MUMBAI: The servicing of automobiles in India has been a constant tug of war between consumers and dealers with long wait times, far flung service shops and delays in getting cars back, a bane. So how does Cars24, one of the earliest unicorns in the auto space, which buys around 20,000 cars a month manage to clean up their cars fast enough in time to sell them?
“The service component of pre-checking is as essential as an NPS or net promoter score for other companies, and is the hardest hating I have ever done by far,” CEO and Co-founder Vikram Chopra says. “You have model levels, variants, different makes and you have to get the right equipment, spare parts and what you can fix and what you can’t and be transparent about it.”
In addition, there are spare parts dependencies and labour dependencies, Chopra says. Will he ever open up the centres to service regular cars? Chopra says that might be worthwhile to pursue even if he can convert it from a cost centre to a revenue centre. But it would happen after a couple years once the company rationalises its own work stream processes. Chopra says that the cars his company buys come from all kinds of consumers that are mostly individual sellers, across the country.
Sellers dispose of cars in the condition that they are in. Once Cars 24 receives it, the company takes a call if it can sell directly or should make it up to its own standards, Chopra says, adding, “around 30% doesn’t meet the standards” and they are sold to dealers. The rest, which is almost around 14,000 cars a month, are sent to service centers which check everything from paint, ACs, transmission, and exteriors and interiors and fix them up as required. Cars24 partnered with over a 100 third party workshops that were originally multi-brand workshops but now 90% are exclusive to Cars24.
“Under the current model with these partner workshops, we pay them per car basis depending on the work a car needs under the reconditioning process,” Chopra said.The average size of these workshops are 15,000 sq ft, and range anywhere between 10,000 sq ft to 30,000 sq ft. In due course, the company will be looking to expand and flip the model to a self-owned one.
The company is looking at building seven self-owned centers that are WIP right now and will also help reduce the turnaround time of reconditioning a car. Land has already been bought for the centers. “They are around 40,000 square feet and will be kitted out with the right tools and machinery and are going to be probably the largest in India,” Chopra said.
Cars24’s new service centres in Mumbai will have around 15-20 bays for testing cars in each of their locations, and can service as many 150 vehicles a day or 4000 vehicles a month per location. These service centers are going to be set up at a cost of around Rs 9 crore to 12 crore each. It takes ten days to turn around a car which includes getting it from a seller, running document checks, background checks, full overhaul service, police cases on it and thorough inspection on the hydraulics and running it for several hours to get a sense of its health and quality,” Chopra says.
Cars24 has almost 7,000 employees and the people who evaluate cars and run quality checks and involves 1,500 technicians country wide. The company is sourcing cars from around 200 cities and every city has at least one stockyard and every major city will have multiple locations with several technicians at each location.