[Samarth 619]

Note: I'm using the Sbk term quite liberally to include most high capacity, expensive, high speed motorcycles.
I can't base this article entirely on research because its not my area of expertise, plus it will be expensive, so suitable inferences have been made.

About Me: I'm a biker since the last 18 years. Aged 36, I'm a Professor of Management in a private college in a relatively small city, but I've had enough travel exposure in India, and have stayed at Bangalore, Delhi, Mumbai, etc.

What I'm Trying to Do in this Thread: I'm trying to discuss an idea, which if it gains sufficient traction might just solve few of business problems related to high capacity bikes. I invite people to be constructive critics, and add to or substract from the idea I give.

The Problem (more like, a list of Problems):

Well, here are some of the most common problems faced, based on my interaction:
For Customers:
1. Poor Quality of Service
2. Non availability of service in Teir 2 and 3 cities
3. Parts availability problems
4. Roadside assistance not helpful everywhere, plus lack of standards, and sometimes, non fulfillment/ refusal.
5. Limited range of products and after service considerations, a few further potential products get rejected,

Problems faced by Dealers:
1. Poor revenue from sales and service both, its like the business isn't even sustainable in most cities of India, specially Tier 2 and 3,
2. Hiring and retaining talented mechanics and maintaining quality of service
3. Customer disputes due to dissatisfaction

The Solution:

Before I share my solution, let's just bust few myths: Many believe there's no market for Sbk's in Tier 2 and 3 cities. Its a false assumption. My own (relatively small) district city with population of around 6 Lakhs has about 12 Sbk's which I can confirm, and many more I don't know of. This is when there's not a single decent mechanic around, leave alone company branded dealership. Can you imagine what we're getting at? Can you name one city without say, 10 Sbk's in it?

I'm not trying to inflate a bubble here: I know the market is small. But are we saturating it enough? Are we handling it properly to ensure both the customer and local dealership is happy?


Now, the solution. I imagine a multi-brand Sbk sales and service store, which is officially licensed by manufacturers to provide motorcycles, services and spares from their end. The model will be strictly a franchisee model, like McDonalds.
The following should be the features of this store:
1. It will be present in Tier 2 and 3 cities as well, in addition to the big cities. It will be present as a brand.
2. Per such center, there will be a team of 4-12 mechanics to handle the service, and this will be scalable as per operations scaling up. These will be the very best of the city.
At least two will be trained by the parent company, in each motorcycle.
3. To ensure zero accidents and even minor scratches, the entire service area will have multiple CCTV Cameras, but in such a way that each bike's service/handling is recorded in full clarity. Plus, these recordings should be stored upto 2-3 months to help in technical assistance later on, and accessible to customers.
4. Customer sales area and lounge to be lavish in all sense of the word with comfort, aesthetics, big screen TVs/ projectors for MotoGP show, motorcycle racing simulators (like video games), etc.
5. Road side assistance on both basis- instant payment (calling helpline number on breakdown) and advance payment (yearly insurance).
RSA vehicle should be purpose built to securely transport the vehicle.
6. Monthly and annual promotional events to ensure fun for customers and cash flow for the dealership. Sometimes per brand, other times all brands.
7. Unsatisfied customer can use the cctv footage, and approach the company to get the motorcycle properly re-serviced, maybe somewhere in another city, or with company mechanics, if not satisfied locally.
The trucks carrying the bikes to be sold, can be used to transport the bike for this other-city service.
8. Multiple showrooms in the same city are a "Yes!" to maintain competition, of course, as long as volumes exist.
9. Franchisee model will give least freedom to mechanics and dealers, and more freedom to customers.

In short, all brands of Sbk's will sell under the same big roof and customer can get it serviced from there. Even in your typical Tier 3 city.

Why is it an awesome business idea?

I'll tell you why I'm convinced its the way ahead:
1. Outsourcing the entire service model to a third party, will put off a burden on motorcycle companies, so they focus on important things.
2. Due to higher sales amounts under one dealership, activity and sales will be very high, resulting in a profitable business model even in Tier 3 city. Imagine a Harley Davidson dealership selling 4 bikes in a month, now imagine a common dealership selling 25 (any) bikes in a month, yes you got me.
3. Due to multiple mechanics, there will be knowledge sharing among them in huge amounts. All will benefit.
4. Customer will also get a better service experience, as within mechanics, "none of us is smarter than all of us", right?
5. Return on Investment should be high ideally, because a lot of costs and fixed asset expendtures are shared among many more customers.

