Garage equipment industry: Realigning to market reality

India is set to overtake Japan to become the third-largest automotive market in the world by 2021, thus offering huge growth opportunity for garage equipment suppliers. Sluggish auto sales in recent months, drive towards electric vehicles, BS VI emission norms (affecting sales of diesel vehicles), etc are putting brakes on dealership expansion plans in the country. This is indirectly affecting the garage equipment industry. To exploit the full potential of the industry, equipment suppliers will have to align their business strategies to the new market realities, says Rakesh Rao.

India’s automotive industry (passenger cars and commercial vehicles) has made rapid strides in the last few years, with the country overtaking Germany to become the fourth-largest market in the world recently. Rapidly increasing vehicle ownership (new as well as second-hand) is driving the demand for servicing centers to maintain and keep them in healthy condition. This is offering substantial opportunity for garage equipment suppliers in the country. “The demand is being driven by need for better quality. There has been a slowdown recently in automobile sales but cars are still selling. India is one of the largest automobile markets in the world and the sheer numbers of vehicles on the road drive the demand for garage equipment,” says Ravi B M, Managing Director, Madhus Garage Equipment Pvt Ltd, which offers an entire range of equipment from the most basic plasma cutters and dent pullers to entire paint booths for the automobile industry.

In India, Madhus Garage supplies products from global majors like Hunter Engineering Company (for wheel service equipment), Ravaglioli (for lifts), Texa AC Chargers, Telwin (for welding equipment used in the bodyshops), Celette (for crash repair systems) etc.

Ravi adds, “Madhus focuses on bridging the technology gap between India and the advanced countries. The equipment we bring are the best in the world and are not ‘cheaper’ equipment. Our equipment helps the technician work faster and more accurately, preventing repeat jobs. The technicians can do the job once perfectly and then move on to the next car without worrying about customer complaints. Some of our premium equipment are also incredibly fast and further increase productivity. For example, our Hunter HakwEye Elite Wheel Aligner is the world’s fastest wheel aligner and we can finish an alignment measurement in less than 90 seconds.”

Industry evolution

To increase sales and reach, auto makers have opened showrooms in every corner of the country. While the car showrooms are at par with those in other advanced countries, workshops have failed to match the international quality standards. Auto servicing segment started the transformation process with the entry of global players like Ford, General Motors, Hyundai, etc who brought with them the concept of modern service using the latest technology. While workshops servicing passenger vehicles (PV) have witnessed technological changes, commercial vehicles (CV) servicing is still done in a conventional way. It is here that companies like Manatec are trying to make a big difference.

“Manatec supply equipment for two-wheeler (2W), four-wheeler (4W), and commercial vehicle in which the CV segment is under priority in focus. In the automotive service equipment, we support workshops which give higher possibilities to generate revenue and high productivity capacity. Particularly, commercial vehicle segment in India is yet to attain a premium service care similar to passenger vehicle segment where the workshop servicing & quality of service have matured in the past 20 years. We are sure the commercial vehicle segment will improve its service benchmarking in line with passenger vehicle segment,” says S Vijayaragavan, Director (Operations) of the Pondicherry-based Manatec Electronics Pvt Ltd.

The demand for heavy commercial vehicles and light commercial vehicles is anticipated to grow at a robust pace driven by rapid industrialisation and infrastructure development in India. To increase productivity for servicing the rising number of commercial vehicles, workshop owners are slowly embracing modern technology. A case in point is wheel alignment. Vijayaragavan explains, “Until now, wheel alignment for CVs world over is done using CCD technology. This means mounting electronic sensor heads on all the wheels to measure alignment angles. Now compare this with our latest innovation, wheel alignment using 3D measuring technology. No electronic sensors on wheels; only chequered targets made of aluminium. Time taken for a 5 axle alignment measurement using CCD technology is 35 minutes, whereas time taken using 3D technology is just 5 minutes. An impressive 7 times faster! Runout measurements can be completed in 51 secs compared to 36 minutes in CCD technology, a whopping 36 times faster. This is productivity at its best.”

A company with a fleet of 100 CVs can save more than Rs one crore per annum if they do wheel alignment regularly. “A company with 500 vehicles can save many crores. This savings is huge and cannot be ignored,” he adds.

Modifications in vehicles also resulted in the need of new equipment for technician to service the car better and ensure higher productivity. Take the example of air-conditioner (AC). Earlier it was a big luxury, today it has become a standard accessory, needing servicing from time-to-time to maintain it. Similarly, with radial car tyres gaining traction, balancing has became a necessity leading to a sharp rise in demand for wheel alignment.

