– Another 9% belonged to other NM and rest 5% to small towns

• Equal representation of owners owning different types of commercial vehicles in the sample covered– HCVs and taxis were further divided into categories based on the axle load and care segment respectively

H C V3 0 %

3 - w h e e le r1 0 %

T a x is1 5 %

L C V1 4 %

B u s e s3 1 %


Distribution of total number of commercial vehicles covered by type

Base: 2394 commercial vehicles

114


BIRDFurther classification of HCVs and taxis owners

met during the course of the study

1 2 - 1 6 . 2 t o n e s2 5 %

> 2 5 t o n e s4 %

1 6 . 2 - 2 5 t o n e s1 1 %

7 . 5 - 1 2 t o n e s6 0 %

Break-up of HCVs covered by axle load

B4 7 %

E1 %

D3 %

C2 4 %

A2 5 %

Break-up of Taxis covered by segment

Base: 221 HCVs owners

229 Taxis owners

• In case of HCVs, over 60% of the vehicle owners covered owned 7.5 – 12 tones axle load HCV– About 25% owned 12-16.2 tones axle load category– About 11% owned 16.2-25 tones axle load category and rest 4% in more than 25 tones category

• In case of taxis, more than 47% of the vehicle owners owned Segment B cars which includes Indica, Uno– 25% belonged to Segment A which includes Omni, Fiat– And about 24% in Segment C which includes Indigo, Contessa, Ikon, Esteem and Baleno

115


BIRD

Approximately 69% of all the commercial vehicle owners covered owned only 1 vehicle…16% owned 2-3 vehicles

6 9 %

4 3 %5 8 %

7 3 % 7 9 %9 1 %

1 6 %

2 0 %

2 0 %

1 9 % 1 4 %8 %

7 %

1 9 %7 %

6 % 3 %1 %

5 %1 2 % 9 %

1 %3 % 7 % 1 %6 %

T o t a l ( 1 0 8 9 ) B u s e s ( 2 1 1 ) H C V ( 2 2 1 ) L C V ( 2 1 6 ) T a x is ( 2 2 9 ) 3 - w h e e le r ( 2 1 2 )

1 2 to 3 4 to 5 6 to 1 0 M o r e th a n 1 0

• In case of bus owners, about 43% owned only 1 vehicle:– Around 20% owned 2-3 vehicles and about 19% owned 4-5 vehicles– Over 19% owned more than 5 vehicles

• In case of HCVs, about 58% owned only 1 vehicles:– Around 20% owned 2-3 vehicles and rest 22% owned more than 3 vehicles

• Over 73% LCV owners, 79% taxi owners and 91% 3-wheeler owners owned only 1 vehicles


116


BIRDOver 48% of all commercial vehicles are

primarily being used for intrastate travel

4 8 % 5 2 %3 8 % 4 1 % 3 3 %

8 1 %

3 1 %3 5 %

2 6 %3 5 %

3 9 %

1 7 %2 1 % 1 3 %

3 6 %2 4 % 2 8 %

2 %

T o t a l B u s e s H C V L C V T a x is 3 - w h e e le r

In t r a s ta te In te r s ta te B o th

• In case of buses, about 52% of the vehicles are used for intrastate travel, followed by 35% of the vehicles being used for interstate and the rest 13% for both• In case of HCVs, only 38% of the vehicles are used for intrastate travel, followed by 36% of the vehicles being used for both inter and intrastate; rest 26% for interstate travel only• In case of LCVs, 41% being used for intrastate and 25% for interstate; rest 24% for both• In case of taxis, 33% being used for intrastate and 39% for interstate; rest 28% for both


117


BIRD

Service Details for Commercial Vehicles

118


BIRD

Only 23% of all commercial vehicle owners are aware about service contracts…and out of those only 3% are subscribing to such contracts

3 %6 %

2 % 3 % 1 % 2 %

2 0 %

3 0 %

2 0 %1 5 % 2 0 %

1 2 %

T o ta l B u s e s H C V L C V T a x i s 3 - w h e e le r

H a v e c o n t r a c t s D o n ' t h a v e c o n t r a c t s

23%

36%

22%

18%21%

14%

• Maximum awareness is among the bus owners, where about 36% of the respondents are aware of such contracts and about 6% have entered into such contracts– A high percentage of bus owners covered owned more than 1 vehicle

• In case of HCV owners, about 22% are aware of such contracts and only 2% have entered• In case of LCV owners, 18% are aware and 3% have entered• In case of taxis also 21% are aware of such contracts but only 1% have entered

– This can be because over 79% of the owners covered owned only 1 vehicle


119


BIRDAverage distance travelled in a month is

highest in case of busses followed by HCVsIn kms/month.

2 % 6 % 4 %1 6 %

6 %1 4 %

3 9 % 4 6 %

5 6 %

2 7 %2 5 %

2 9 %3 3 %

2 5 %

4 1 %

2 1 %1 5 %

3 %

3 4 %

5 % 2 %

3 3 %

1 8 %

B u s e s H C V L C V T a x is T h r e e - w h e e le rA t le a s t 1 k 1 k - 3 k 3 k - 5 k 5 k - 1 0 k M o r e t h a n 1 0 k

9504 kms 7461 kms 4354 kms 3956 kms 2719 kms

• Average distance traveled by a bus (including inter and intrastate) in a month is 9504 kms• In case of HCVs, the average distance traveled by a vehicle in a month is 7461 kms• In case of LCVs the average distance drops down to 4354 kms/month• In case of taxis (including all segments), average distance traveled in a month is 3956 kms• Average distance traveled in a month is lowest in the case of three-wheelers at 2719 kms


120


BIRDAverage distance covered by HCVs of different

capacities ranges from 6500 – 9300 kms per month

4 %

1 7 %9 %

2 7 %

1 8 %2 5 %

4 5 %

4 4 % 5 4 %

3 3 %

1 4 % 2 1 % 2 2 %

3 8 %

2 9 %

7 . 5 - 1 2 1 2 - 1 6 . 2 1 6 . 2 - 2 5 > 2 5A t le a s t 1 k 1 k - 3 k 3 k - 5 k 5 k - 1 0 k M o r e t h a n 1 0 k

6530 kms 9342 kms 8083 kms 7555 kms

In kms/month.Base: 221 HCV owners

• In case of HCVs with axle load between 7.5-12 tones, average distance covered in a month is 6530 kms

• And in case of HCVs with axle load between 16.2-25 tones, it increases to 8083 kms/month

• In case of HCVs more than 25 tones of axle load, average distance covered is 7555 kms/month

• The highest average distance covered in a month is 9342 kms by HCVs of axle load 12-16.2 tones

121


BIRDAs a result of heavy travel, the frequency of service in

case of buses is highest at once a week

3 4 %

1 2 % 1 3 % 9 %2 1 %

1 2 %

1 2 % 1 1 %6 %

1 9 %

1 5 %

1 9 % 2 4 %3 2 %

2 8 %1 4 %

1 1 % 1 7 %

6 %1 6 %

2 6 %3 6 %4 1 %4 3 %

2 3 %

B u s e s H C V L C V T a x is T h r e e - w h e e le r

1 - 2 w e e k s 3 w e e k s 4 w e e k s 6 w e e k s > 6 w e e k s

• In case of buses, around 34% of the vehicles are serviced (includes normal tuning, washing) atlleast once a week – Around 12% of vehicles are serviced once in 3 weeks and another 15% once in a month

