South-East Asia What India can learn?

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Oct 28, 2013 (3 years and 5 months ago)

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Developments in the Vibrant After
-
markets of
South
-
East Asia


What India can learn?

Automotive Component Manufacturers Association of India

New Delhi, India

8 February, 2013

2

© 2013 J.D. Power Asia Pacif ic, The McGraw
-
Hill Companies, Inc

CONFIDENTIAL. No part of this document may be reproduced or copied without prior permission f rom J.D. Power Asia Pacif ic..

Drivers of a Vibrant Aftermarket


After
-
Market
Business

Growth in Primary
Vehicle Market

End
Customer
Behavior

Competitive Threat

Trade
Environment

3

© 2013 J.D. Power Asia Pacif ic, The McGraw
-
Hill Companies, Inc

CONFIDENTIAL. No part of this document may be reproduced or copied without prior permission f rom J.D. Power Asia Pacif ic..

Future

Outlook in India, Thailand and Indonesia

The three markets are poised to grow even against macro
-
economic

challenges

Sales & Production Outlook


Light Vehicles



India will continue its path of
growth even though
beseeched by challenges due
to sheer size and demography.



Thailand will also grow albeit
slowly.



Indonesia amidst significant
economic growth is poised to
overtake Thailand to become a
key market in the region
.



Overall positive trend in the
primary sales is likely to have
a significant positive impact on
the after
-
market volumes and
revenues.

India

LV Sales

3.6m

7.9m

Thailand

LV Sales

1.2m

1.5m

Indonesia

LV Sales

1.08m

1.6m

COMMENTS

2018

2013

4

© 2013 J.D. Power Asia Pacif ic, The McGraw
-
Hill Companies, Inc

CONFIDENTIAL. No part of this document may be reproduced or copied without prior permission f rom J.D. Power Asia Pacif ic..

Drivers of a Vibrant Aftermarket


After
-
Market
Business

Growth in Primary
Vehicle Market

End
Customer
Behavior

Competitive Threat

Trade
Environment

5

© 2013 J.D. Power Asia Pacif ic, The McGraw
-
Hill Companies, Inc

CONFIDENTIAL. No part of this document may be reproduced or copied without prior permission f rom J.D. Power Asia Pacif ic..

Trend of Servicing at Non
-
authorized
N
etwork
D
uring Warranty

Decreasing preference for servicing cars at non
-
authorized network

observed during the initial ownership period.

% People servicing cars at non
-
authorized network

COMMENTS



Steep decline on customer
propensity to visit non
-
authorized
service outlets
observed across the 3
markets.



Among people visiting the
non
-
authorized network,
preference to adhere to oil /
lubricant change.



Essentially, reduction in the
scope of using parts observed
across markets in the non
-
authorized network during in
-
warranty

27%

11%

8%

38%

20%

10%

India

Thailand

Indonesia

16%

11%

2%

2005

2008

2012

6

© 2013 J.D. Power Asia Pacif ic, The McGraw
-
Hill Companies, Inc

CONFIDENTIAL. No part of this document may be reproduced or copied without prior permission f rom J.D. Power Asia Pacif ic..

Reasons for
U
tilizing
N
on
-
authorized
N
etwork

Across years, the biggest advantage of the non
-
authorized network


accessibility


has been diminished from a customers’ perspective

2005

2012

Reasons
for use of
non
-
authorized network

Source: JDPAP Sy ndicated Studies

Source: JDPAP Sy ndicated Studies

7

© 2013 J.D. Power Asia Pacif ic, The McGraw
-
Hill Companies, Inc

CONFIDENTIAL. No part of this document may be reproduced or copied without prior permission f rom J.D. Power Asia Pacif ic..

Trend of Servicing at non
-
authorized network: USA Market

As the vehicle ages, customers propensity to move towards a non
-
authorized
service network increases

% People servicing cars at non
-
authorized network

COMMENTS



As
the vehicle ages
propensity to service at an
after
-
market chain increases.



In the USA, close to 43%
customers in their 5
th

year of
ownership, visit a non
-
OEM
sponsored workshop for their
service needs.



Similar trend is likely to
feature even in India.

Source: JDPAP Sy ndicated Studies

17%

43%

1 Year
Owners
2 Year
Owners
3 Year
Owners
4 Year
Owners
5 Year
Owners
USA

8

© 2013 J.D. Power Asia Pacif ic, The McGraw
-
Hill Companies, Inc

CONFIDENTIAL. No part of this document may be reproduced or copied without prior permission f rom J.D. Power Asia Pacif ic..

