Unlike other industries, the auto service sector hasn’t witnessed a very negative impact due to COVID-19.
Post COVID-19 lockdown, people are trying to maintain social distancing as much as possible. This has eventually led to the increased use of personal automobiles; hence the need for servicing these vehicles has also increased. Unlike other industries, the auto service sector hasn’t witnessed a very negative impact due to COVID-19. But no one can stand without adaptation as well.
Mahindra First Choice Services is one of the largest chains of multi-brand car workshops in India. It has 400 four-wheeler workshops across 366 cities in India and 200 two-wheeler workshops. The brand has serviced about 5 lakh vehicles in the last financial year.
Changing customer expectation in the current situation requires each industry to reinvent to stand. Mahindra First Choice Services has also adapted it and brought about changes to handle the current consumer expectations. It has taken measures to ensure:
- Protection of the stakeholders; both the partners and the customers. To its franchisees, the company has supported by maintaining their spirits. And to the consumer whose vehicles were at their centres, they gave assurance about their vehicles.
- Restoration of the situation by giving reassurance to the customers. This is done by maintaining hygiene; their vehicles are protected and providing contactless service.
- Re-invent: On the consumer front, Mahindra First Choice Services has adapted to the new requirements of the consumer and started providing contactless service and doorstep service. It has also given a self-training program called ‘Go on a date with your car’ where they show the customer the periodic maintenance of the car. On the franchisee front including the vendors and suppliers, the company has helped them with working capital requirements by giving them solutions. They extended the waiver to royalty for franchisees in these tough times. Also, a fund was set up to help employees to sustain themselves.
Mahindra First Choice Services has taken care of its franchisees and is preparing for the post-COVID requirements like the work from home scenario and need for digitization.
Though the organisation is just 9-year old and the franchising is 6-year old for the brand, it has maintained high-level support to its partners. The main focus is on the value proposition. Both the tangible and perceived value proposition has to be strong and should go in hand.
The brand supports the franchisee before operations, during set-up, and after complete-setup. It takes about 9 to 12 months for a 4-wheeler workshop to complete set up processes. 2-wheeler workshops take 2 to 3 months for this. Before setting up, First Choice Services supports the franchisee in layout, designing, procurement of materials, and the application of required licenses.
After this, they provide the training to the franchisee at Mahindra Institute of Quality. It is a 6-day program where they teach them the fundamentals of the automotive business, fundamentals of franchising, how to ensure customer acquisition, attainment, and satisfaction. Also, the employee management topics are touched on. At this point, the franchisees understand the criticality and complexity of the business and decide on further joining in.
Next after setup, 6-month support is given on how to conduct customer acquisition activities and business development activities. Also, a spare part supply is provided. There is a program where the spare parts supplier credit is given to the franchisee and the payments are routed through the brand. Franchise owner involvement in funds management is very less. Once they have become experts in their field, support is given on how to grow the business.
When it comes to an actual relationship, it has a strong field force in the form of a hierarchy to ensure proper contact. The business manager visits the workshop every week and notes customer satisfaction, conducts a general audit, and checks if processes are managed well. He also addresses issues if any. Each quarter, there is a franchisee interaction meeting and once in a year, there is a rewards and recognition program.
Since the number of vehicles in this category is very high in a city, there is a great requirement for the services of these vehicles. With Mahindra’s Express Format, a two-wheeler workshop requires a capital of just Rs 15 lakh.
It is an ideal opportunity for service professionals who have the experience, knowledge about the industry, understand the customer but don’t have the capital to invest. The scale of two-wheelers is very high as compared to four-wheelers. Mahindra is strong in remote areas in both kinds of vehicles. So, it's a great opportunity for people who lost their jobs and wish to stay at their native only.
In metros, there is a strong spare art supply chain system and a strong retailer distribution. Towns away from metros have a weaker supply chain. Mahindra First Choice Services has opened warehouses for the procurement of spare parts across the country. This hub area within 200 km helps franchisees with doorstep delivery of spare parts free of cost. A lot of business development activities are undertaken in tier II and Tier III cities. They help in local marketing by sharing the costs which are initially higher and gradually reduce after the franchisee becomes independent.
When Mahindra First Choice Services was first open to franchising, it did adopt conversion franchising. But, it noticed that these franchisees did not accompany for more than a year and a half. The major factors being the resistance to change from the set standards of the old garages and could not follow the standardized processes of the company. The other factor was the software usage which was becoming difficult for them to understand and follow.
But now, the company has also adapted and made a few changes to get along with the conversion platforms:
- It has changed the systems and software from SAP to internal software for garage management which is more user-friendly.
- It has high relationships with all the insurance companies. There are many tie-ups and cashless payments. This helps in getting customers as well as dealing with working capital issues.
- It is going to introduce an Express workshop where periodic maintenance service would be given.
The franchisee need not be from an automotive background nor does he need to have business experience. He has to be passionate and focused about the work.
The breakeven is achieved after a year and a half, but if the franchisee is passionate, it can even be achieved in 6 months. Maintaining relationships with the customer as well as employees is another important factor.
Also, it has to be noted that spending should be efficient. Too much spending on infrastructure will only lead to increased expectations and funds issues.
Franchising with Mahindra First Choice Services is a less risky and successful opportunity because it has an established business model, established value proposition, shared operating costs, and shared costs of procuring materials and parts. Mahindra First Choice has already reached 70% of its actual business post-COVID-19.
Edited By: Vaishnavi Gupta