Union Budget 2023-24: Government must work with after-sales mobility startups to launch skilling, training programmes
The automobile industry’s advancement is still highly dependent on after-sales service
The impending recession and negative market sentiments have been a major source of concern for growth-stage startups. Demands from stakeholders and the investment ecosystem for higher margins and lean structures make the startup journey difficult for any charismatic results. Therefore, this is the appropriate time for the government to do everything possible to help startups, Micro, Small and Medium Sector Enterprises (MSME) sectors, and entrepreneurs seeking growth in the aftermath of the pandemic.
Automakers embrace future-ready vehicles
When it comes to the automobile industry, it has overwhelmingly been among the hardest hit by the COVID-19 disruptions, with car prices skyrocketing and consumers compelled to spend their money maintaining their existing vehicles rather than purchasing new ones. To entice customers, automakers are increasingly concentrating on embracing future-ready, cutting-edge vehicles that provide a safe, comfy, and luxurious driving experience.
While improved functionality is essential in the buyer’s decision-making process, the automobile industry’s advancement is still highly dependent on after-sales service.
Previously vehicle owners had no alternative and they were obligated to pay what the dealer demanded due to the illusion of “Love for Original.” With the changing times, many aggregators and entrepreneurs in car servicing have helped to raise customer awareness that the same servicing or configuration can be done at a cheaper price. Numerous other flaws with authorised dealers and workshops, such as an absence of transparency, a lack of outlet stores, longer wait times for handover and repair work, and soaring urban expectations, have further created a larger market for after-sales service platforms.
Considering the rising demand for auto service, here’s what auto after-sales service startups expect from the Union Budget 2023:
Importance of manpower training
Manpower is without a doubt the most valuable resource in the automobile after-sales service industry. The current auto after-sales service providers have a team of experts and dedicated technicians who use best-in-class tools to provide quality service upfront, such as car repairing, denting and painting, car battery and tyre replacement, and more. However, the sudden shift to future mobility could endanger the large workforce involved in IC engine servicing. To encourage growth in this sector, the government must work with after-sales mobility startups to launch skilling and training programmes that will result in a qualified and educated workforce that is future-ready.
Availability of spare parts
The most pressing concern in the automobile aftersales segment right now is the scarcity of spare parts for maintaining the existing fleet of vehicles. Component shortages are primarily the result of the Russian-Ukraine war, and COVID-imposed restrictions have hampered the production of auto spare parts in micro, small, and medium-sized industries. To improve customer satisfaction, the sector requires government assistance in facilitating the availability of imported spares as well as relaxation of rules by insurance companies and curbs on vehicular lifetime management.
Reducing GST norms for billing on labour
Reducing GST norms for billing on labour, particularly in the aftersales ecosystem, has always been a growing demand in the sector. The industry leaders urge the government to keep labour rates at 5 per cent GST, as is the case with service charges in other industries (i.e. hotels). Since most auto workers are at the bottom of the pyramid, lowering the GST on labour to 5 per cent will increase income and livelihood opportunities, as well as create more entrepreneurs in the segment. Also, working in B2B environments with long-term contracts makes regulatory filings difficult, which necessitates more freedom in terms of time and options.
Digitisation of auto industry regulations
In recent years, the automobile aftersales service sector has witnessed significant growth and transformation. After COVID, customers expect quality end-to-end solutions from vehicle pick-up to servicing, followed by a post-service customer connect, all with a digital touch. As a result, the sector is hoping that the upcoming Budget 2023 will proceed to set the stage for the digitisation of automobile industry regulations, which will increase interstate vehicle sales and servicing, shorten the time it takes to transfer ownership, and reduce taxes.
Without government support, the road ahead appears to be bumpy, as the automotive aftermarket, a key and stable revenue contributor to the automotive industry, is about to undergo radical changes. Customer expectations are shifting, new technologies are being adopted more quickly, and competitive power is tilting. As a result, these variations will also drastically alter value creation and marketing strategies in the automotive aftermarket. The tempo of consolidation in India’s metropolitan markets will quicken, and new players will come onto the scene. However, only those players who act strategically now will be able to dominate their rivals and thrive in the segment.
The writer is the Co-founder and CEO of Automovill. He tweets @Mriduonmove @automovillindia. Views expressed are personal.
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