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Old 2nd April 2024, 15:04   #1
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Why are there no company-owned & company-operated service networks?

I am curious to understand, why are there no company owned or company operated service network in India?

I see "service quality" as one of aspects which could be a hit or miss with many car ownership experiences shared in this forum. Time and again, I see the same repeated even in Official reviews that sub-par service experience or ASS Horror stories with some OEMs. Also, there are so many threads about dealership frauds/mistreatment/poor service quality etc reported on this forum.

Similar to how public sector oil companies like Indian Oil, Bharat Petroleum who claim to operate the so called COCO (Company Owned & Company Operated) fuel stations which presumably deliver better "quality" and "quantity" of fuel to motorists. Why cannot there be say a COCO TATA motors service center or Skoda or Hyundai? Or maybe even premium players with low volume such as Audi, BMW?

Are there some regulations that prevent OEMs to operate service network? Or is the quantum of investment & manpower required to operate such network that OEMs shy away from? Can someone please some light on this if you are from the automobile sector or has knowledge in this domain?

Last edited by Quicksilver85 : 2nd April 2024 at 15:07.
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Old 2nd April 2024, 15:10   #2
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re: Why are there no company-owned & company-operated service networks?

The problem in India atleast, is that in order to offer superior service they would have to reward their staff with better pay so as to ensure professionalism and quality. This would mean much higher labor costs in comparison and that would lead to less customers bringing in their cars for service as well as dealer partners being miffed about company trying to steal customers away from them considering service is where all the money is made.
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Old 2nd April 2024, 15:30   #3
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re: Why are there no company-owned & company-operated service networks?

Tata had pioneered this model with its Concorde range of service stations. Hyundai too had tried this, they had a full fledged company owned dealership in Delhi. Unfortunately, the model didnít work out. Wasnít profitable in either case.
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Old 2nd April 2024, 16:23   #4
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re: Why are there no company-owned & company-operated service networks?

Quote:
Originally Posted by Quicksilver85 View Post
I am curious to understand, why are there no company owned or company operated service network in India?
Quote:
Originally Posted by Shreyans_Jain View Post
Tata had pioneered this model with its Concorde range of service stations. Hyundai too had tried this, they had a full fledged company owned dealership in Delhi. Unfortunately, the model didnít work out. Wasnít profitable in either case.
Although miniscule in numbers, Hyundai seems to still having such network. HMP

I came to know about HMP in 2011 during an interview with them at Mumbai office.
I was offered an assistant manger position at HMP Delhi if I recollect correctly, which I politely declined. I was there for a sales position role, Bhopal but fate had other plans.
It was memorable interview though. Puts smile on my face even today. Was grilled a lot by the tall regional manager.
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Old 2nd April 2024, 16:41   #5
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re: Why are there no company-owned & company-operated service networks?

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Originally Posted by IshaanIan View Post
The problem in India atleast, is that in order to offer superior service they would have to reward their staff with better pay so as to ensure professionalism and quality. This would mean much higher labor costs in comparison and that would lead to less customers bringing in their cars for service as well as dealer partners being miffed about company trying to steal customers away from them considering service is where all the money is made.
Ya, makes sense now. The same dealers who were appointed to sell their cars might presume company owned service centers rob them their bread & butter by the way of servicing the cars and making more money than compared to just a one time sale! Also, agree with you on the cost of service being higher due to paying as per regulation requirements/company standards etc.,
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Old 2nd April 2024, 17:58   #6
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re: Why are there no company-owned & company-operated service networks?

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Originally Posted by Quicksilver85 View Post
I am curious to understand, why are there no company owned or company operated service network in India?
Royal Enfield has company owned service centers. To my limited knowledge, there's one in Chennai and one in Bangalore. Possibly there could be more. The service experience is way better at these locations as compared to the average non-company owned service center.
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Old 2nd April 2024, 19:11   #7
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re: Why are there no company-owned & company-operated service networks?

Probably because all car manufacturers know that if they want to generate decent returns from automobile service business, they have to take the customers for a ride (Eg: brake pad cleaning, door panel anti-rust coating etc)

It is best to let somebody else handle the dirty business.
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Old 2nd April 2024, 19:21   #8
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re: Why are there no company-owned & company-operated service networks?