• In case of HCVs, the maximum number of vehicles i.e. 43% are serviced once in more than 6 week period– In case of LCVs, taxis and three-wheelers the trend is quite similar


122


BIRD

Large and small garages are most preferred service destinations for most of the commercial vehicle owners…use of company ASS is highest in taxis

3 2 % 3 8 %

1 3 % 1 6 % 1 4 %

2 7 %2 6 %

4 0 %4 6 %

3 1 %

1 7 % 1 2 %

1 1 %

2 3 %

1 0 %

1 4 % 3 1 %

1 2 %

3 8 %

1 0 % 5 % 3 % 7 %

1 4 %

1 0 %


L a r g e g a r a g e S m a l l g a r a g e / p e t r o l p u m p s C o m p a n y A S S M e c h a n ic I n - h o u s e / S e l f

• In case of buses, only 17% of the vehicles are sent to company ASS for repair– Maximum vehicles i.e. about 57% of the vehicles are sent to large and small garages for repair

• In case of HCVs, about 12% of the vehicles are sent to company ASS, maximum vehicles being serviced at large and small garages• In case of taxis, over 23% of the vehicles are sent to company ASS for repair

– About 46% are being serviced at small garages and about 16% in large garages


123


BIRDAs expected, average maintenance expenditure

per Km is highest in HCVs followed by buses

1 . 2 5

2 . 2 7

1 . 0 6 1 . 0 8

0 . 4

B u s e s H C V L C V T a x i s 3 - w h e e le r

Maintenance expenditure/ Km (INR)

• In case of buses, average maintenance expenditure per km is Rs.1.25– This included both inter and intra state buses

• In case of LCVs, the average expenditure is at Rs.1.06

• In case of taxis, it is at Rs.1.08 and in case of 3-wheelers is at Rs.0.40


124


BIRD

And it has definite impact on the average monthly expenditure on maintenance which is again highest in case of HCVs

1 0 2 1 01 2 8 6 0

4 0 7 0 3 2 5 49 4 0

B u s e s H C V L C V T a x i s 3 - w h e e le r

Maintenance expenditure/ month (INR)

• In case of buses, average monthly expenditure on maintenance is about Rs.10200/-

• In case of HCVs, average monthly expenditure is the highest at about Rs.12800/-

• In case of LCVs, average monthly expenditure is almost 1/3rd of an HCV at Rs.4070/-

• For taxis, average monthly expenditure is around Rs.3200

• In case of 3-wheelers, it is the lowest at Rs.940/- only


125


BIRDAbout 50% of the monthly expenditure incurred

on maintenance is spent on components

5 0 % 4 6 % 4 8 % 4 6 % 4 8 %

2 1 %2 0 % 2 0 % 2 2 % 2 2 %

2 9 % 3 4 % 3 2 % 3 2 % 3 0 %


C o m p o n e n t s L a b o r C o n s u m a b le s ( in c lu d in g t y r e s )

• In case of buses, about 50% of the monthly expenditure incurred on maintenance is spent on components– About 21% on labor and rest 29% on consumables

• In case of HCVs, about 46% is spent on components– About 20% on labor and rest 34% on consumables

• In case of other commercial vehicles also, the trend is very similar


126


BIRD

Drive transmission and suspension related components are replaced most often…engine components take the third spot

4 0 %

3 1 %

4 0 %

3 3 %

4 3 %

1 4 %

2 2 %

2 2 %

2 4 %

2 5 %

2 9 %

2 4 %

1 4 %

1 7 %

1 7 %

1 4 %

2 0 %

1 5 %

2 1 %

1 0 %

3 %

3 %

5 %

5 %

5 %

3 - w h e e le r s

T a x is

L C V

H C V

B u s e s

D r iv e T r s n S u s p e n s io n / B r a k in g E n g in e E le c t r ic a l E q u ip m e n t s

• In case of buses, about 43% of the vehicles face engine related problems most often– About 25% face suspension problems

• In case of HCV, about 33% of the vehicles face engine related problems most often– About 24% face suspension problems

• The trend is more or less similar for other type of components also


127


BIRD

About 60% of the total expenditure on components is on OEM genuine type…claim commercial vehicle owners

6 3 %

6 0 %

6 3 %

6 4 %

6 8 %

1 3 %

1 9 %

1 9 %

1 7 %

1 8 %

1 6 %

1 3 %

1 2 %

1 3 %

1 1 %

6 %

3 %

8 %

6 %

8 %

3 - w h e e le r

T a x is

L C V

H C V

B u s e s

O E M G e n u in e O t h e r b r a n d s L o c a l B r a n d s D u p l ic a t e s


• In case of buses, about 18% of the amount is spent on purchase of other brands and about 11% on local brands– Around 3% is spent on purchase on duplicate components

• In case of HCVs, the trend is almost similar except the spent on duplicate components which increases to 6%– The trend in LCVs is also very similar

• In case of taxis and 3-wheelers, the average expenditure on duplicate components increases to 8%

128


BIRD

Additional Service Details for

Commercial Vehicle commuting on highways

129


BIRD

In case of an emergency breakdown on a highway, owner of the vehicle takes the decision about the servicing requirements in majority of the cases

7 3 %8 1 % 8 3 %

2 7 %1 9 % 1 7 %

B u s e s H C V T a x is

O w n e r D r iv e r


• About 73% of the bus owners are responsible for taking servicing decision in case of an emergency– In rest 27% of the cases, salaried driver of the vehicle takes the decision himself

• In case of HCVs, around 81% of the owners take such a decision – In 19% of the cases, the driver is given the freedom to take a decision

• In case of taxis also, the trend is almost similar to HCVs

130


BIRD

Maximum percentage of vehicles were serviced at small garages and road-side mechanics when such an emergency had happened last time

3 7 %2 8 %

4 7 %

1 5 % 3 0 %

2 1 %2 7 %

2 8 % 1 3 %

1 6 %9 % 1 6 %

5 % 3 %5 %

B u s e s H C V T a x is

S m a l l g a r a g e / p e t r o l p u m p s M e c h a n ic L a r g e g a r a g e C o m p a n y A S S I n - h o u s e / S e l f


• Although in case of buses and taxis, about 16% of the owners/drivers took the vehicle to company ASS for servicing but still maximum preferred small garages and road-side mechanics– Can this be a case of poor network of company ASS on some of the national highways across the country

• Only 9% of the HCV owners/drivers took their vehicle to company ASS– About 30% of the owners took their vehicle to small garages and road side mechanics

131


BIRD

In maximum percentage of emergency cases for HCV and bus owners, the driver showed a kuccha bill to the owner for reimbursement of service expenses

1 5 %

3 6 %

2 5 %

4 %7 %

1 3 %

2 3 % 2 4 %

1 9 %

1 3 %9 %

1 2 %

3 8 %

2 0 %

1 2 %1 0 %

5 %

1 5 %

I a m o w n e r /d r i v e r Im a k e p a y m e n t

D r i v e r s h o w sk u c c h a b i l l

D r i v e r s h o w sp e r m e n a n t b i l l

F u ll fa i th o n d r i v e rs o n o b i l l r e q d

G i v e n a li m i t tod r i v e r

C a s e to c a s eb a s i s

B u s e sH C VT a x is


• In case of taxi owners, about 38% were driving the vehicle when it happened last time and made the payment then and there– But after that about 20% of the owners reimbursed the expenses to the driver when a kuccha bill (made by mistry) was shown

• About 25% of bus, 19% of HCV and 12% of taxi owners reimbursed the expenses only when the driver showed a permanent bill which can be a proof of servicing at either company ASS or large garages

