A four-wheeled Reincarnation

Ensuring law and order in insurgent towns, drafting policies for key ministries or achieving export breakthroughs in vital markets, this 70-plus eminent IAS officer and ex-Maruti MD has done it all…but he’s best known as one of India’s premier turnaround architects across industries and businesses. In this exclusive Q & A interaction with IIFL’s Sudhir Raikar, he describes the value proposition of his five-year old brainchild Carnation Auto – India’s largest independent post-sales corporate player in the car sale & service space.

Jan 01, 1970 05:01 IST Sudhir Raikar

How and when was the concept of Carnation born?

The idea of Carnation developed during my Maruti stint when I got a ringside view of the multi-brand automotive sales and servicing segment. As you may be aware, almost 80% of this market was shared between just three brands at that time. The rest was a fragmented space comprising over 10 different brands. Given the fact that almost 60-70% of car owners seemed discernibly keen to quit their dealership networks as soon as the warranty periods expired, I sensed an acute need for a new independent after-market player to provide customers with a quality alternative. My Maruti experience undoubtedly helped me gain rich insights into diverse customer needs beyond mere market specifics.

Was there opposition to the idea of Carnation - stiff or otherwise - from any quarters that mattered to you?

Carnation’s idea of independent multi-brand sales and service network was relatively a new business model for India. There was no opposition as such, even from other service providers since we were targeting those car owners who had already opted out of their authorized networks. However we faced several key challenges like the OEM ceiling on distribution of parts, dearth of skilled manpower with multi-brand experience and the substantial investment needed for concept promotion beyond brand marketing. On the skilled manpower front, our comprehensive training programs not only helped a largely rustic car servicing workforce gain invaluable corporate exposure, it also increased their market value vis-à-vis their competitors.

How was your experience with fund raising? Was your individual brand name a key motivator for prospective investors?

We have been very fortunate to have some very passionate and supportive investors on board. They have shown keen interest in the novelty and originality of the idea from the very onset. Surely, the individual name helped but that was not only the sole motivator. Thanks to the faith bestowed by our investors, we could establish COCO (Company Owned Company Operated) outlets to take our business model to fruition.

In the corporate sphere, you are known as a maverick turnaround architect across industries. How difficult was it to establish an integrated auto solutions network in a country where after-sale is conventionally regarded as nothing more than an afterthought.

After-sale in India, conventionally, has grappled with transparency. You have no single point of contact for voicing your problems and concerns. Carnation is trying to bridge the gap between customers and service agents through a transparent after-sale support process. Carnation customers have direct access to my office (even my Facebook page) in case of any problem and our team in turn tries to resolve each and every issue as quickly as possible. Every single invoice that we generate carries my email id and I read and act upon every single email that comes my way. We run an extremely transparent business.

Were your alliances with auto majors and value chain entities integral to your corporate vision or was it a midway strategy in order to expand your network based on trusted names?

We have always looked to partner with all the players in the ecosystem. I truly believe that there is sufficient room for all to grow. Trusted names give your customers confidence and collaborating with auto majors and value chain entities was always our principal strategy.  

How did you decide on the Service offerings? Do you have in-house qualified engineers and mechanics or do you follow an outsourcing model?

We based our business model on a simple premise of providing a one stop shop to meet all the needs of a car owner. Where we had the competitive advantage, we established our own solution offerings like car service, body repair and pre owned cars. Where it was not a strategic or core offering, we partnered with third party service providers with proven field expertise in areas like road side assistance and car detailing. Thus we have a mixed bag of in-house professionals and outsourcing agencies.

You have hit bull's eye with your 'Repair not Replace' Philosophy - a telling dent into a disgustingly common practice of outright replacement where repair was possible…  

We believe in customer delight, hence we offer them the best service at an affordable price. We make sure your car is pampered like never before because we have highly skilled technicians who believe in attacking the root of a problem, not in symptomatic treatment. Talking in purely business terms, our margins on labour are more than that on the sale of body panels. Hence it’s more profitable for us to repair, not replace. Moreover, we don’t have the burden of targets since we are independent. This is truly a win-win for all stakeholders - Carnation, the car owner and the insurance company.

How do you rate the competition in the pre-owned car segment? Are you happy with the in-roads or breakthroughs you have made in this segment?

We are continuously expanding our pre-owned car business and have plans to open 200 outlets across India by 2015. I am happy with the latest developments as many local dealers have evinced interest in associating with Carnation. We are India’s first independent multi-brand auto solutions company and also one of the most trusted brands in the certified pre-owned cars business.

How do you go about expanding your franchisee model? Are there any L & D systems in place to help existing franchisees move up the value chain?

We have one of the most attractive franchisee models for pre-owned cars that we have rolled out across the country. We are very close on launching the multi-brand car service franchisee model in the near future. We are constantly improving the Franchisee business model based on market and partner feedback, which will consequently help our existing franchisees to move up the value chain and make their business even more profitable.

Any expansion plans outside India in the time to come?

Currently, we are looking for franchisee partners across India. I feel that the markets here in India are significant for any level of growth you want to achieve. Scale and growth is only limited by your ability to deliver, not by limitations of demand or market. Hence our focus has always been on improving our execution capability.

Has your value proposition impacted every target audience the way you want it to? How has the experience been with insurance companies in particular? 

Our targets were car owners outside dealer warranties and those who cherish the value of money without compromising on quality or service delivery. Our value proposition will surely bridge the gap between reliability and affordability in used cars as well as in the car servicing & care segment. The insurance companies are wholeheartedly supporting us since there is no conflict of interest in our objectives.

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