Car Service Business: How to Open a Car Service Center in India

Table of Contents

Share this article

India is one of the leading producers of automobiles in the world with more than 1,860,809 units of passenger vehicles, three-wheelers, two-wheelers, and quadricycles in January of 2022.

With the growing middle-class income in the country and the presence of a large pool of youth, the demand for new vehicles and servicing them is also going to be on the rise.

In this article, we will look into the automobile service industry in India, how to create a business plan for a car service business, the target audience, etc.

Automobile Servicing Industry Overview

The Indian automobile industry is currently the fourth largest one in the world. The growth of the automobile production industry in turn helps the growth of the automobile service industry as well.

The Indian car service industry can be generally divided into three sectors:

  • Authorized Service Centers
  • Unorganized Local Garages
  • Multibrand Network

Authorized Service Centers

Authorized Service Centers are service centers that aim to provide a number of services to cars and are in charge of maintenance of the car for a specific car brand. These Authorised Service Centers are either operated by the owner of a specific car brand or a franchisee. They do not provide service and maintenance to any other brands.

Unorganized Local Garages

These are local car garages that produce very basic services for cars. They do not have any complicated equipment or machinery. They are often owned by individuals and offer services at the cheapest rate.

Multi Brand Car Service Centers

Multi Brand Car Service Centers are a rather new trend in the automobile service industry. It was created to fulfill the needs of customers that couldn’t be fulfilled by authorized service centers or unorganized local garages. A multi-brand car service center on the other hand is neither expensive as an authorized service center nor as cheap as local garages. They often provide services to more than one brand and offer high-end services that are usually not available in unorganized local garages. These are the newest trends in the automobile service industry.

How Many Cars Are Sold in India?

The key factor that helps in the growth of the automobile service industry is the increase in car sales and production in the industry. The annual production of automobiles in India in the year 2021 was around 22.6 million according to the India Brand Equity Foundation (IBEF). Out of this total unit, about 13 million automobiles were manufactured between April and October of 2021. Let us now look into the car sales trends in the country.

How Many New Cars Are Sold Each Year in India?

The sales of cars were around. 2.9 million, a record number for the year 2020. The economy was down for the automobile industry in the year 2021 with only 2.72 million passenger cars but with the start of the new year, the sales of passenger vehicles in India have increased by around 14%.

How Many Used Cars Are Sold in India?

The sale of used cars was around 4.4 million units in the year 2020, but in the same year, the sales of new cars were only 2.8 million units. The sales of used cars continue to grow at a CAGR of 15.1%. In the year 2021, the value of the Indian used car market was around [USD 32.14 billion] and it is expected the industry will grow to USD 74.70 billion by the year 2027.

With the increase in sales of used cars, the need for a car service business is also expected to grow simultaneously. Now let’s look into how to create a car service business to help you run your business successfully!

Creating a Business for a Car Service Business

A business plan is the foundation of all business. It helps a business to function in the right direction using effective steps to achieve its goals. The business plan has details of all the activities and roles involved in the business. The business plan states the goals and objectives of the business and gives the business to look forward to.

Executive Summary

The executive summary is the preview of the whole document in short. It must give a summary of what the business is about in a few lines and highlight all the important details that are present in the document. The executive summary is key to attracting financiers who may be interested in funding the business. The following is an example of how the executive summary for a car service business should be:

“Richmond Car Service Center is owned by David Richmond as a sole proprietor. He is a graduate of Automobile engineering and has gained technical skills in the car service industry for the past 10 years. The Richmond Car Service Center aims to provide the best services possible at an affordable price so that everyone could have a car that is maintainable and serviceable under their limited budget.”

Objectives Of The Business

This section must highlight what the objectives of the business are. This includes the key goals of the business such as the following:

  • Increase the sales revenue of the business consistently through year three
  • Increase customer satisfaction and experience by constantly evaluating the service and making changes to meet the needs of the customers
  • Expand the business to two more regions within a year

All the goals must be specific with what exactly the business needs to achieve and the time period within which it should be done. A clear, and precise goal increases the chances of achieving those goals instead of being vague.

Mission Of The Business

The mission of the business is similar to the objective but it is different in that it is more long-term and describes how the business should have established itself in the industry, what it represents as an entity and what it aims to achieve. The following is an example of the business mission of a car service business:

“The aim of Richmond Car Service Center is to provide superior quality services at an affordable price and in an environmentally friendly way. The key aim of Richmond Car Service Center is to gain the trust of the customers and provide them with services that they actually need. Richmond Car Service Center also aims to give customers a wholesome experience with a transparent service process and friendly service people to assist them on the go.”