132


BIRD

About 10% - 20% commercial vehicle owners admit purchasing duplicate/refurbished component in such an emergency situation

5 2 %

5 7 %

6 0 %

2 0 %

1 6 %

2 1 %

1 5 %

1 9 %

1 0 % 8 %

1 4 %

8 %

T a x is

H C V

B u s e s

O E M G e n u in e G e n u in e i f c r i t i c a l c o m p o n e n t e ls e o t h e r s D u p l ic a t e / r e f u r b is h e d N o t s u r e


• In case of buses, about 60% owners claim to have purchased genuine components– About 21% had purchased genuine if components were critical else local

• In case of HCVs, about 57% owners claim to have purchased genuine components– About 19% purchased duplicate components and about 16% purchased genuine only if it was critical

• In case of taxis, about 52% owners claim to have purchased genuine components– About 15% of the owners purchased duplicate and about 14% were not sure about the type of component fitted

133


BIRD

Maximum percentage of commercial vehicle owners have full faith on their drivers and do not check to ensure whether the component fitted is original

2 3 % 2 3 %

1 7 %

2 9 %

7 %

3 8 %

2 2 %

1 7 %1 9 %

4 %

3 1 %

1 2 %

2 6 % 2 6 %

5 %

F u l l f a i t h o n d r iv e r s D r iv e r c o l le c t s t h ep a c k a g in g

P e r s o n a l ly c a l l t h er e t a i le r

P h y s ic a l ly c h e c k T ie - u p s w i t h s e r v ic es t n s

B u s e sH C VT a x is


• In case of buses, about 23% of the owners have full faith on their drivers– However a larger number i.e. about 29% physically check the components also equal number of owners ask their drivers to collect the packaging

• In case of HCVs, about 38% of the owners have full faith on their drivers– Also about 22% of the owners ask their drivers to collect the packaging of the component

• In case of taxis, about 31% of the owners have full faith on the drivers but another 26% physically check and also call the retailer

134


BIRD

Profile of the respondents 3. Auto component channel members

- Distributor- Wholesaler/Retailer- Authorized service station- Other service station- Roadside mechanics

135


BIRDOver 866 auto component channel members

were met across locations

M e c h a n i c s4 0 % W h o le s a le r /R e ta i le r

2 2 %

O th e r s ta t i o n s1 8 %

A u th o r i z e d s tn s9 %

D i s tr i b u to r1 1 %

Base: 866 channel members

Distribution of sample by line of business

Distribution of sample by city type

• Around 40% of the total sample covered were roadside mechanics

– Close to 11% were distributors and about 22% were retailers/wholesalers

– Over 9% of the sample constituted of authorized service stations and around 18% owned other service stations/garages

• Close to 3/4th of the sample covered were located in metro and non-metro locations

7 % 1 1 % 1 1 % 1 4 %

5 % 5 % 4 % 6 % 6 %

6 7 % 6 3 % 5 7 % 5 2 % 5 0 %

3 3 %2 8 %

2 8 %2 1 %2 1 %1 1 %

D i s t r i b u t o r W h o l e s a l e r A u t h o r i z e ds t n

O t h e r s t n s M e c h a n i c s

M e t r o N o n m e t r o s O t h e r N M S m a ll

136


BIRDFurther classification of channel members

covered during the survey

• Close to 50% of the auto component distributors covered claimed to have an annual sales turnover of more than Rs. 10 lakhs from auto components– However, only 17% of wholesalers/dealers had sales of more than Rs. 10 lakhs

• A high percentage of the distributors, authorized and other service stations employ more than 5 employees per outlet– However, in case of mechanics and wholesalers/retailers majority of the respondents employ less than 3 employees

1 9 %

5 %

2 3 % 2 6 %2 0 %

7 %

1 %

2 %

1 4 %

1 6 %

3 5 %

3 2 %

< 1 1 t o 5 6 t o 1 0 1 1 t o 2 5 2 6 t o 5 0 > 5 0

W h o le s a le r / R e t a i le r

D is t r ib u t o r

All figures in INR lakhs

Distribution of sample by annual sales from auto components

2 4 %

1 2 %

2 0 %

3 6 %3 1 %

2 %

2 7 %

1 4 %5 %

7 %

1 %

1 5 %

3 % 1 %7 %

2 4 %

2 1 %4 %

2 7 %

3 %

2 8 %

5 8 %

1 4 %

4 2 %

5 8 %

1 5 %

1 %1 2 t o 3 4 t o 5 6 t o 1 0 1 1 t o 2 0 > 2 1

Base: 866 channel members

Distributor Wholesaler/ Retailer

Authorized stations

Other stations

Mechanics

Distribution of sample by number of employees per outlet

137


BIRD“….since we also need customers to come back to us

we provide them with counterfeits…” Large Distributor

• High percentage of channel members confess stocking and selling counterfeit components:– Distributors: 14%– Wholesaler/Retailer: 31%– Authorized service station: 10%– Other service stations: 55%– Roadside mechanics: 43%

• Key counterfeiting hubs identified in India – By City:– Chennai

• Mount Road• G P Road (General Ports Road)• Pudupet• Loot Road• MANNADI

138


BIRD“…greediness of dealers, retailers and mechanics

force us to supply counterfeits to them…” Distributor

• Key counterfeiting hubs identified in India – By City:– Delhi

• Kashmere Gate• Karol Bagh• Darya Ganj• Jheel• Mayapuri• Mori Gate market

– Mumbai• Ulhas nagar• Bhivandi• Sion• Vashi

– Kolkata• Mallick bazar

139


BIRD“…authorized dealers also purchase components from

us for use in service stations…” Retailer

• Key counterfeiting hubs identified in India – By City:– Kolkata

• Central avenue• Richi road• Bhawani pur

– Other cities• Nana peth (Pune)• Pimpri Chinchwad (Pune)• Nigadi (Pune)• Lal Bagh (Lucknow)• Cant Road (Lucknow)• Alambagh (Lucknow)• Miller Ganj (Ludhiana)• Samrala Chowk (Ludhiana)• Kaloor (Kochi)• Edapally (Kochi)

140


BIRD“…majority of the counterfeit components are

supplied by authorized dealers of OEMs…” Mechanic

• Key counterfeiting hubs identified in India – By City:– Other cities

• Sector 38, 43, 48 and 22 (Chandigarh)• Kashi Vishwanath Market (Jamnagar)• Rajkot and surrounding areas• Municipal chowk (Chapra)• Gunj and super market (Gulbarga)• Vidhu Nagar (Guni)

141


BIRD

Brand of components being stocked and sold by channel members covered

142


BIRDFair percentage of distributors & retailers stock

counterfeits for various component typesBase: 283 channel members

• Counterfeits of drive transmission, suspension and equipments seem to be popular among distributors and wholesalers/retailers

• Although few channel members confess to stocking counterfeits of engine parts also but they are lesser in number

2 6 %1 6 %

3 0 %2 3 %

9 1 %9 4 %9 4 %9 7 %9 8 %

5 5 % 4 8 % 6 0 % 5 3 %5 7 %

3 1 %

6 %6 %5 %

4 %

6 %

O E M N o n -O E M L o c a l C o u n te rf e it

Drive Trsn Engine Electrical Suspension Equipments

Distributor

6 0 %

4 4 % 51%59 %

8 6 %8 9 %8 6 %9 0 %9 3 %

8 7%71% 79 % 8 3 %

8 0 %

57%

18 %2 0 %18 %

14 %

2 3 %



Wholesaler/Retailer

143


BIRDSurprisingly, authorized stations also confess of

stocking local and counterfeit componentsBase: 226 channel members

• Almost all authorized service stations stock OEM approved genuine components. But, few authorized stations covered in the study stocked local and counterfeit

components also

• More than 1/3rd of other service stations confess to stock counterfeit components