Customer will be served better in less cost.
Dealerships will have a working, profitable business model.
Companies will sell more such bikes as Tier 3 markets open up.

Its not just a Win-win. Its a Win-win-win.

Challenges?

Couple of them. Getting the entire, or most of the industry to agree on this officially, for one. Maybe few small brands will jump in before the larger ones.
Maintaining the quality & experience in a small city is another point of discussion.
Nothing impossible though.


So, what do you think? I know post corona period is hardly suitable for this discussion, but let's think long term, apparently even e-bikes will have segments from commuter to super luxury.. so not much of change here.
Can we work on this idea? Can we improve it? Is it even possible? I'm open to a discussion... Please let me know.

[Jhinchak]

Although a similar models exist in the western market. Here are few problems likely to arise in India.

1. Favoritism of one brand over the other just because of higher margins being provided by the manufacturer.

2. Brands often share the test ride vehicles among dealers, especially the higher value and low volume products.

3. Huge Showroom and inventory would be required as many brands have many bikes on sale, for eg. triumph and Honda has more than 10 bikes on sale at the moment and adding Suzuki, kawasaki etc. would result in 50+ bikes to display and sell.

4. Knowledge sharing would not be preferred by manufacturer.

[no_fear]

@ Samarth,

A noble thought and a good academic exercise. Unfortunately, reality is different, in the case of new bikes.

I had proposed a similar model to three large international superbike manufacturers in India. Proposal was promptly rejected.

1. By right, a dealer is a part of a manufacturer. They are privy to confidential information, vehicle recalls, new launches, and intellectual property rights. A dealership works on a distributor model - where the dealer commits to investing a certain amount of money to run a dealership under a brand, and in return buys vehicular assets, spare parts, and services at a margin (30-40% below MRP). The dealer's employees work for the dealer but their training costs are borne by the manufacturer.

2. A dealer cannot onboard competitor names since it will clash with the principles in point 1. Unless two companies have synergies in place and agree to share resources, they won't sell new vehicles under a shared roof. There is a lot at stake. Franchise model won't work for multi-label dealerships, as a franchisee has to agree to the franchiser's terms and conditions. You cannot expect McDonald's to allow their franchise partner to use the kitchen to cook and sell Burger King burgers. The same applies to bike dealers.

3. What you are proposing is called an "aggregator" or "reseller" or "consolidator". These work well for online platforms such as airline, rail, hotel bookings, or consumables, like stuff sold on Amazon / Flipkart. It won't work for new vehicles due to clash of principles in point 1.

4. The model will work well for used bikes. There are several service centres in Delhi and Bangalore who are trying this, but with limited success.


The key issue here is training of service personnel. Most manufacturers in India train personnel through video and powerpoint presentation. On hands training in minimal, and the service guys are left on their own. Quality training is severely lacking and that results in shoddy service and customer complaints (famous example - Keerthi Triumph in Bangalore). To run competent service centers, you need qualified and well trained staff and huge investments in tools and inventory. Sadly, in India, we don't have many. Many is an overstatement. Qualified service personnel in India can be counted in one hand. No one wants to spend money to make money.

To give you a monetary estimate, it takes roughly Rs 10 crore annually to run a decent sized motorcycle dealership. This includes upfront cost of buying a minimum amount of motorbikes per month / quarter (whether they are sold or not), building rent, salaries, inventory and any associated costs. I have not included any licenses or permits needed (fire, security, toxic waste disposal, drainage, cleaning).

Once you calculate the costs and the return on investment, from a business sense, it makes 0 sense to run a quality dealership. To cut costs, dealers find ways, and that spirals into poor experience for customers.

[bf1983]

I knew only no_fear would be able to give a proper response to your thread and I am not surprised he had already had this idea and pitched for it in the past.

I have nothing much to add but I remember when Tata and Fiat shared the same dealer space and Fiat was given a very step motherly treatment by the dealers with sales executives pushing hard for Tata cars over Fiat cars and I can see similar things happening here as well. Dealers will definitely push for bikes where they get greater margins or where the company looks the other way when customers complain about shoddy servicing or underhanded behaviour.

[am1m]

Isn't there someone in Bangalore who does this? https://xtorque.in/

I think they do multi-brand service and after-market parts, not bike sales though.

