TVS shifts up a gear; turns focus to on-demand mobility services

With a renewed focus on a largely unorganised market, the firm is hoping to become India's largest on-demand mobility service provider

The $8.5 billion TVS Group - best known for its scooters, motorcycles, auto components and and logistics - has renewed focus on another arm of its business. And that is TVS’ aftermarket solutions company, TVS Automobile Solutions (TAS). A part of the group’s 109-year-old dealership and distribution arm TVS & Sons, TAS generates a handsome Rs 2,000 crore in revenues annually.

Sensing an opportunity in the largely unorganised market, the company is repositioning itself as a one-stop solution provider by aggregating the unorganised garages and integrating their array of aftermarket services to offer standardised and speedy service across the country. It already offers service, breakdown and accident assistance round-the-clock, pan-India.

To become India's largest on-demand mobility service provider, expanding its physical infrastructure won't be enough. So TAS is bringing all stakeholders -- distributors, retailers and garages --- on a single digital platform. All this may sound easy, but it is a humongous effort in an industry where margin is thin and competition from the unorganised sector is rampant.

Besides hopping on to the digital bandwagon, TAS's offline strategy rests on two pillars -- expand geographically, while offering cutting-edge technology. "We have taken the leadership in transforming Indian automotive aftermarket by creating an ecosystem of retailers, garages and fleet wherein each stakeholder is benefited in terms of growth, efficiencies and profitability by actively participating in the value creation for end customers,” says says G Srinivasa Raghavan, executive director of TAS.

But first, imagine the complexity involved. The independent aftermarket comprises full-service franchisees, outlets dealing in over-the-counter parts, workshops and garages. They could be located in far-flung areas, with very little in terms if quality control. That said, the opportunity is immense. The industry is estimated to be around Rs 55,000 crore and is growing at around 8-12 per cent every year. Aftermarket comprises of vehicles that have gone outside the dealership community to a completely fragmented market services by a combination of retailers, distributors and garages.

There are about 30-35 million cars and 600,000 CVs outside the warranty period, which need to be serviced. On an average, a truck owner spends around Rs 1.75 lakh and a car owner spends around Rs 30,000-40,000 per year on services, says Raghavan.

The industry is taking the first steps towards being organised since the price gap between the organised and the unorganised sector is narrowing after the introduction of the goods and services tax (GST). For example, taxes for parts like filters have fallen to 18 per cent from around 30 per cent earlier. The other major reason being that vehicles are getting more connected digitally, something many roadside garages may not be able to handle.

Entrepreneurship and innovation are the key propositions that TAS is offering partners to get over such hardships. Its franchisee model will encourage entrepreneurship, while digital innovation will help make partners self-sufficient. "Our strategy is simple. Let the customer drive or use the car, we will take care of the maintenance and service," says Raghavan, adding that TVS has been in the automotive aftermarket business for more than 100 years now and it "understands vehicles, components and the eco-system better than anybody else".

As far as the physical retail model is concerned, the idea is to aggregate all participating CV retailers under one banner -- PartSmart, while for garages for passenger vehicles, the umbrella brand will be MyTVS.

This franchisee model has brought a large chunk of mom-and-pop service providers under the umbrella of organised service. Today, it has more than 300 PartSmart stores across the country and is looking at increasing the number to 1,000 by 2020. This will not only make TAS the biggest organised service chain in India, but also the largest in the world, outside North America, says Raghavan.

Under MyTVS, the company caters to owners of a range of car brands. There are over 400 entrepreneurs under this structure like Mukesh Sethi, an apparel manufacturer from New Delhi, who decided to take the franchise of MyTVS in 2017 to make money from his unproductive land. Sethi now services a whole range of brands -- from Maruti to Mercedes -- and promises turnaround of a vehicle in about three days, against 9-10 days earlier.

The story is not about passenger cars alone, MyTVS also caters to around 70,000 fleets in India and another 14,000-15,000 in Saudi Arabia. Take Arun, partner, Core Logistics, for whom TVS Fleet Services manages nearly 400 vehicles. He says his bottom line has “improved considerably” post the tie-up with TVS because truck utilisation has gone up by 20-25 per cent. Earlier, if a truck broke down it would take at least 24-48 hours for it to get back on the road; today it takes around five hours. That apart, the total maintenance cost for his fleet has dropped to Rs 14-15 lakh annually from Rs 18 lakh.

That apart, TAS has created a garage ecosystem through TVS Auto Assist, which has already brought in 6,500-7,000 garages for last-mile service.

While building its physical infrastructure, the company also created a digital network for the stakeholders. Over the past three years, it has built an integrated supply chain platform with 20,000 auto parts retailers. This distribution ecosystem has a pan-India footprint. A retailer can order parts via his mobile phone, which would be linked to TAS’ ERP system. The retailer will know whether the part is available and, if not, get advise on alternative parts and update the customer on time of despatch accordingly.

To get to that level of service efficiency, TAS devoted the last three years to put together a catalogue and get global brands like Bosch, Hella, Michelin, Valeo among others into the system. The company has created its own IoT, algorithms to convert the DTCs (diagnostic trouble codes), integrated that with its call centre to ensure mobile-enabled vehicles reach the breakdown point within 30-45 minutes, across the country.

That speed helps TAS to replace a vehicle part within 24 hours across the country. It has set a target to deliver parts in three to five hours in the coming months. To support this, the company will set up auto supermarkets across the country. The first such store has come up at Namakkal, the logistics hub of Tamil Nadu. TVS will have 18 such stores across the country in three years. With this and by cutting out the layers in the value chain, TAS hopes to increase the margin of the retailers and distributors. 

Once all that is in place, the cost advantage for the customer would be 20-30 per cent under TAS, against any other OEM owned dealerships.

Ensuring mobility

TAS: Infrastructure and beyond

6,000 partner garages

27 cities with own response vehicles

31,000 break-downs handled per month

60% repair done on site

Response time: 35-45 minutes

• Women assist for women drivers
• Manages nearly 60,000 vehicles including taxis
• India’s largest e-catalogue with over 1,00,000 components SKUs