– Local/unbranded components are also stocked by 50% of other stations covered

12 % 8 %

9 9 %9 9 %10 0 %9 9 %10 0 %

2 6 %16 %

2 5% 2 3 %2 7%

5% 5% 5%

4 %3 %3 %4 %

4 %



Authorized stations

55%4 4 % 4 7%

53 %

8 0 %8 7%8 4 %8 5%9 5%

77%71% 77% 8 1%

8 1%

54 %

3 9 %3 5%3 4 %

2 7%

3 7%



Other service stations

144


BIRDAs expected, almost 50% of the roadside mechanics

covered stocked counterfeit componentsBase: 357 mechanics

• Counterfeits of drive transmission components are stocked by majority of the roadside mechanics covered

– Suspension and equipments are the next most counterfeited components

• Local components are also being stocked by close to 50% of the mechanics met

• Majority of the respondents claim to stock OEM and Non-OEM genuine components

5 2 %4 3 %

7 4 %8 1 %7 1 %8 0 %8 6 %

8 2 %6 1 % 7 3 %

8 3 %7 9 %

3 7 %

5 1 % 5 4 %

4 1 %4 1 %

3 2 %3 1 %

4 8 %


Drive Trsn Engine Electrical Suspension EquipmentsRoadside mechanics

145


BIRD

Attitude towards auto component replacement- Private vehicle owners

- Commercial vehicle owners

146


BIRD



147


BIRD

For majority of two-wheeler owners, desired source of purchase for various components is not company ASS but other service options

4 7 %3 7 % 3 4 % 3 2 % 3 3 %

2 0 %2 4 % 2 4 % 2 6 % 2 5 %

1 6 %1 5 % 1 7 % 1 6 % 1 5 %

2 1 % 2 2 % 2 3 % 2 4 %

2 % 3 % 3 % 3 % 3 %1 5 %

E n g in e D r iv e E le c t r ic a l S u s p e n s io n E q u ip m e n t s

C o m p a n y A S S S m a ll g a r a g e L a r g e g a r a g e M e c h a n i c S e lfBase: 1141 two-wheeler owners

• In case of engine components, maximum number of two-wheeler users i.e. 47% would like to purchase from company ASS– Rest 53% of the users still prefer to purchase components from other service options

• In case of drive transmission, the percentage of users who would purchase from company ASS drops to just 37%– Although drive transmission problems were faced by the maximum number of users, still they would not go to company ASS for repair/purchase

• For all other categories of components the percentage of users going to company ASS for purchase keeps on decreasing

148


BIRD

On the contrary, four-wheeler owners would prefer purchasing all types of components from company ASS…share of small garages also goes down

6 2 %5 4 % 5 1 % 5 1 % 5 2 %

9 %1 2 % 1 5 % 1 4 % 1 3 %

2 0 %2 2 % 2 3 % 2 1 % 2 1 %

1 1 % 1 0 % 1 1 % 1 2 %8 %


C o m p a n y A S S S m a ll g a r a g e L a r g e g a r a g e M e c h a n i cBase: 1550 four—wheeler owners

• In case of engine components, maximum number of two-wheeler users i.e. 62% would like to purchase from company ASS– This shows the importance given to such components by the users

• In case of drive transmission, the percentage of users who would purchase from company ASS drops to 54%– Around 12% would prefer going to small garages and about 22% to large garages

• For all other categories of components the percentage of users going to company ASS is hovering around 51%

149


BIRD



150


BIRDChoice of auto components purchase source among

commercial vehicle owners is highly fragmented

2 5 %1 7 % 1 8 % 1 7 % 1 7 %

2 3 %2 7 % 2 5 % 2 7 % 2 7 %

2 0 %1 9 % 1 9 % 1 7 % 1 6 %

2 7 % 2 8 % 2 9 % 2 9 %

9 % 1 0 % 1 0 % 1 0 % 1 0 %

2 3 %


C o m p a n y A S S S m a ll g a r a g e L a r g e g a r a g e M e c h a n i c S e lf

• In case of engine components, maximum number of owners i.e. 25% would like to purchase from company ASS– Around 23% prefer small garages and road side mechanics

• In case of other type of components, the percentage of owners who would purchase from company ASS drops to just 17% - 18%– Maximum percentage of owners would like to purchase such components from road side mechanics – The next best option for the owners are small garages

Base:1089 commercial owners

151


BIRD

Discounts offered and promptness of service offered by other service stations are key factors preventing the use of company authorized stations

4 3 % 4 2 % 4 2 %3 6 % 3 6 %

D i s c o u n ts o f fe r e d E x p e n s i v e s e r v i c e s o fc o m p a n y A S S

P r o m p tn e s s o f s e r v i c e E x i s t i n g r e la t i o n w i tho th e r s e r v i c e s tn s

G e n u i n e c o m p o n e n tsa r e c o s t ly

• Over 43% of the commercial vehicle owners have given maximum weight age to discounts offered by other service stations as a key determining factor in choice of such stations over company authorized service station

• Another 42% of the respondents have given high importance to promptness of service (of other service stations) and high cost of services in company authorized service station as next 2 important factors– Over 36% of the respondents perceive genuine components to be costly

• It seems existing relationships with other service stations has an important role to play in the final choice of service destination also

Top Box score

Base:1089 commercial owners

152


BIRD

Attitude towards counterfeit components

153


BIRDMethodology used for mapping attitude

towards counterfeit components

• Battery of statements were exposed to the respondent and level of agreement was sought

• The following scale was used to capture the level of agreement by the respondent

Level of agreement Code

I strongly agree with this statement 1

I somewhat agree with this statement 2

I neither agree nor disagree with this statement 3

I somewhat disagree with this statement 4

I completely disagree with this statement 5

154


BIRD

Around 11% of private owners and 19% of commercial owners confess to purchase of counterfeit components intentionally

5 %

5 2 % 4 8 %

2 2 % 2 7 % 3 1 %3 8 %

3 0 % 3 3 %

6 %

1 8 % 2 5 %

1 6 %

2 6 % 2 1 %

3 3 %

2 4 %2 9 %

9 %

1 0 %

S o m e w h a t a g r e e

S t r o n g ly a g r e e

Base: 2314 private owners

1089 commercial owners

Many times I intentionally buy counterfeits

I am aware about damages caused by counterfeits to my vehicle

I feel cheated when counterfeits are pushed when I have paid for original

Many times counterfeits are sold as originals

Quite frequently original spare parts are not available

Private owner

Commercial owner

• Surprisingly, majority of the private and commercial vehicle owners seem to be aware about the damages caused by counterfeit components to their vehicle

• Also, more than 50% of the respondents feel that quite frequently original spare parts are not available which forces the channel members to push counterfeits

155


BIRD

Majority of the private and commercial owners strongly agree that use of counterfeits increases frequency of repair

6 4 %

5 0 %4 1 %

4 8 %3 8 %

5 3 %4 4 %

1 9 %

2 7 %

2 8 %2 4 %

2 7 %

2 2 %2 7 %

5 0 %

2 6 %





Use of counterfeits reduces the vehicle life

Use of counterfeits causes frequent break-down of the vehicle

Use of counterfeits worsen the overall driving experience

Use of counterfeits increases frequency of repair

Private owner

Commercial owner

• Majority of the private and commercial vehicle owners seem to be aware about the fact that use of counterfeits reduces the useful life of the vehicle and causes frequent breakdowns