Today, number of electronic components - to control various functions within the vehicle - is increasing in a car. Garages are modernising by equipping themselves with new technologies to diagnose problems in the new-generation vehicles and solve them. “In the auto industry in India, modernisation is definitely on the up. With the advent of new cars based on custom features dependent on electronics, servicing these cars will be equally challenging. Diagnostic equipment will lead the way to a new way of servicing methods. Realising this importance, ATS ELGI is working towards catering to such needs, in terms of auto problem assessment and maintenance, techniques for our products,” opines V Vishwanath Ram, Head Marketing, ATS Elgi, which offers equipment for vehicle servicing in PV, CV and 2W segments. The company – which is a wholly-owned subsidiary of Elgi Equipments - offers lifts, wheel service equipment, equipment for body shop (paint booths, welding equipment, panel repair equipment, etc), equipment for washing & cleaning, and other utility tools (pneumatic tools, grease pumps, test lane, on car brake lathe, etc).

Market size

The global automotive garage equipment market is witnessing steady growth. Rise in urbanisation and surge in sales of vehicles in various countries have increased the overall vehicle miles driven globally by approximately 2 per cent to 4 per cent in the past few years. This, in turn, has propelled the usage of passenger cars which is anticipated to augment the global automotive garage equipment market during 2018-2026 period, said a report of Transparency Market Research (TMR).

According to TMR, the global automotive garage equipment market is projected to expand at a CAGR of 3.5 per cent during 2018-2026 and reach $ 8 billion by 2026. Asia Pacific (which accounted for 49.22 per cent of the global automotive garage equipment market share in 2017) is expected to be at the forefront of global demand expanding at a CAGR of 3.74 per cent between 2018 and 2026.

Garage equipment makes a big difference in the quality of work delivered by workshops. India is estimated to have about 5 lakh garages employing 75 lakh people. “The size of the garage equipment industry in India is difficult to estimate due to the large size of the unorganised workshop segment. The authorised dealerships should be in the region of Rs 500-800 crore. But when you add the unorganised segment (road side mechanics, small workshops and bodyshops that you can find across India), it could be even higher,” points out Ravi.

The car servicing market can be classified into three categories - organised single brand segment-run by authorised car dealership network catering to a particular brand of cars, organised multi-brand workshops that deal with multiple brands and a vast network of unorganised multi brand garages. Unorganised multi-brand workshops account for a major share in the auto servicing segment followed closely by organised single-brand segment. On the other hand, organised-multi brand service providers account for about 1-3 per cent. It has been observed that the post warranty close to 65 per cent of the consumers break their connection with authorised workshop and move to unorganised independent garages.

The car servicing industry in India is slated to grow from Rs 20,000 crore in 2017 to Rs 33,000 crore by 2020, with organised multi-brand workshops segment (comprising players like Carnation, MyTVS, Mahindra First Choice Services, Bosch Car Services, etc) experiencing the fastest growth. The contribution of organised multi-branded workshops is likely to go up to 8 per cent by 2020 as they provide cost effective yet high quality repair services to car owners.

Increasing productivity of workshops

Besides helping service centers to satisfy their customers (ie car owners), quality garage equipment can also increase productivity of the auto workshop. Vishwanath says, “By opting for our products, garages can make big savings on manpower, time and operational expenses.” Like by using automatic washing, car gets washed and dried in 5 minutes compared to 30 minutes taken by conventional washing. Automatic car washers are consistent in giving a quality wash unlike manual washing and consume 160 litres (L) of water per car against 300 L taken by manual washing. Automatic AC recovery and charging machines take 20 minutes to do the entire job, which otherwise a person will have to be there exclusively to do the job. Since, it is automatic, the mechanic can be used for other jobs. General service, pneumatic tool provision and inflator provision in one lift increases productivity, unlike other conventional two post lifts.

“Today garages are incurring a huge cost buying water, and also disposing of the waste, equipment suppliers are offering water recycling plant to tide over this challenge. The water recycling plant it a perfect answer to the problem, where only upto 20 L of top water (to take care of water loss due to evaporation/spillage, at the time of usage) is sufficient per car. Water can be recycled and reused infinity times,” informs Vishwanath.

Impact of slow auto sales

Sluggishness in auto sales in recent months has taken a toll on auto distribution network, leading to the closure of some 300 dealerships across India. This is indirectly affecting the garage equipment industry. “Many equipment vendors build business on credit and today, with the tightening of credit by all banking and financing companies, they are in trouble. Over 300 dealerships have closed down in India over the past 2 years and many garage equipment companies have lost a lot of money due to this. Secondly, the majority of the garage equipment industry is only focused on selling cheap, equipment without a focus on quality, longevity and productivity. This is further making it difficult for the dealerships to work profitably. Currently, the biggest challenge facing the industry is the slowing of car sales which is restricting the growth of new dealerships,” observes Ravi.

Vishwanath elaborates, “The sales trend of the passenger vehicles have been on the downtrend for more than 10 months now, which is effecting the activations of new workshops as the there is a cash crunch in the market due to stock overload. This trend will continue this year as well.”

