Lucas Indian Service expands with innovative solutions: S Muralidharan
Lucas Indian Service (LIS) is an automotive aftermarket organisation provides solutions to a range of vehicle manufacturers from two-wheelers to cars, trucks, and buses, as well as off-highway vehicles. LIS also manufactures wide range of auto electrical parts and distributes through its regional offices and warehouses. The company also provides service and specialised training to service dealers, vehicle manufacturers, state transport undertakings, defence establishments, and fleet operators. In an interaction with Bhargav TS and Sricharan R of Auto Components India S Muralidharan, President LIS, talked about the transformation by digitisation and new technology it is bringing to the aftermarket industry and the future plans of LIS. Edited excerpts:
The last year was fascinating for the automotive industry with the transition to BS IV and the introduction of GST. How has it been for the aftermarket players especially in the commercial vehicle segment?
Muralidharan: Yes, the commercial vehicle industry is going through unprecedented changes. BS IV was introduced last year and in the next 2 years BS VI will be rolled out. There were legal changes like demonetisation and GST. On the technology front there is increasing digitalisation. All these are coupled with the overall economic and infrastructure development. Roads have become better even in the Nort East and interior areas. All these will jack up the demand for various types of vehicles. The BS IV transition has happened fast and most people are surprised that it happened smoothly. People expected that there might be a lot of issues coming up along with that change. There were no obvious problems. The transition of BS IV to BS VI also will be smooth because there will be only basic characteristic changes in the engine and the allied components. The only major addition is the exhaust gas recycling (EGR) unit. Those who are able to service BS IV vehicles can also service the BS VI vehicles easily.
The improvement in road infrastructure also indicates that people do not want to use old vehicles, which would directly affect the aftermarket. But, this would be better for the overall economy by having better, fuel efficient and greener vehicles. At the same time, 15-20 year old cars and trucks have to be scrapped. The other thing that is killing the environment is speed. The speed here denotes the speed of the delivery. The customers have become so demanding and all wanted to replicated it. Everyone talks about time and the time of delivery has become so important because of e-carts websites. Because of this, the truck operators and others do not think of keeping the vehicle idle, especially in the service centre due to non-availability of parts. This increases the pressure on the aftermarket services. Gone are the days when it took 3 days to service. And now, the customers wanted to the service to be done in hours for most of the products. The pressure on the distribution of parts and servicing of parts has increased. More important, the reliability of the product including the component is so high that the truck manufacturers also demand longer term warranty like cars. Pressure on warranty is very high. The components they offer have to be more reliable and have to last the life of the warranty.
Because of all such developments, the aftermarket need of a vehicle begins only from 3-7 years. The first 3 years will come under warranty period. And within the 3-7 years, the parts have to be given so fast and serviced so quickly. Otherwise, they would not be using it. As a consequence of these, a lot of bigger fleet operators are developing their own garages where they do a lot of small
repairs. Their logic is simple. Instead of getting the parts from the distributor now they are sourcing directly from the producers like us, which will also allow them to save some money. This puts enormous pressure on regular garages and on the retail chain. The transition from BS IV to BS VI, will be one of the rarest points of history of any society with the co-exitence of 3 generations of vehicles. For example, you can witness an inline pump, rotary pump and a common rail. For normal dealers or a distributor, it is a challenge to keep all these and they may not. Therefore, they will start selling spurious parts. So, a company like LIS will win only if it reaches the fleet operators or all the small markets with a bigger basket of items. And that is the direction LIS wants to move. We are trying to break away and reach fleet operators and
garages with a much wider range of products and it is a different concept of service.
It is an opportunity for training because these people, who are in between the wholesalers and dealers, are the ones going to suffer. This is an era of GST and somewhere around the time, they will crumble. Because nobody has such a stocking power of ranges. I am not sure what will happen, as the depth and width of distribution might be the challenging. The major gainers might be the OEMs themselves. They will sell in their own packs and I think it is foolish to compete with them. But we can co-exist with the OEM channel and the LIS listed parts are stronger than any local parts and this will help us to squeeze out spurious parts. That’s the direction we are proceeding.
Directionally LIS will go for more reach and we are becoming an aftermarket solutions provider. If a fleet operator has a problem, we don’t just repair it, we give him a whole package and that is what we’re focusing on. On the digital side, we have an app and are trying to give to the mechanics. Whether people will order via an app is a question. He will browse through the net but will go to a retailer and buy. In India changes happen very fast. If it happens we are in for some interesting times. And, we are prepared for that too. We have a website and we are also in e-market.