• Also, most of the vehicle owners agree that use of counterfeits has a negative impact on the overall driving experience

156


BIRD

Close to 80% of both private and commercial vehicle owners felt the need of increase in number of company authorized service stations

6 0 % 6 5 %

5 0 %

6 5 %

4 8 %5 7 %

4 5 %

2 3 %2 1 %

2 8 %

2 0 %

2 5 %

2 7 %

2 6 %

5 8 %

2 3 %





Repair in authorized service stations should be made cheaper

Number of company authorized service stations should be increased

Counterfeit manufacturers should be dealt with strictly

Re-furbishing of inferior auto components should not be allowed

Private owner

Commercial owner

• More than 75% of both private and commercial vehicle owners felt that the repair in company authorized service stations should be made cheaper so as to attract more and more vehicle owners

• Also, a high percentage of vehicle owners felt re-furbishing of auto components should be banned as they are inferior in quality

157


BIRDCheap price and easy availability are the key reasons

for purchase of counterfeit components

8 1 %

4 8 %

3 1 %2 4 %

1 8 %

8 7 %

5 4 %

4 4 %

2 3 % 2 4 %

1 3 %

C h e a p p r ic e E a s y a v a i la b i l i t y D is c o u n t s W o r d o f m o u t h P a s te x p e r ie n c e s

N o n - a v a i la b i l i t yo f g e n u in e

P r i v a t e o w n e r sC o m m e r c i a l o w n e r s



• About 81% of private owners and around 87% of commercial vehicle owners feel that cheap price of such components motivates people to purchase them

• About 50% of all vehicle owners also feel the easy availability of such components in the market is also a key reason

• Other reasons cited are discounts, word of mouth and past experiences

158


BIRD

Some Suggestions to curb

the growing menace

159


BIRD

Public-private partnership for education of customers against evils of using such components is imperative…

• Jaago Grahak Jaago– This famous tag-line being used by consumer protection cell can also be

replicated in the case of counterfeit components – As large percentage of customers are buying such illicit duplicates under the

impression of being genuine– And as we all know, the kind of danger the consumer and his loved ones are

exposed to on using such duplicate components– Spreading education and awareness among the customers is most important

and this effort has to be jointly supported by public and private stakeholders

• Education of channel members and law enforcement agencies– In addition to the education of the customers, the channel members and law

enforcement agencies need to be educated– This would help in identification and removal of counterfeits from the supply

side

160


BIRDOEM backed service stations/mobile vans need

to provided on National Highways

• According to experts a high percentage of counterfeit components for commercial vehicles are being pushed on National Highways– It is estimated that truck-owners in India spend Rs.220 bn annually on

maintenance of trucks (Source: The Elgi Magazine)

• Despite such huge expenditure, the truck owners had access only to spurious low quality spares and maintenance by untrained mechanics

– The drivers purchase spurious components and claim bills for original components. Though the fleet owner are aware of such malpractices but they do not have any other option

• In our primary survey also, majority of truck owners have recommended expansion of network by the vehicle manufacturers

– In developed countries, there are special services targeted at commercial vehicles commuting on the highways

– Such services offer monthly preventive maintenance and emergency vehicle repairs which are just a phone-call away

• Infrastructure provided includes workshops on highways in addition to mobile vans

161


BIRD

Sharing of market intelligence among the various vehicle manufacturers through associations will definitely help in curbing this menace

• As different vehicle manufacturers, are operating from different geographies the market intelligence is bound to differ– Sharing of market intelligence will help in reduction of counterfeits in the

market fulfilment resulting in better future

• Rationalization of taxes and duty structure– Price difference between an original and counterfeit component can range

between 50% - 150% for high end vehicles– Reduction in the taxes might act as a de-motivator for counterfeit

manufacturers

• Organized retail chains – One-stop shop for various types of genuine components especially in

Northern region where counterfeiting is being done at a very large scale

• Non-metros and small towns to be given equal importance if not more in terms of education

162


BIRD

Summarizing…

163


BIRDKey take-out

Improve awareness of counterfeiting and damages caused among private and commercial vehicle ownersCurrent awareness levels are rather moderate at around 40% awareness only. The message needs to be reinforced continuously by way of an extensive PR activity

Suggested game planPromote use of original equipment and authorized service centres through advertisements in suitable media (auto magazines, general magazines, newspapers, etc.) and articles.

Suggestion 1

Messaging clearly needs to highlight the financial benefits (low breakdown rate leading to lower maintenance cost) and conevnience aspect (lesser number of trips to service station, avoid embarassment on the road)

Get new car owners hooked to authorized service stations by hoardings and materials in the service station, TV messages in waiting rooms, pamphlets, etc.

Target not only owners but also car drivers and auto-mechanics on the benefits of genuine components and how it is more beneficial in the long-run to use genuine components

Suggestion 2

Suggestion 3

Suggestion 4

164


BIRD

Suggested action plan

Awareness Interest Desire Action

Through advertisements in T.V., radio, Internet and industry magazines

Through detailed articles and customer experience studies on websites, newspapers, T.V. auto shows, etc on the benefits of genuine components

By offering value for money warranty offerings, reaching out to even for second hand and old vehicles by way of loyalty programs

By improving the distribution infrastructure of auto components, network of authorized service stations, allow buying `only components’ from service stations

165


BIRD

Thank you!

166


BIRD

Annexure

167


BIRD

Share of counterfeit components by vehicle category- Private vehicles


168


BIRD

In case of scooters, just about 10% of the total expenditure on components is in authorized service station

S c o o t e r s r u n n in g : 1 3 7 L a k h s

N o r th4 8 %W e s t

2 7 %

S o u th1 6 %

E a s t9 %

E x p e n d i t u r e p e r t r ip ( R s . )

3 6 9

1 5 41 1 2

3 1 9

9 71 2 5

0

1 0 0

2 0 0

3 0 0

4 0 0


A t A u th o r i z e d S e r v i c e S ta ti o n s O th e r s

S e r v ic e D e s t in a t io n

% g o i n g to A S S1 0 %

% G o i n g to n o n A S S

9 0 %

C o m p o n e n t s A f t e r m a r k e t ( R s . c r )

A u th o r i z e d , 1 8 1

N o n A u th o r i z e d ,

1 6 2 8

169


BIRDBut it goes up to 15% in case of motorcycles…

M o t o r c y c le s r u n n in g : 1 3 5 L a k h s

N o r th2 0 %

W e s t3 3 %

S o u th3 4 %

E a s t1 3 %


2 8 0

1 1 6 1 2 21 0 81 3 8

3 3 8

0

1 0 0

2 0 0

3 0 0

4 0 0






8 1 %


A u th o r i z e d , 2 8 0


1 5 3 9

170


BIRD

About 1/3rd of total expenditure on components in case of Segment A cars is in authorized service stations

S e g m e n t A c a r s r u n n in g : 1 2 L a k h s

N o r th3 6 %

W e s t2 5 %

S o u th2 6 %

E a s t1 3 %


1 , 6 1 3

4 1 7 4 7 34 3 3 4 6 6

1 , 4 9 0

0

5 0 0

1 , 0 0 0

1 , 5 0 0

2 , 0 0 0






7 3 %


A u th o r i z e d , 1 9 0


5 0 0

171


BIRD

As expected share of authorized service stations increases to almost 50% in case of Segment B & C cars