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It is best to let somebody else handle the dirty business.
You nailed it. It's also why car manufacturers don't open their own dealerships:

- It's a dirty business

- OEMs would rather hide behind a dealership

- A dealership can do things to maintain profitability (overbilling, upselling, scamming) that an OEM never would / could.

- Push the liability onto the dealership.

- Of course, one of the biggest reasons is that OEM CEOs, COOs, heads of marketing etc. are used to talking numbers in the hundreds of crores (if not thousands), sales of thousands of cars etc. They have no interest in dealing with 50 cars a month or revenue of 10 crores / month. It's too small for their ambitions.
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Old 2nd April 2024, 19:32   #9
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Re: Why are there no company-owned & company-operated service networks?

On one sentence...

Let someone take the blame.

Why are there no company-owned & company-operated service networks?-pawn.jpg

Last edited by svsantosh : 2nd April 2024 at 19:34.
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Old 2nd April 2024, 23:06   #10
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Re: Why are there no company-owned & company-operated service networks?

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Originally Posted by ninjatalli View Post
Royal Enfield has company owned service centers. To my limited knowledge, there's one in Chennai and one in Bangalore. Possibly there could be more. The service experience is way better at these locations as compared to the average non-company owned service center.
I checked on Google & found the Bangalore RE owned service center. Yes, as you mention there seem to be some on the 2 wheeler side, not sure on the 4 wheeler side of things.

Someone from the forum also mentioned Tata had a presence in the past as well, not any more.

The general consensus from the above comments seems to be, OEMs want a layer in between the customer and themselves for whatever practical reasons (avoiding washing dirty laundry in public) and are happy just selling the spares and not to forget the cars themselves, while dealers "service" the customers. Of course, OEMs have better things to do like charting a new sales strategy, launching stellar products, readying facelifts and "special editions" by doing sticker jobs than having to take the headache of giving an ear to an irritated customer
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Old 2nd April 2024, 23:18   #11
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Re: Why are there no company-owned & company-operated service networks?

I service my car in one such workshop in Chennai. It is called Maruti Service Masters (MSM) and it is a JV between Suzuki and Sumitomo Corporation. I have been going there right from the first service after I bought the car from ABT during 2009. In my opinion it is the best set up, though I won't say one gets 100% satisfaction even there. Let us say > 90%. I think it is present in New Delhi also, no idea about other cities. There is also a Hyundai Motor Plaza (HMP) in Chennai which I think is Coco model. No idea about other brands.
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Old 2nd April 2024, 23:49   #12
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Re: Why are there no company-owned & company-operated service networks?

When Maruti, Hyundai, Tata or Royal Enfield sets up a handful of company operated service centers, I think their goal is to learn first hand about typical issues faced by the customers and also perhaps business issues faced by authorized service centers.

Last edited by SmartCat : 2nd April 2024 at 23:52.
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Old 3rd April 2024, 00:03   #13
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Re: Why are there no company-owned & company-operated service networks?

One reason is channel conflict. If the manufacturer sets up own dealership, this brings the manufacturer in direct competition with their own dealers. So they either need to go all the way and have full control and ownership of the sales and service channel, or stay out the distribution and service channel. Given the investment requirements for setting up dealerships throughout the country will be high, it makes no sense for the manufacturer to enter the downstream business.

Regards,
Lsjey
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Old 3rd April 2024, 00:25   #14
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Re: Why are there no company-owned & company-operated service networks?

Maruti operates 4 COCO service stations in Delhi NCR under the brand name of "Nexa Service Masters". These are located at Okhala (Delhi), Sahibabad (Ghaziabad), Greater Noida West (Noida) & Naraina (Delhi - under closure).

Earlier Naraina used to be only service center, but as Maruti has lost the tenancy case they have opened service centers at three other locations. My experience with them suggests that, their best manpower has been allotted to Greater Noida center with Sahibabad getting the worst lot.
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Old 3rd April 2024, 05:51   #15
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Re: Why are there no company-owned & company-operated service networks?

Frankly most of us already crib a lot about labor costs associated with service. And labor will be far costlier for full time employees of an auto company than for a dealer. Which would make service costs even higher unless the company is willing to lose money. Donít see any logic for a COCO structure.

And the entire idea that every dealer is out to cheat is also false. In my view lots of dealers try to do the right thing. Outright cheating is rare - and pushing for higher sales at the margin is not a big deal.
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