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Apr, 17 2011

Pre-owned car market will be the next big business

From heading India's largest passenger car company Maruti Udhyog Limited to initiating his own company, Carnation Auto, Jagdish Khattar, Chairman and Managing Director, has traversed a long distance.

From heading India's largest passenger car company Maruti Udhyog Limited to initiating his own company, Carnation Auto, Jagdish Khattar, Chairman and Managing Director, has traversed a long distance. He tells Amanpreet Kaur about his vision of developing India's largest independent multi-brand automobile sales and service network.

Kindly share with us your entrepreneurial journey? How did you conceive the idea of starting a Carnation Auto?

During my stint at Maruti, I used to visit dealerships and understand from customers as to what are their pain points and what is it that they are looking for in a car service provider. Also, the trend in the Indian auto industry was such that most car owners moved away from the dealership network post their warranty period. Also, many car owners have multiple cars of different makes. Carnation was conceptualised keeping in mind the needs of the Indian car owner. The fact that the model was successful in some of the developed countries did help in making various stakeholders aware of the potential of the model. In the last two years of operations, the response from the customers has been overwhelming.

What kind of products and services do you offer?

At Carnation, we offer end-to-end solutions for car owners, right from periodic servicing of the car, small running repair needs and even accidental repairs. We have tie-ups with most insurance companies for cash-less claims. Apart from these, we have pre-owned cars, accessories, value-added services, car customisation, etc to name a few.

What kind of business model do you have for retailing Carnation Auto products and services?

We propose to pursue the franchise model, as it will give wider spread to our network and help in building our brand. We have company-owned and operated outlets. However, we will look at the franchise route in the near future. We wish to ensure that we have robust backend operations, which will help us in scaling. We have already implemented SAP across our locations and verticals. We have also outsourced activities like CRM, post-service follow-up, finance, HR, etc to Genpact. Our business is very dynamic and there is no set benchmark. We are confident of fulfilling the automobile needs of the customer under one roof.

To beat the cut-throat competition in this segment, what marketing strategies are you looking at?

Ours is an established service industry though with a new concept of multi-brand. The need of the customer has been validated. Our effort is to make him aware of our existence, invite him to experience us and then our job is to retain him for future .We do various BTL activities like leafleting, newspaper advertisements, inserts, service camps, etc.

Being a niche concept, how many outlets do you have?

We have a network of 24 hubs across India, covering 15 cities. On top of these, we have 50 Workshops on Wheels pan India. We also have 11 accessories centres and 8 pre-owned car locations. We have 11 centres, out of which we run our insurance renewal business. We can only run our hubs at locations where industrial activity can be undertaken and these locations are not located near commercial centres.

What is the growth potential of pre-owned car market in India?

I feel that this will be the next big thing in the Indian car market. The ratio in India is roughly 1:1 to every new car being sold and a similar ratio in US is three to four times the new car sales. Also, now people are willing to buy a bigger used car rather than a new small car. As of now, the organised market has a share of 10 per cent of the total sales of used cars. The confidence of customers is greater in brands retailing used cars, as we back the car with a certification and warranty, which is the topmost concern in the customer's mind when he is buying a used car.

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