[BANDHAV]

Originally Posted by no_fear

@
4. The model will work well for used bikes. There are several service centres in Delhi and Bangalore who are trying this, but with limited success.

What are the primary reasons for the limited success? There is a vaccum in the market, why are such outfits are not experiencing great amount of success?

Slightly OT: How different/relatively easy it is to get into Multibrand pre-owned superbike game? There seems to be exponential increas in numbers of player getting into it.

[roy_libran]

Originally Posted by BANDHAV

What are the primary reasons for the limited success? ..... why are such outfits are not experiencing great amount of success?

1. (unbridled) greed
2. (abysmal) capability
3. (poor) open/after market part availability
etc.

I have tried once each, with pathetic results, each of the 3 big options in the NCR and am now back to the A.S.S for good.

[no_fear]

Originally Posted by BANDHAV

What are the primary reasons for the limited success? There is a vaccum in the market, why are such outfits are not experiencing great amount of success?

Slightly OT: How different/relatively easy it is to get into Multibrand pre-owned superbike game? There seems to be exponential increas in numbers of player getting into it.

Bhpian Roy_libran has summed it up very well. I can enlarge the summation and explain a bit more.

The successful service centers are stand alone affairs. Most are run by 1-2 persons who have had good experience in servicing bikes and have moved from the corporate side (working in dealerships) to running their own service center. As long as you have a steady clientele of customers and are servicing about 200 bikes a year, while keeping overhead costs low, you remain profitable and can keep a control on things. Also, your business is directly correlated to the number of service bays you have in your shop.

When it comes to scaling up service centers, that's where you run into trouble. You need financial power, constant supervision, and keep your fingers crossed that your staff are not poached by competitors. Then with a larger scale of operations, your indirect costs shoot up a lot more and you have to play in volumes to break even or remain profitable. At this stage you are also at the mercy of suppliers to ensure that spare parts are sent to you readily and at the volumes and price range you want. This never happens.

Regarding the second point of pre-owned superbike game.

Anyone can get into this business with a capital of Rs 30-50 lacs. You go around shopping and pick up a dozen bikes, find a rental place, use instagram to promote your bikes and pray that the bikes get sold at the price level you want. The problem starts on the supply side. There are not that many superbikes (600 cc and above, and excluding KTM, RE and domestic brands) sold in India annually. The number is less than 5,000.

The used market does not get a healthy supply of bikes, and the ones usually sold are either accidental or have frame / engine issues. Once you start dealing with these bikes, then your reputation is at stake and you end up in a downward spiral.

There are plenty of discussions about the used superbike market on this forum.

[Kashief]

Smarath_619 - Congratulations for conceiving this idea!

I own a Ninja 650 and you know there are only 2 showrooms in Tamil Nadu (Chennai and Coimbatore) and both are owned by JMB motors. So there is a monopoly and if I'm not satisfied with their service then I don't have any other option. The reason behind choosing Kawasaki, because either I stay in Chennai or Coimbatore so that servicing won't be a problem.

Now I'll summarize the pain points,

1. For periodic service I have to travel 40kms one side to do the service with prior appointment. I'm kind of a person don't prefer to leave the vehicle over night for servicing be it bike or car and drop/pick up by myself. Anyway Kawasaki service centre don't provide Pick up/Drop facility.
2. If I'm dropping for service, I cannot go back to home and come again due to the distance. So only option is to stay in the service centre and pick up the vehicle once it is done. Usually it takes 2-3 hours based on how quick you open the job-card once the service centre is open. I always ensure that I reach there by 9AM.
3. Saturday's are not preferred because they cannot service your bike within 3 hours due to more load. So only weekdays are allowed to wait and get your vehicle. Either I have to take off or do work from workshop.
4. Waiting area in the service centre cannot fit more than 4 people at a time and never saw the A/C or TV running. So I have to kill my time either stalking the vehicles which are being serviced or go out for tea.
5. I have a Doctor neighbour in our society who also eventually owns previous gen Ninja 650. One fine day when I was washing my vehicle he noticed me and asked where do you do the servicing. When I said Kawasaki Service centre, he quickly asked is it near by the place where we stay (hoping that a new authorised service center might be opened). I said No and have to take the vehicle to Ambattur and his ray of hope diminished.

So I believe the business case you are looking here will work out based on which part of the city you are opening the service centre and how efficient the mechanics to service and solve the peculiar issues of these Multi brand super bikes, last but not least the bulk initial investment cost on setup, tools, employees, etc.