Q: As you mentioned, on one hand the number of vehicles is going up but at the same time the quality of the product is also going up, which will eventually have a dip in the aftermarket. In this scenario, how do you plan to grow?
Muralidharan: One, we increase market share by squeezing out spurious and local players. We will go deeper into the market by getting garage contacts and nowadays even going to fleet operators. Second, we are an aftermarket solution provider which means, earlier we serviced only the pumps. But today, I need some high-pressure pipes and some recess and overflow valves. Third, we support them technology-wise through apps. This means that our lead time has really shrunk. Earlier, we used to address the problem within 3 days, but now we are talking in hours. Today, we will make up 92% of services in 8 hours on all India basis. Across the country, if a
vehicle needs a repair we service back it within 8 hours. We are talking about a full repair. That’s the way we pull the customers.
Q: On service, you said you are planning to increase your reach. What is the current level?
Muralidharan: It is all about turn-around time. It does not matter anymore that how many numbers of workshops. We have 7000 electricians and have a database of about 25,000-30,000 electricians. But to me that are numbers. What matters is the time we help the customer. We are tying up with whoever possible. We have our own company workshop, authorised service dealer, we have electricians and use all these and set it right. Going forward we will be planning to reduce the time further. GST, e-way bill, better roads, technology etc will help it.
Q: How do you overlook your competitors?
Muralidharan: I do not look anybody. For me branded market is always a branded market. I am not worried about others and I want to grow. We make the market bigger and there is a share which we can always take. It is estimated that, aftermarket business is around Rs 66,000 crore, which is growing at around 6-7% YoY. In this accessory is not included, if you put all these together it will be closer to possibly around Rs 80,000 crore. But now each company will be doing a business of just Rs 1000 crore to Rs 2000 crore. So, there is a huge opportunity for growth.
Q: How is the passenger car segment growing?
Muralidharan: It is much more complex and will have more digitisation. It is also likely to have electronic parts which are all linked by Controller Area Network (CAN) and connected vehicles will be part. What I do not know is when there will be a shift to AI. Definitely, the parts life will increase, and digitisation has a huge role. The end user will use the app and he will compare. There the challenge will be for garages. For example, most of the parts will be electronics. At LIS, we have developed a device (dongle) which is for diagnostics. It has its own strengths. It is for the middlelevel cars. Top level cars will have their own garages and tools, so we are not competing with them. It is an On Board Diagnostics (OBD) tool and will be linked with internet and also via smartphone. It will be given to the garages for servicing. We may give it to the customers but not at the moment, as the DIY is not popular in India.
Q: Can you say more about this new device in terms of service?
Muralidharan: We give the dongle to each garage and in the process, we supply the parts. The approach for the aftermarket solutions will be there. The car market is a sophisticated one and we are bullish about the two-wheeler market. It is large and not aggregated. There is an opportunity and we are growing strongly. We have products from Lucas TVS and Indian Nippon Electricals. We have a range of products and we will have the reasonable basket. Since the market is disintegrated we feel we have an enormous scope. The technology shade is slower than the rest. But, the risk is EVs. We have products for e-bikes and e-rickshaws. We are into that too.
Q: Could you elaborate more on the two-wheeler service segment?
Muralidharan: We are going deeper into the market. We are in touch with a lot of mechanics and train them.
Q: How do you manage to do all under one roof?
Muralidharan: That is the expertise that we bring to the table. We modernise stores, improve stores and we improve warehouses. Parts management, technology management and product management are what we bring. Our ability to bring you the product technically correct, aftermarket solutions and we even give you the brand of your choice. We are brand neutral and we have almost all the brands. Because customers want choice.
Q: As an aftermarket player, how do you take on the counterfeit?
Muralidharan: We have coding systems, barcodes and more sophisticated systems in place. Only by educating people we can eradicate counterfeit.
Muralidharan: We export to SAARC countries. We follow wherever the OEMs go. From LIS we are exporting to different countries wherever the Indian cars go. Now the component manufactures have started exports.
Q: How is your exports business? Q: Do you have plans to venture into any new areas?
Muralidharan: We continuously search for new products and areas. We have taken up distributorship for NSK Bearing and we have taken up Gates India products. We are also willing to partner with anyone, who has a strong product portfolio.