Services And Products Offered By The Business

The service and product section must enlist all the essential services and products that the business aims to provide its customers with. The following is an example of the services and products section of a business plan for a car service center:

“Richmond Car Service Center is a one-stop shop where customers can get all their car service needs met. The company aims to provide service with regards to all the different categories of car service such as brakes, transmissions, wheel alignment, etc.

Some of the key car services provided by Richmond Car Service Center include the following:

  • Scheduled maintenance
  • Wheel alignments, tires, and rims
  • Brake repair
  • Comprehensive engine repair
  • Transmission

Market Analysis

The market analysis section analyzes the target market audience that the business aims to attract. Market analysis involves creating a market segmentation and doing market research on the demographics, psychographics, buying patterns, etc of the target audience. The following is an example of a market analysis done for a car service business:

“Richmond Car Service Center aims to provide services to cars of all kinds and brands. We do not differentiate between them. The car service industry is not affected by seasonality hence there is little change in the demand for the service during the various seasons. The main target audience is people who own four-wheelers, both new and used. The customer is usually between 22 to 60 years old. They are below different income levels and cannot be segmented based on them. They reside within 5 km within the Delhi Railway Station since our business is situated right next to it.”

Competitors Analysis

The key to thriving in any industry is to analyze the competitors in it. Evaluating who your competitors help you gain key insight into how you can turn the business into a success.

The following is an example of the competitors’ analysis of the car service sector:
“The car service industry is a highly competitive industry. In addition to the competition, the high capital cost and low margin of each of the businesses in the industry are also a threat. The suppliers have a great deal of power in the industry and help the capital costs are non-negotiable. The customers on the other hand do not put much value into the service provided. Most customers do not differentiate the value of one car service business from another and often opt for the business which provides the service at a lower cost. With the increased number of  car service centers now available, the competition is only going to get higher.”

Management Plan

The management plan must include the details of the roles and job titles that are required to run the business. It must also include details of the responsibilities of each role and to who they are accountable. The management plan must be in as much detail as possible including the salary and number of personnel required for each role.

The following is an example of a management plan for a car service business:
“Jason Richmond, the owner of the business will be the key manager of the business. He will be in charge of making key decisions regarding the business. His wife Mary Richmond will act as a part-time office manager in his absence to make important decisions. The company needs two entry-level mechanics with trained skills in the car service industry to operate during the initial few months. The accounting, bookkeeping, and marketing activities of the business will be outsourced. The business will also require four fully trained senior mechanics to perform complicated tasks.”

Financial Plan

The financial plan is one of the most important parts of the business plan. It details how the business aims to procure funds for running the business, how much of it is going to be self-funded, how much of it is going to be sourced from an external entity, how the costs are going to be managed, where the money is going to be spent, etc.

A solid financial plan is required to reap profits quicker and grow the business. It must include details such as break-even analysis, projected profit and loss, projected cash flow, projected balance sheet, business ratio, etc.

Break-even analysis

The break-even analysis is a projected financial calculation that compares the cost of starting the new business with the sales revenue of the business. These two data are compared to find out when the business will reach break-even, i.e., the point where the business has earned enough sales equal to the cost of setting up the business.

Projected Profit And Loss

The projected profit and loss statement consists of a projected document that states the forecasted profit or loss the business aims to achieve within a fixed time period.

Projected Cash Flow

The cash flow statement is created by forecasting how much money the business is expected to receive or spend based on its activities for a specific period of time.

Projected Balance Sheet

The projected balance sheet, also known as the pro forma balance sheet shows the estimated total assets and liabilities of the business.

Business Ratio

The business ratio is used to analyze if the business can run smoothly and meet its financial obligations without any struggle. A high business ratio indicates that the business will be able to pay all its creditors and continue to run the business whereas a lower business ratio means there is a disturbance in the cash flow of the business.

Conclusion

With the rise of the automotive industry, all the different sectors in it are growing including the production, sales, and service industry. Particularly in the automobile sales industry, the sales of used cars have increased.

If you feel that this car business is not for you. Don’t sweat! There are a variety of car business ideas for you to choose from.

This in turn has opened up the demand for car services. With the increased income level among the Indian middle-class population, more people are now coming forward to spend money on luxuries like cars.

With all information gathered, the car service industry is a great field to start a business and establish yourself as a trusted entity with success.

This post is also available in: English

Share:

Leave a comment

Your email address will not be published.

Subscribe to Newsletter

Start a business and design the life you want – all in one place

Copyright © 2022 Zocket