All the best!

[Samarth 619]

Originally Posted by no_fear

@ Samarth,
A noble thought and a good academic exercise. Unfortunately, reality is different, in the case of new bikes.
I had proposed a similar model to three large international superbike manufacturers...............

Thank you for your response, I appreciate it.
The way corpo's promptly reject potential ideas even before exploring the potential, is sad. But, its obvious because they get pitches a dozen a day, even on breakfasts and lunches (talking figuratively). Maybe a small company can accept the pitch before big names do, and there's higher chance when we have more on the ground and less on paper?
Honda/ Suzuki/ Ducati will not agree at this nascent stage, when there's nothing on paper? (which big names by the way, you never told? So I'm assuming these names.)

I'll answer pointwise what I think:-

1. Sorry, but the truth is, the common dealer is a separate business from the motorcycle company. They have their own brains & make their own decisions. Remember, the Kawasaki Mumbai dealer who ran away with customer money to the tune of Rs. 1.18 crores in 2019 or so? And after that, Kawasaki launched an event in a hotel to compensate the owners and give them their bikes? In fact, franchisee model will better control such behaviour than a standalone dealer.

Now coming to the separate businesses under one roof, yes, this is an issue. The solution is: Use this business model only for class 2 and 3 cities and don't tell the franchisees any confidential information, they shall only receive clear instructions over mails from centralised office of this new service company, and are immediately implemented. ERP software shall keep all informed as need be.
For them, all products are equal, and any company's sales are an extra boost to their efforts.
The big city's individual dealers continue to work with the company like before only, their work/relation is not affected.

In short distributor relationship management is being outsourced, like everything is nowadays. (With exception of transportation, which is cost efficient only if its shared)

2. We're focusing on Tier 2 and 3 cities. Remember, any sales for the manufacturer is extra sales. There's no clash.
Its like a big marketplace under one roof.
This big service company we're talking about will purchase bikes from motorcycle companies and agree to undertake complete service in exchange of spare parts and logistic support, that's all. Its HO can be Mumbai, but sales and service operations to be in every Tier 2 and 3 city.
Why should any bike manufacturer reject extra sales? Either the pitch was not in the right direction or maybe the message didn't get across.
McD and BK's analogy can't be connected with this market. We're talking a 3rd party company who deals with all companies, and strives to maintain all of them.
They see Brand 1 going down, they'll mail franchisees to focus on it or increase the margins for it? Personal biases always exist, yes, that's an issue, but we can ensure near to zero professional bias.

3. There's no clash, when we consider we're logging into an untapped market, and we don't have to inform everything to franchisees. Only the Mumbai HO of this particular service company communicates with the company, the franchisees just need to do their job.
They can deal with it, right?
Even if few companies sell more, its due to their products being better, the others have to accept the fate. Its an untapped market, who knows.

4. Once again, my point of focus is Tier 2 and 3 cities, where we have more superbikes per citizen (*compared to unserved lcoations). The chain will be like this:-

Motorcycle manufacturer --> Sbk World (Franchisor) --> individual franchisees in small cities --> Customers.

Ajmer has a group of 12 Sbk's for sure, even though its a 6 Lakh city. Which means a proper big bike per 50,000 people (I'm not even counting RE650's and Ninja 300's and like). We mght need research to conclude that more might follow if network is good. Similarly, every city I know has a couple of them, and more might follow if we support them.
You know from your 1199 experience that not every Sbk owner is an avid fan who will travel 500 kms to get their bike serviced. Although yes, we need more research to be conclusive.

The key issue here is training of service personnel. Most manufacturers in India train personnel through video and powerpoint presentation. On hands training in minimal, and the service guys are left on their own. Quality training is severely lacking and that results in shoddy service and customer complaints (famous example - Keerthi Triumph in Bangalore). To run competent service centers, you need qualified and well trained staff and huge investments in tools and inventory. Sadly, in India, we don't have many. Many is an overstatement. Qualified service personnel in India can be counted in one hand. No one wants to spend money to make money.

Agreed, but won't 12 brains still be better than one in such a case?

I think we need to understand that a lot of mechanics are at various levels of competency: a guy I know is an expert at basic servicing, and front fork repair and head cleaning, but nothing much apart.

The rule is one manufacturer's dealer can't have 12 good mechanics, under my idea you can. Number matters.