Propensity to Service By Type of Service: During Vs. After Warranty


7x

4x

4x

Lube/ Oil/ Filter
Change
Other routine
maintenance
Repairs
Increase in Customer Propensity

Authorized Vs. Non
-
Authorized

COMMENTS



Customers propensity to
have their cars serviced at
Non
-
authorized network
increases across the types of
service



Maximum increase seen on
simpler tasks like
Lube/Oil/Filter Change

9

© 2013 J.D. Power Asia Pacif ic, The McGraw
-
Hill Companies, Inc

CONFIDENTIAL. No part of this document may be reproduced or copied without prior permission f rom J.D. Power Asia Pacif ic..

Drivers of a Vibrant Aftermarket


After
-
Market
Business

Growth in Primary
Vehicle Market

End
Customer
Behavior

Competitive Threat

Trade
Environment

10

© 2013 J.D. Power Asia Pacif ic, The McGraw
-
Hill Companies, Inc

CONFIDENTIAL. No part of this document may be reproduced or copied without prior permission f rom J.D. Power Asia Pacif ic..

Drivers of a Vibrant Aftermarket


Accessibility to

Workshops

Quality of
Work

Quality of
Vehicle

Trust

11

© 2013 J.D. Power Asia Pacif ic, The McGraw
-
Hill Companies, Inc

CONFIDENTIAL. No part of this document may be reproduced or copied without prior permission f rom J.D. Power Asia Pacif ic..

Accessibility of Workshops

Quantum growth in the spread of authorized service outlets

across the three countries.

COMMENTS



Proliferation of full fledged
authorized dealerships
.



In addition, stand


alone
service and spares centers
have been added.



Geographic penetration has
resulted
authorized
workshops in Tier 2 and Tier
3 towns.



As a result, customers are
being reached out to by
OEMs’ more effectively.


Outlet Increase

Past 5 Years

50%

15%

10%

Source:Industry,JDPAP

Estimates

12

© 2013 J.D. Power Asia Pacif ic, The McGraw
-
Hill Companies, Inc

CONFIDENTIAL. No part of this document may be reproduced or copied without prior permission f rom J.D. Power Asia Pacif ic..

Quality of work done

The last few years has seen overall improvement on work
quality being administered at authorized workshops.



Increased focus on
ensuring that processes are
adhered to by OEMs.



Strengthening of the VOC
system at
authorized
networks further
assisting
improvement.



Greater focus towards
retention of customers post
warranty.



Resulting in better quality of
service at
authorized
workshops today.

90%

92%

95%

99%

100%

98%

97%

97%

98%

2010
2011
2012
India
Thailand
Indonesia
COMMENTS

Trend of service quality

Source: JDPAP Sy ndicat ed St udies

13

© 2013 J.D. Power Asia Pacif ic, The McGraw
-
Hill Companies, Inc

CONFIDENTIAL. No part of this document may be reproduced or copied without prior permission f rom J.D. Power Asia Pacif ic..

Trust

Over years, structural changes in the OEM workshops have
brought about a sense of “trust” from customers



Regular measurement
systems of their own
performance coupled with
VOC feedback has made the
authorized network better
aligned to customer needs.




Structural changes in dealer
organizations, proactive
communication have resulted
in customers building sense of
“trust”.

COMMENTS

Quality

Cost

Deliver
y

Customer

Feedback

Performance

Measure

Organization
Structure

Escalation &
Review

Customer
Centric
Process

Proactive

Communication

14

© 2013 J.D. Power Asia Pacif ic, The McGraw
-
Hill Companies, Inc

CONFIDENTIAL. No part of this document may be reproduced or copied without prior permission f rom J.D. Power Asia Pacif ic..

Quality & Complexity of Vehicles

Even with higher feature contenting, the automobile industry

has witnessed declined in problems experienced.



Manufacturing quality and
supplier quality has improved
dramatically.



Fewer problems reported


reduced incidence of repairs
per car.