Besides, changes in regulation (BS VI emission norms) and market dynamics (electric vehicles, dropping sales of diesel vehicles) are also adding to the woes with auto OEMs taking a conservative view on investing in dealership expansion. “The new norms of the government on BS VI will affect purchase of new diesel cars as the prices of entry level diesel cars are likely to become expensive. Another factor affecting the industry is the upcoming EV segment. OEMs are gearing up for EVs and putting the dealership on a back foot at the moment. In a direct relation to our business, if there is no new activations and marginal expansions, it effects our business,” informs Vishwanath.

To mitigate these challenges, garage equipment makers are drawing up de-risking strategies. ATS ELGI’s Vishwanath elaborates, “We are foraying into the non-garage and unorganised segment, by which we will be derisking our dependence on organised garages. As an example, the multibrand garages amount to 30 per cent of the new workshop activations year on year and it is likely to grow. Going forward, the bodyshop will take the lead with new technology based of ease of usage and productivity.”

Exploring new markets

Influx of Chinese machines with low quality and low price is also posing a risk to the auto garage equipment industry. “To attain lower break even, workshops are looking for less investment and they do not want their capex to be very high. Under this scenario, the products from China bring stiff competition with very low price. Manatec has consciously taken a decision to move out of some product segments because of the price issues. Our focus today is more on our core strength of electronics and innovative precision manufacturing,” says Vijayaragavan.

Garage makers are also looking at overseas market to expand business with the launch of quality products. “We command and sustain leading position in India. It is time for us to expand to new geographies. We are exploring and it is a part of our long term strategies,” opines Vishwanath.

Vijayaragavan adds, “With the automotive industry performing under highly fluctuating market trend, Manatec feels only new launches bolster the growth in this segment. Being in aftermarket service segment, the company hopes to continue its good run in the domestic market and also maintain its strong showing on the export front. The vision of the company is to increase the domestic market share from 30 per cent to 50 per cent and to enhance the export distribution network from 65 countries to 150 countries within a span of 2 years. So, it will increase our market share globally by 10 per cent.”

Garage modernisation: A boon

With auto workshops undergoing modernisation, especially on bodyshop front, garage equipment will benefit directly. “Madhus has a complete portfolio of products for any workshop or bodyshop. We will focus in a major way on bodyshops as they are expanding very aggressively in India. Truck and bus industry is now gearing up to equip their workshops with new technology,” informs Ravi.

Speaking about future plans, he says, “We are keen to do justice to our current range of products and ensure that we are able to meet the demands of all our principal companies. Manpower is something we are always working on. We are adding new talent aggressively all across India. We are also focusing on our internal training methods and aiming to improve the overall standard of our sales and service engineers to an international level.”

Increase in awareness about vehicle maintenance and safety among auto owners is driving the garage equipment market. Rise in preference for vehicle customisation and increase in number of maintenance & repair garages, technical inspection centers and body shops are other factors leading to the rise in demand for garage equipment. Suppliers, on their part, are assisting garages to equip themselves with latest technologies to increase their efficiency and productivity.

Vijayaragavan elaborates, “Manatec is gearing up for some exciting times ahead. Not only does it offer professional training under its aegis to skilling the workforce, it is also raising the technological benchmark in bus and truck alignment segment through its state-of-the-art 3D alignment systems. Leveraging our years of design experience in the field of wheel alignment, we have implemented a customised solution for TOE angle setting in the assembly line of OEMs. So far the only solution was to import such equipment at high cost. But this has changed now with our solution. We truly believe 3D alignment is the future in CV world and we are proud this technology emerges from India.”

Despite the slowdown, automobile demand remained robust in the calendar year 2018 with all segments reporting a strong double-digit growth (except passenger vehicles which grew at 5 per cent). In India vehicle ownership is still very low (18 vehicles for every 1,000 Indians) compared to the US (800 vehicles) and Europe (around 500 vehicles). With over 1.3 billion people in the country, auto industry will continue its staggering growth and is expected to overtake Japan for the third spot by 2021. This means strong demand for garage equipment as more cars will need maintenance and repair. However, equipment suppliers will have to align their business strategies to meet the new requirements of the auto industry.

Many equipment vendors build business on credit and today, with the tightening of credit by all banking and financing companies, they are in trouble.” Ravi B M, MD, Madhus Garage Equipment Pvt Ltd

To attain lower break even, workshops are looking for less investment and they do not want their capex to be very high. Under this scenario, the products from China bring stiff competition with very low price.” S Vijayaragavan, Director (Operations), Manatec Electronics Pvt Ltd

The new norms of the government on BS VI will affect purchase of new diesel cars as the prices of entry level diesel cars are likely to become expensive. Another factor affecting the industry is the upcoming EV segment.” V Vishwanath Ram, Head Marketing, ATS Elgi