S e g m e n t A c a r s r u n n in g : 9 L a k h s

N o r th3 6 %

W e s t2 5 %

S o u th2 6 %

E a s t1 3 %


2 , 4 8 1

6 7 0 7 2 34 5 4 5 3 0

1 , 6 6 1

0

5 0 0

1 , 0 0 0

1 , 5 0 0

2 , 0 0 0

2 , 5 0 0

3 , 0 0 0






5 3 %


A u th o r i z e d , 3 9 6


3 3 6

172


BIRD

Expenditure on components in company authorized service station is the highest in case of Segment D cars

S e g m e n t A c a r s r u n n in g : 1 8 0 0 0

N o r th3 6 %

W e s t2 5 %

S o u th2 6 %

E a s t1 3 %


3 , 9 2 4

1 , 1 3 81 , 8 3 8

4 2 6

1 , 2 4 22 , 1 1 4

0

1 , 0 0 0

2 , 0 0 0

3 , 0 0 0

4 , 0 0 0

5 , 0 0 0






4 7 %


A u th o r i z e d , 1 5


8

173


BIRDSummarizing the figures of component expenditure in

authorised station for private vehicles

2 2 %1 1 % 1 6 %

2 8 %

5 4 %6 5 %

7 8 %8 8 % 8 3 %

7 2 %

4 6 %3 5 %

T o ta l S c o o te r M o to r c y c le s S e g A S e g B & C S e g D


Private vehicles

• In case of cars, the expenditure on components of Segment D cars in company authorized service station is the highest at 65% and lowest being in the case of Segment A cars at 28%

– It seems that as we move up from one segment to other in case of cars, the share of company authorized service stations increases significantly• In case of scooters the share is 11% and close to 15% for motorcycles

174


BIRD

Share of counterfeit components by vehicle category - Private vehicles


175


BIRDFor all commercial vehicles, expenditure on components

in authorized service stations is very low at 15%

1 5 % 1 5 % 1 0 % 1 5 % 2 2 %

8 5 % 8 5 % 9 0 % 8 5 % 7 8 %

T o ta l H C V L C V B u s e s T a x ie s


Commercial vehicles

• In case of four-wheeler taxies, the expenditure on components in company authorized service station is highest at 22%– On the hindsight in case of LCVs it is the lowest at 10%

• For HCVs and buses the share of authorized stations is 15%

Rs. 3852 cr Rs. 1740 cr Rs. 1692 cr Rs. 1229 crRs. 8513 cr

176


BIRD

Entry of counterfeit components in the auto

component after-market in India

177


BIRDStructure of auto component replacement

market in IndiaAuto Component

Manufacturers

Authorised Distributors

Wholesalers

Retailer

Mechanic

OE sales

Company ASS

In the recent past, the sales to OEMs for aftermarket has been increasing. The

OEMs now prefer to interact with their

customers directly rather than through their vendors

Customers

Institutional sales

178


BIRDHow do counterfeit components enter the

market?• Different respondents have different view

points. However, one thing which was common was that majority of such components enter the market through the channel:

Auto Component Manufacturers

Authorised Distributors

Wholesalers

Retailer

Mechanic

Majority believe that it enters at the retailer level

Some also believe that wholesalers push it

Customer

Few say mechanics are also involved

179


BIRD

Automobile

manufacturers

Auto component

manufacturers

Channel

members

Counterfeits

Vicious cycle forcing channel members to push counterfeits • Want to deal with the

customers directly

• Contracts with auto-component manufacturers for supply of components at decreasing prices in future

• Forced to maximize profits from replacement market

• Aggressive pricing policy

• Do not consider economic feasibility of channel at times

• In recent past have squeezed margins of channel in order to become more competitive

• Bear the brunt of reducing margins

• Temptation to earn higher margins

• No incentives for being a faithful member

180


BIRDCounterfeit manufacturers are exclusively into the

business of manufacturing such components

• Domestic counterfeit manufacturers– Have tie-ups with retailers and wholesalers– Source second hand cheap machinery– Have manufacturing at one place and printing

at another• Gather both at one place and pack them as

original

– Fast moving components are being copied– Dies are counterfeited by reverse engineering– Capacity to duplicate any component within 3-4

days after change in packaging

Source of Counterfeits

• Imports– Mainly from China and

other Asian countries– Illegally enter the

country– Most of the time

components come unbranded and unpacked

– Quality comparatively better

Key hubs in India: Punjab (Ludhiana, Jalandhar) Delhi and Tamil Nadu

181


BIRD

Counterfeit components have a negative impact on the brand image and trust placed by the customers on OEMs and their partners

• Customers are under the impression that they are purchasing genuine

components but in actual counterfeit components have been pushed:

– Such components underperforms with respect to the expectations resulting in

negative brand association and ultimately negative word of mouth

– It also has a negative impact on the sales of the organized sector player

– In addition to the domestic market users, the export market is also affected by

counterfeit components• Major auto component manufacturers have conducted raids and caught export

consignments containing counterfeit components under their brand name to key hubs

across the world especially Dubai

– Mico Bosch caught an export consignment worth Rs.50 crores containing

fast moving counterfeit components under their brand name

– Though most of the stakeholders have taken some kind of initiatives in this regard

182


BIRDKey initiatives taken to curb the menace of counterfeit

components by various stakeholders

• Investing resources to have a separate brand protection cell within the organization• Use of inventive holograms in packaging• Educating the customers, channel about the change in packaging through

exhibitions/ campaigns/ mobile vans/ melas etc• Hiring specialized agencies to conduct raids on counterfeit manufacturers and

sellers• Getting closer to the customer by supplying components to the after market directly

rather than through the vendors• Opening company owned showrooms in key urban areas in order to provide

genuine components to the customers• Regular stock audits carried out on the channel members in order to instil a sense

of discipline• Dealing with large institutional buyers directly and not through channel

183


BIRDSome quotes to be shared…

“….CF manufacturers copy anything which sells…..” - large auto component manufacturer

“….channel members also want to eat chicken and drink alcohol, but at the current margins they are not able to do that…..thus they sell CF components….”

- large auto component manufacturer“…social ethics need to created against the purchase of CF….as all the customers purchase

such components on the assumption that they are purchasing genuine components….”- large OEM & Association

“…change in packaging is a viscous cycles, it results in more confusion in the market among the channel and customers….also within 3-4 day period it is again copied…”

- large auto component manufacturer“…there could be some counterfeit components being passed through company ASS in remote

locations when supply is irregular….” - large OEM

“…government should place adequate checks in order to ensure supply of genuine components in case of large institutional purchases…”

- large auto component manufacturer

184


BIRD

Detailed profile of the respondents met

185


BIRD


186


BIRD1288 two-wheelers and 1659 four-wheelers of all types

were owned by private vehicle owners covered… their ownership by town class


1659 four-wheelers

4 7 %

3 5 %

1 0 % 8 %

5 0 %

3 4 %

1 3 %

3 %

M e t r o N o n - m e t r o O t h e r N M S m a ll

2 - w h e e le r

4 - w h e e le r

• Private vehicle owners in metros owned over 47% of the total two-wheelers encountered during the study followed by non-metros at 35%

• Similarly in the case of four-wheeler, ownership of the private vehicle owners in metros contributed to over 50% of the total followed by non-metros at 34%

