CarZ: Plan for 300 outlets pan-India by 2018 | SupportBiz

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CarZ: Plan for 300 outlets pan-India by 2018

CarZ is a Hyderabad-based multi-brand car service network, founded by Venu Donepudi and Vijay Gummadi. After the first outlet in Hyderabad in 2010, CarZ went on a rapid expansion spree and, today, it has 15 outlets spread across South India, with over 350 employees.

SupportBiz presents an exclusive conversation with Venu, the co-founder of CarZ.

Tell us about the background of the founders…

Vijay and I bring nearly three decades of automobile experience working with leading automobile giants like General Motors, Ford and Chrysler in North American and European markets. I was accorded Honorable Mention in 2006 by General Motors.

I am basically a Bachelor of Engineering in Electronics & Communication, while Vijay holds a Bachelor’s degree in Mechanical Engineering and a Master’s degree in Manufacturing Engineering from USA.

Vijay is also the co-founder of two successful technology start-ups.

How did the idea of CarZ come up?

Automobiles have been our passion since childhood, and CarZ is an extension of that. The idea of CarZ germinated in the year 2006, when we both were working in the US. We thought of starting a multi- brand car service model, of the likes of Maaco and Midas.

The results of our feasibility research were very encouraging, and showed that customers in India are willing to move away from the traditional dealership model and look at alternate options which are more convenient, cost- effective and high on service quality. That is how CarZ came into being.

How are you funded?

The initial investment for CarZ was majorly self-funded, with some help from family and friends. We raised USD5 million Series A funding from Indo-US Venture Partners (IUVP), in the year 2011.

Tell us about your franchise outlets…

Royalty from our franchisees is one of our regular revenue streams, apart from the car servicing done our outlets. Our franchises are treated as our own center, and so, the better their performance, the higher the royalty we earn.

What are your further expansion plans?

We plan to set up about 300 service outlets across India by 2018, with 9,000-plus employees. Currently, our outlets are spread across Andhra Pradesh, Karnataka and Kerala. We plan to enter Tamil Nadu, Maharashtra, Goa and Gujarat in the next phase. Out of these, 200 will be company-owned and the remaining 100 would be franchised.

What are the major challenges you face?

We are cautious of the changing market dynamics with newer competitors entering the industry, and the influx of foreign players. Another challenge is to keep up with the rapidly changing technologies being adopted across the world in automobile servicing. The other major challenge is to retain and recruit quality talent and manpower, as it is tough to come by.

What sets you apart from other car service stations?

Unlike a usual dealership model, we offer a complete gamut of services - including repair, maintenance, denting, painting, styling and detailing for cars made by most major manufacturers under one roof.

Our technicians are highly trained and we use modern equipment that is imported from Japan, Korea and Germany.

Our rates are lower by 15 to 30 percent as compared to others.

We also allow customers to interact with the technician working on their car, so that they get a first- hand feel of the service.

How do you market your business?

Most of the success of CarZ can be attributed to word-of-mouth publicity. Media campaigns, interactive social media campaigns, value-for-money offerings like membership cards and discount coupons are some of the other marketing methods used by us.

What is the size of the car maintenance industry in India?

The car service business in India is roughly around INR30,000 crore, dominated by service centers of carmakers and unorganized players. However, the car servicing in India is moving away from the traditionally-run OEM dealer network to more cost–efficient and professionally-run multi-brand players. There are also an estimated over 19000 multi-brand workshops in India.

What is the scope of the industry?

The sale of new cars has been increasing, and is in excess of 2.5 million vehicles per year. Only a third of the vehicles go back to the dealer after the warranty period, so there is a huge opportunity. Though there is a large unorganised market for servicing, the more complicated cars of today cannot be dealt by these small shops. Training, parts and equipment is needed, which we can deliver at a cheaper cost than the authorised service centres of the carmakers.

Some of the major PE investors like IFCI Venture Capital Funds, Kitara Capital, Indo US Ventures, BTS India Advisors, SIDBI Ventures and Sequoia Capital have invested heavily in this sector, and there are many more investments being considered.

Corporate Website: CarZ