Koovers brands your local mechanic, brings dealer like service to doorstep
More than 25 million cars have been sold since 2005 and the consumer is looking for an alternative after-sales service to expensive dealership.
When Rajesh Krishna, an IT veteran, returned to India after a 20-year stay in the US, he got his school friends Sandeep Begur, Kantharaj Urs and Vinayak together for a reunion at the Karnataka State Club in Bengaluru. Since Sandeep and Kantharaj owned automobile dealerships and spare parts networks, the conversation naturally turned to automobiles, and then to the difficulty in accessing good car service centres with transparency in pricing.
It then occurred to the four friends to try and figure out if technology could solve the problem of serving the consumer with transparency. Thus, Koovers, the zero-inventory service platform, was born in August 2015.
However, it was a personal problem that gave birth to this idea. When Rajesh relocated to India he decided to take a road trip. When he borrowed his dad’s car, he realised that it needed to be serviced for a 600-km trip. Rajesh tried hard to get an appointment with a regular dealer who could service the car in five hours. However, he could not find anyone who could deliver the car so soon. In search of an alternative, he started to look for a good multi-brand service centre.
Rajesh had further trouble because he could not verify if those independent centres would use genuine parts and offer transparency in pricing. At that juncture, he realised there were enough independent service centres that could be brought on to a platform to help car owners such as him.
The ‘independent post warranty car service’ is highly underserviced, unorganised, and unreliable. At one end of the spectrum you have low-cost garages with little or no credibility, and at the other, there are good quality but expensive dealership service centres. Koovers brings the best of both worlds by providing an assured cost-effective, high-quality service.
Koovers starts with triple curation of service centres, enhances them with technology and training, and provides a high-quality, low-cost option for car owners. They are assured of transparent price, genuine spares, and a quality service.
The opportunity is massive with over 25 million cars sold since 2008. In the coming years, this number is expected to double. According to CII-ACMA, the automotive after-sales servicing business in India is pegged at about $2 billion (excluding spare parts) in 2015.
“We spent over two months talking to industry experts on the challenges and success of chains such as Car Nation, Mahindra First Choice, and other multi-brand outlets,” says Sandeep, co-founder of Koovers. He added that the idea took shape when they launched the company during Diwali 2015. They onboarded their first set of garages in November and December. After training them for four months for following processes, they started transacting with the garages from April 2016.
The business and the competition
Certain new age companies, like Cartisan, Autoyaar, and Mericar, are aggregating the service providers, focusing on providing a technology for discoverability. However, they have little or no controls on quality, consistency, and predictability of service.
There are other automotive industry players trying to create their own branded chain but are grappling with scalability and cost issues. Carz, based in Hyderabad, was one such business that scaled up with exclusive multi-brand service. However, they struggled with the inventory model when it came to spares.
Koovers has deep automotive industry knowledge because of two of its founders. “We have taken a ground up approach to solving the problem,” says Vinayak, co-founder of Koovers. They have spent time curating service providers and ensured that these centres go through a three-stage curative process.
Upon successful grading on a 100-point scale, they become a Koovers branded garage. Koovers enhances their capabilities across multiple dimensions in providing a dealership like quality service at a low cost. Says Sandeep,
“We provide round the clock automotive supply chain logistics and financing and ensure that the garages have access to quality spares at the right time at much lower cost than the general market.”
Through this credible network, Koovers hopes to become a reliable, cost-effective, one-stop solution for post-warranty cars. The founders have invested, more than Rs 50 lakh—to get the business off the ground. They raised an undisclosed angel round, from high net worth individuals, to gain early revenues. Koovers has around 50 branded centres and over 150 garages as part of their network in Bengaluru. Around 25,000 customers have availed services at their garages.
To stay ahead of the curve, they have recently launched “Koovers Car Club” modelled on the lines of AAA, a popular car service club in the USA. The membership is free, for now, and provides the owner of the vehicle with free roadside towing within a certain radius, free accidental death insurance coverage, preferential car services pricing, and member only discounts at their food, shopping, and leisure partners. “This is a fantastic opportunity for all car owners to register and experience Koovers at no cost,” says Sandeep.
There are challenges ahead for Koovers—it wants to scale the model across the country and will need to spend money in training service centres for the Koovers’ way of customer service. “An idea should scale with technology and the consumers should not go through additional pain when they use such a service. But B2C businesses are difficult to scale and require long term capital,” says Naganand Doraswamy, CEO of IdeaSpring Capital.
The grass is greener
But Sandeep and Kanthraj, along with the other two co-founders, think they are onto a winner because of their automobile experience. Sandeep has a network of 500 spares partners who supply to the Koovers branded workshops. Kanthraj has the expertise to create a dealership like experience that is made standard for individuals who own independent service centres. These service centres will pay a small fee per vehicle for using the name of Koovers and will also sign in to a revenue share with the brand.
The opportunities are endless because, annually, more than three million cars sell in India, and every owner is looking for an alternative to the dealership service. The main challenge for Koovers is to ensure that the large OEMs support independent network of mechanics. Today, dealerships are defacto asked to manage service cars sold through their network because of the business model followed in the automotive retailing industry.
Depending on the brand, the commission on cars sold is less than 2.5 percent; the dealer only makes money when the pool of cars come back for service. Therefore, the margins made on the service, through parts replacement and tune-ups, can be more than 100 percent of the intended cost minus the cost of labour. The spare parts are marked up to recover the high cost of rentals and corporate expenses.
While companies like Koovers bring a fresh perspective, they have to convince the consumer that they are an alternative. They could also convince an OEM or two to support them to ensure brand loyalty of the customers. Koovers has just crossed Rs 1 crore in revenues. Moving forward, it is hoping to increase its revenues. Maybe it is time for a branded multi-car service centre, after all.