187


BIRDMaximum percentage of vehicles owned were

purchased in the 3 year period from 2000-02

1 8 %

3 8 %

1 8 %

1 1 %

5 %

1 1 %

5 %

2 5 %

9 %

3 % 4 %

5 5 %

A f t e r 2 0 0 2 2 0 0 0 - 0 2 1 9 9 7 - 9 9 1 9 9 4 - 9 6 9 1 - 9 3 B e f o r e 1 9 9 1

2 - w h e e le r

4 - w h e e le r


1659 four-wheelers

• Over 38% of all two-wheelers owned were manufactured in that period as compared to 55% of the four-wheelers• In case of two-wheelers over 18% of the vehicles were purchased after 2002 as compared to just 5% in four-

wheelers

188


BIRD

More than 2/3rd of all the vehicles encountered were first hand purchases…with non-metro cities having the highest percentage of first hand ownership

Two-wheelers Four-wheelers


1659 four-wheelers

• In case of two-wheelers over 83% of the vehicles are first hand purchases – The percentage of first hand vehicles is highest in the non-metros at 88%. Purchasing power of people in most of these non-metro cities have increased significantly in the recent past – As expected the percentage of first hand vehicles in the case of Small towns is comparatively lesser

• In case of four-wheelers over 75% of the vehicles are first hand purchases – Again the highest number of first hand purchases are in non-metros and the lowest in Small towns

7 7 %8 3 %8 8 %8 1 %8 3 %

1 7 % 1 9 % 1 2 % 1 7 % 2 3 %

T o ta l M e t r o N o nm e t r o s

O th e r N M S m a ll

F ir s t h a n d S e c o n d h a n d

6 4 %7 7 %8 0 %

7 2 %7 5 %

2 5 % 2 8 % 2 0 % 2 3 %3 6 %



F ir s t h a n d S e c o n d h a n d

189


BIRDAround 68% of two-wheelers and 72% of four-

wheelers were first time purchases

Two-wheelers Four-wheelers

1 5 % 1 6 % 1 4 % 1 9 %5 %

7 5 %6 6 %6 4 %7 0 %6 8 %

1 7 % 1 4 % 2 2 % 1 5 %2 0 %



F ir s t t im e p u r c h a s e A d d it io n a l R e p la c e m e n t

1 3 % 1 6 % 7 %2 0 %

9 3 %

6 3 %7 7 %7 0 %7 2 %

1 5 % 1 4 %1 6 %

1 7 %

3 %4 %



F ir s t t im e p u r c h a s e A d d it io n a l R e p la c e m e n t


1659 four-wheelers

• In case of two-wheelers over 70% of vehicles purchased in metro cities are first time purchases for a household– However, in case of non-metro cities only 64% of the two-wheelers purchased are first time purchases– As expected the percentage of first time purchases in the case of Small towns is highest at 75%

• In case of four-wheelers over 70% of the vehicles purchased in metro cities are first time purchases – However, in case of non-metro cities over 77% of the four-wheelers purchased are first time purchases probably proving the increase in expenditure by the people in such locations– As expected the percentage of first time purchases in the case of Small towns is highest at 93%

190


BIRD

On an average 4-wheelers cover a distance of 39 kms/day in a weekday as compared to 31 kms/day for 2-wheelers…highest being in other NM cities

3 0 . 93 3 . 6

2 8 . 5

3 4 . 5

2 1 . 2

3 8 . 6 3 9 . 33 6 . 1

4 7 . 3

2 2 . 4


T w o - w h e e l e r

F o u r - w h e e l e r


1659 four-wheelers

• In case of two wheelers average distance covered per weekday (working days):– Is highest in the case of Other NM cities at 34 kms/day

– Is lowest in the case of Small towns at 21kms/day

• In case of four-wheelers average distance covered per weekday:– Is highest in the case of other NM at 47 kms/day

– Is lowest in the case of Small towns at 22 kms/day

191


BIRDSimilarly, other NM vehicle owners cover

maximum distance per day on weekends……

2 7 . 6 2 7 . 8 2 8 . 93 1 . 9

1 5 . 6

4 2 . 3 4 0 . 24 3 . 7

5 2 . 5

1 9


T w o - w h e e l e r

F o u r - w h e e l e r

• In case of two wheelers average distance covered per day on weekends (Holidays) is 22kms/day– This is much lower than the average distance covered per weekday which stood at 31kms/day

• Probably people choose to rest or travel with entire family on the weekend for which two-wheeler might not be the suitable vehicle always

• In case of four-wheelers average distance covered per day on weekends is 42kms/day – This figure is slightly higher than the average distance covered per weekday which is 39kms/day

• Probably four-wheelers are used for family travel/visits on the weekends


1659 four-wheelers

192


BIRD

Regular Service Details for

Two-wheelers - Scooters

- Motorcycles

193


BIRDPaid routine service was the primary nature of last

regular service among all two-wheeler owners

3 2 %2 5 % 3 0 %

8 %

9 2 %

6 9 %7 4 %6 5 %

1 %1 %2 %


P a id r o u t in e s e r v ic e B e c a u s e o f m a l f u n c t io n A c c id e n t a l r e p a i r s

• In case of metros over 65% of the users took their vehicle for paid routine service as compared to 74% in non-metros– Also in metros 32% of the users took their vehicle for regular service because of malfunction as compared to 25% in the case of non-metros

• In case of other NM over 69% of the users took their vehicle for paid routine service as compared to 92% in small cities– Also in case of other NM more than 30% took their vehicle for regular service as a result of malfunction compared to just 8% in case of small cities


194


BIRD

Frequency of regular service ranges from 4.5 – 5 months in all locations except small cities where it increases to once in every 4 months

4 8 %5 8 %

4 8 % 4 5 %

3 9 %3 6 %

3 5 %5 1 %

4 %4 %

7 % 3 %1 0 % 1 %

2 %

3 %1 % 3 %2 %

M e t r o N o n - m e t r o O t h e r N M S m a l l4 - 6 m t h s 1 - 3 m t h s 6 - 9 m t h s 9 - 1 2 m t h s > 1 2

• In case of metro cities, over48% of the users have reported 4-6 months as frequency of regular service as compared to 58% in the case of non-metros– More than 1/3rd of the vehicle owners in both metros and non-metros have reported 1-3 months as frequency

• In case of Other NM cities, over48% of the users have reported 4-6 months as frequency of regular service as compared to just 45% in the case of small– Over 35% of the vehicle owners in other NM and 51% in small have reported 1-3 months as frequency of regular service

4.96 mths 4.58 mths 5.32 mths 3.98 mthsBase: 1058 two-wheelers

195


BIRD

When it comes to regular service in case of scooters, higher percentage of vehicles are been taken to company ASS in comparison to normal service

1 9 %4 0 % 2 6 %

7 %1 3 %

1 7 % 1 3 % 5 %

5 1 %3 2 % 3 8 %

8 5 %

1 7 %8 % 2 1 %

2 %3 % 3 %

M e tr o N o n m e t r o s O th e r N M S m a ll


Base: 327 scooters

• In case of metros over 13% of the users took their vehicle for regular service to company ASS compared to 17% in the case of non-metros– However, small garages and road-side mechanics are still the favorite service destinations among the users

• In case of other NM over 13% of the users took their vehicle for regular service to company ASS as compared to just 5% in case of small cities– Small garages are preferred by 85% of the users in small cities as compared to 38% in case of other NM

196


BIRD

In case of motorcycles almost 1/3rd of the vehicles are being taken to company ASS for regular service in case of metros and non-metros