To give you a monetary estimate, it takes roughly Rs 10 crore annually to run a decent sized motorcycle dealership. This includes upfront cost of buying a minimum amount of motorbikes per month / quarter (whether they are sold or not), building rent, salaries, inventory and any associated costs. I have not included any licenses or permits needed (fire, security, toxic waste disposal, drainage, cleaning).
Once you calculate the costs and the return on investment, from a business sense, it makes 0 sense to run a quality dealership. To cut costs, dealers find ways, and that spirals into poor experience for customers.

I suppose you're not too aware about small city business scenario. Give me just Rs. 5 crores for the same experience. I myself got shop certificate for just Rs. 1800 (the one confirming fire hazard standards).
Yes, it will take 3 years at least to break even, did I promise immediate or assured returns? But there's also a chance of doing good in starting and fading later on.
Credit is still a thing in this market, believe me, you don't need to get bikes on cash always. Otherwise, spare cash will run up and the extra liquidity will hurt profitability.
Franchisee model is to ensure this quality only. Why did I mention CCTV you think? Its way better than an individual dealers who do things their way.
I know small city business life, we can run such a business model for under Rs. 2 Lakhs spending per month easily (all costs, but not including depreciation for now).
So, can't this business sell 3-4 bikes per month and service around 5 for a start, and hold 2 paid pro-consumer events like drags and offroading, etc to remain breakeven?

Once again I repeat, my business model is focused on untapped markets. Tier 2 and 3 cities to be specific.
This model will do great if it starts with comparatively small companies like Keeway, Harley Davidson (may I risk my repute call it small 'at present'), etc. or even small bikes or e-bikes. Eventually, honesty, performance and commitment will ensure you get big names.

I'm very happy to receive a detailed reply from you. Believe me, I actually got a good debate, while I get none in the small city college environment where I come from.
Do let me know what you think of this, after my clarifications regarding small city focus and franchisee relations?

Originally Posted by am1m

Isn't there someone in Bangalore who does this? https://xtorque.in/
I think they do multi-brand service and after-market parts, not bike sales though.

Correct but once again, its a big city only-service player we're talking about. While these guys do a great job (I'm told), they're doing nothing to tap the untapped market of small cities.
Plus these guys compete against official service centers, while small cities have none.

[evil_grin]

You won't be able to convince manufacturers to let you sell bikes in your multi brand store.
However, that's not the problem, like you said, in Tier 2 and 3 towns, buying a super bike isn't an issue, maintaining it is.

We have FNGs that deal with cars, even German or luxury ones. Many provide better diagnoses and fixes than ASS. We don't have that equivalent for super bikes in either Tier 1 or Tier 2/3 cities.

What you could try is a multi brand service and repair center. Start off with Tier 1. To make it viable in Tier 2/3 cities, you'll have to choose a location that's accessible from multiple Tier 2/3 cities. E.g. between Cuttack and Bhubaneswar.

[Samarth 619]

Originally Posted by evil_grin

You won't be able to convince manufacturers to let you sell bikes in your multi brand store.
However, that's not the problem, like you said, in Tier 2 and 3 towns, buying a super bike isn't an issue, maintaining it is.
We have FNGs that deal with cars, even German or luxury ones. Many provide better diagnoses and fixes than ASS. We don't have that equivalent for super bikes in either Tier 1 or Tier 2/3 cities.

Exactly, agreed on most parts.
But, I think even big manufacturers won't refuse once you have volumes on your side. Come with an order of say, 100 bikes at once, and watch as the rules bend.. After all its a new, untapped market.

From the discussion on this thread, I realise that, a big manufacturer/ corporate like Tata could actually consider this, a small entrepreneur wouldn't likely be taken seriously on this.

What you could try is a multi brand service and repair center. Start off with Tier 1. To make it viable in Tier 2/3 cities, you'll have to choose a location that's accessible from multiple Tier 2/3 cities. E.g. between Cuttack and Bhubaneswar.

They already exist in Tier 1 and from what I understand, they're far better in service quality, yet worse in revenue, for these reasons:
1. The missing original parts ecosystem
2. The missing official support of the manufacturer
3. The official dealer proves to be a big competition, like it or not.

You're right about accessiblity from multiple Tier 2/3 cities. This seems like it could work if strategically planned.
Yet, the biggest question remains, who will bell the cat? Who will actually take the plunge? The investor would love to see a big name doing all this, than a young, ambitious, energetic no-name.