Vehicles
becoming more
complex from an engineering
perspective



increased
complexity of repair


need
for specialized tools, training,
manpower

50
100
150
200
250
India
Thailand
Indonesia
AC
Power steering
Central locking
Power windows
Keyless entry
2000 Industry
2011 Industry
COMMENTS

2005

2008

2012

Source: JDPAP Sy ndicated Studies

Problems reported per 100 vehicles

Change in Feature Contenting

2.4x

2.3x

2.5x

2.1x

0.33x

15

© 2013 J.D. Power Asia Pacif ic, The McGraw
-
Hill Companies, Inc

CONFIDENTIAL. No part of this document may be reproduced or copied without prior permission f rom J.D. Power Asia Pacif ic..

Drivers of a Vibrant Aftermarket


After
-
Market
Business

Growth in Primary
Vehicle Market

End
Customer
Behavior

Competitive Threat

Trade
Environment

16

© 2013 J.D. Power Asia Pacif ic, The McGraw
-
Hill Companies, Inc

CONFIDENTIAL. No part of this document may be reproduced or copied without prior permission f rom J.D. Power Asia Pacif ic..

Collaborative approach to Address End
-
Customer Requirements

Collaboration
to ensure outreach of genuine spares to the end customers

have assisted the non
-
OEM service chains to flourish in Thailand.

Parts being
produced by:

Given out to:

(Stage 1)

End Users

OEM

Tier 1
Supplier

Generic
Suppliers

OEM
Dealers

Parts
Distributor
(Multi
-
brand)

Non
-

OEM
service
Chains

Parts
Sub
-
Dealers

Given out to:

(Stage 2)

Given out to:

(Stage 3)

Local
Repair
Outlets

End

Customer

Case Study: Thailand

17

© 2013 J.D. Power Asia Pacif ic, The McGraw
-
Hill Companies, Inc

CONFIDENTIAL. No part of this document may be reproduced or copied without prior permission f rom J.D. Power Asia Pacif ic..

Thailand Case Study (1)

B
-
QUIK is one of the largest and successful non OEM service chains in

Thailand

B
-
QUIK’s core promise lies in



Quick Service.


Trained technicians.



Genuine Parts.

18

© 2013 J.D. Power Asia Pacif ic, The McGraw
-
Hill Companies, Inc

CONFIDENTIAL. No part of this document may be reproduced or copied without prior permission f rom J.D. Power Asia Pacif ic..

Thailand Case Study (2)

COCKPIT is another large and successful non OEM service chains in

Thailand, backed by Bridgestone Thailand.

19

© 2013 J.D. Power Asia Pacif ic, The McGraw
-
Hill Companies, Inc

CONFIDENTIAL. No part of this document may be reproduced or copied without prior permission f rom J.D. Power Asia Pacif ic..

Growth of After
-
Market service chain

Last 3 years witness significant growth on non
-
authorized service chains in
Thailand

Network growth of Non
-
OEM service chains

COMMENTS



Focus on providing quick
service supported by suitable
value chain of spares led to
the growth of non
-
OEM
sponsored service chains in
Thailand.

382

454

494

2010
2011
2012
19%

9%

20

© 2013 J.D. Power Asia Pacif ic, The McGraw
-
Hill Companies, Inc

CONFIDENTIAL. No part of this document may be reproduced or copied without prior permission f rom J.D. Power Asia Pacif ic..

Does the need exist for this kind of set
-
up in India:

Sheer geographical spread and changing ownership numbers will drive
the requirement for non
-
OEM sponsored service set
-
up.

Lag between geographical expansion of sales and that of network
expansion

Rising service load will bring in stress on current OEM workshop
infrastructure

Cost pressures from customers will
restrict investment in infrastructure.

Pressure of handling influx of new
cars likely to result
in dilution of focus
on retention.

1

2

3

4

21

© 2013 J.D. Power Asia Pacif ic, The McGraw
-
Hill Companies, Inc

CONFIDENTIAL. No part of this document may be reproduced or copied without prior permission f rom J.D. Power Asia Pacif ic..

Key Enablers to Successful Aftermarket Venture:

Differentiated
aftermarket service brand
positioning supported
with a sharp
focus on the customer


End
-
Customer

Choose Appropriate
Business

Model

Clear Core
Positioning


S
ervice

Sharp Focus
on
Execution


Network Planning

Build the Brand


Trust

22

© 2013 J.D. Power Asia Pacif ic, The McGraw
-
Hill Companies, Inc

CONFIDENTIAL. No part of this document may be reproduced or copied without prior permission f rom J.D. Power Asia Pacif ic..

Thank You!