1 1 %3 1 %

2 5 %

2 %

2 0 %6 %

1 3 %

9 %2 7 % 2 7 % 3 2 %9 %

3 9 % 3 5 % 3 0 %

7 8 %

1 %3 % 2 %

M e t r o N o n m e t r o s O t h e r N M S m a l l


• In case of metros and non-metros over 27% of the users took their vehicle for regular service to company ASS – Percentage of vehicles being serviced at small garages and road side mechanics are slightly lesser as compared to scooters

• In case of other NM over 32% of the users took their vehicle for regular service to company ASS as compared to just 9% in case of small cities– Small garages are preferred by 78% of the users in small cities as compared to 30% in case of other NM


197


BIRD

Two-wheelers owners who regularly purchase components from non-company authorized service stations claim to spend 70% on genuine components

6 9 %

7 6 %

6 6 %

7 1 %

1 3 %

1 6 %

2 0 %

1 8 %

1 6 %

7 %

1 0 %

9 %

4 %

2 %

2 %

1 %

S m a l l

O t h e r N M

N o n - m e t r o

M e t r o



• In case of metros and non-metros on an average users spend 70% on purchase of genuine components – Approximately 2%- 4% of the expenditure is on duplicate components

– Rest is on local or other brands of components

• In case of other NM and small cities the trend is almost similar– Approximately 20% of the expenditure is on other or local brands of components

198


BIRD

Average expenditure on components has been the highest in case of metro cities…although in motorcycles the difference is not very high

3 3 4

2 3 4 2 3 2

1 2 0

3 5 73 4 1

3 2 4

1 5 1

M e t r o N o n - m e t r o O t h e r N M S m a l l

S c o o te r s


In Rs.

• In case of metros, the average expenditure on components by scooter users was Rs.334 and in case of motorcycle users it was Rs.351• In case of non-metros, the average expenditure on components by scooter users was Rs.234 and in case of motorcycle users it was Rs.341• In case of other NM, the average expenditure on components by scooter users was Rs.232 and in case of motorcycle users it was Rs.324• In small cities, average expenditure by scooter users was Rs. 120 and Rs. 151 by motorcycle users


199


BIRD

3 8 3

2 8 5 2 7 4

2 0 5

1 2 21 0 2 1 0 0

7 4

1 2 6 1 1 7 1 2 08 4



In case of regular service also, company ASS are almost 50% more costlier than other service options for scooter users

In Rs.

• Users who took their vehicle to company ASS for last regular service spent on an average Rs.383 on purchasing components as compared to:– Rs.285 in case of large garages– Rs.274 in case of small garages– Rs.205 in case of road side mechanics

• Expenditure on labor and consumables is also highest in case of company ASS– This again might be a big deterrent for price-sensitive users who take their vehicle for regular servicing

Base: 327 scooters

200


BIRD

3 9 6

2 5 5

3 3 5

2 4 6

1 6 1

9 4 1 0 3 9 6

1 3 61 1 3 1 2 5 1 1 2



Regular service of motorcycles in company ASS is not as costly compared to other service stations

In Rs.


• Expenditure on labor and consumables is highest in case of company ASS– It seems that the motorcycle manufacturers are not charging a very high premium for normal or regular service


201


BIRD

A fair percentage of the users have purchased few genuine and few local components…although majority still claim to have purchased genuine components

1 2 %

2 1 %

1 1 %2 0 %

8 %

7 %9 % 1 1 %1 4 %

1 3 %

5 6 %6 5 %

4 5 %6 5 %

9 %8 %7 %

1 3 % 6 %


G e n u in e F e w g e n u in e a n d r e s t lo c a l D u p l ic a t e / R e f u r b is h e d N o t s u r e O t h e r s

• In case of metros over 65% of the users claim to purchase genuine components in last service as compared to 43% in case of non-metros– And in case of non-metros over 7% of the users purchased duplicate components compared to 8% in the case of metros

• In case of other NM and small cities, around 60% of the users claim to purchase genuine components – Also in case of small cities more than 11% of the users purchased duplicate components compared to 9% in the case of other NM


202


BIRD

Regular Service Details for

Four-wheelers

203


BIRD

Paid routine service was the primary nature of last regular service among four-wheelers owners across locations

2 0 % 1 8 %

2 9 %

4 %8 % 5 % 1 4 %

9 3 %

5 4 %7 3 %

6 9 %

3 %3 %4 %3 %


P a id r o u t in e s e r v ic e B e c a u s e o f m a l f u n c t io n U n d e r w a r r a n t y A c c id e n t a l r e p a i r s

• In case of metros over 69% of the users took their vehicle for paid routine service as compared to 73% in non-metros– Also in metros 20% of the users took their vehicle for regular service because of malfunction as compared to 18% in the case of non-metros

• In case of other NM over 54% of the users took their vehicle for paid routine service as compared to 93% in small cities– Also in case of other NM more than 29% took their vehicle for regular service as a result of malfunction compared to just 4% in case of small cities


204


BIRD

When it comes to regular service, percentage of vehicles being serviced at company ASS increases substantially….specially in case of small towns

4 8 % 5 2 %7 1 %

5 6 %

2 9 % 2 0 %

1 0 % 3 2 %

8 %2 0 % 2 0 %

1 6 % 1 2 %3 %3 %

M e t r o N o n m e t r o s O t h e r N M S m a l l


• In case of metro cities, almost 50% of the vehicles were serviced at company ASS as compared to 52% in the case of non-metros– Around 30% of metro vehicles were serviced at large garages compared to 20% in non-metros where an equal number were serviced at small garages also

• In case of other NM cities, around 71% of the vehicles were serviced at company ASS compared to 56% in small towns – Also in case of other NM cities, over 16% vehicles were serviced at small garages– But in case of small towns, more than 32% of the vehicles were serviced at large garages


205


BIRD

Respondents who regularly purchase components from non-company authorised service stations claim to spend maximum on purchase of genuine components

9 8 %

8 9 %

7 2 %

8 1 %

7 %

1 7 %

1 2 %

2 %

4 %

7 %

5 %

4 %

2 %

S m a l l

O t h e r N M

N o n - m e t r o

M e t r o


• In case of metros on an average users spend 81% on purchase of genuine components compared to 72% in the case of non-metros– Approximately 2%- 4% of the expenditure is on duplicate components

– Rest is on local or other brands of components

• In case of other NM and small towns almost majority of the users claim to purchase genuine components only


206


BIRD

Average expenditure on components in case of regular service is lower as compared to normal service

1 1 9 7

1 7 3 8

2 2 4 2

3 1 1 6

2 0 9 8

A B & C D E M U V / S U V

In Rs.

• As normal service included comparatively higher percentage of accidental cases

– Also the base of respondents in case of regular service is higher which might have averaged out the exceptional cases encountered

• The average expenditure on components in the last regular service ranges from Rs.1197 in the case of Segment A cars to Rs.3116 in the case of Segment E cars


207


BIRD

1 6 9 5

1 2 5 6 1 3 1 0

9 8 1

5 0 93 8 2 3 2 2

2 2 4

7 6 6

5 1 03 9 4

3 3 3



Gap between expenditure on components in Company ASS Vs other service stations reduces in case of regular service

In Rs.


• Expenditure on labor and consumables in company ASS is also comparable with other service options


Research-based Consultancy for B2B and technology Markets BIRD 1 Study to Size the Counterfeit...

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Transcript of Research-based Consultancy for B2B and technology Markets BIRD 1 Study to Size the Counterfeit...