Market overview | Carnation value proposition | JV Partners | Auto Malls/Auto Cities | Accessories and car customization |
Innovation - New Concepts

• The Indian market projects the new car sales to be 2.2 million by 2012 and 3 million by 2015. The car park is expected to grow to 15 million by 2012 and 19 million by 2015. This growth is projected from the current levels of new car sales of 1.4 million and a car park of 11 million in 2008.
  • An incremental investment of Rs.12,000 to Rs.15,000 crores is required in the next 3-4 years in the dealer network to meet the needs of the growing customer base.
• Presently 80% of the market is held by three brands i.e. Maruti, Hyundai and Tata while 20% of the market is held by 15+ brands.
  • New OEM entrants and other existing OEM players have difficulty in establishing pan India presence due to high real estate costs and ability to meet the expansion plans of leading incumbents.
  • OEM players are making multi-million dollar investments in manufacturing and parts manufacturing but none in automobile sales and service network. The dealerships are left to individuals to invest and operate.
  • The dealerships are increasingly facing the challenge of sustaining operations due to high real estate costs and single brand showrooms with limited car park. OEMs are affected by the same factors while wanting to expand the dealership network.
• In the service and body repair market scenario, up to 60-70% of car owners go outside of the manufactures network post warranty.
  • The service and parts markets is valued at just under Rs.15,000 crores.
  • The insurance companies are also affected in the current scenario as the claims outflow is higher than the premium earning.
• Used car sales are expected to grow from 1.4 million to 4.0 million by Year 2012.
  • 90% of existing used car market is primarily controlled by unorganized sector
  • Some OEM have started dealing in used cars but are giving limited choice of owm make of cars

• Carnation is in the process of setting up a state-of-the-art network of integrated multi-brand auto sales, services and related solutions hubs across the country.
• In countries like UK, Germany and France, the aftermarket share of service load is shared approximately equally amongst OEM dealers, neighborhood garages and third party independent channel. In India currently there are only two categories: OEM dealers and neighborhood garages. Carnation will act as an alternative to OEM dealers and neighborhood garages while providing uniformity in pricing, quality and service experience across the country.
• Carnation in used car sales will provide a nation-wide presence with wide range of vehicles and warranty backup.
• In an effort to provide complete auto care solutions to its customers under one roof, Carnation is tying up with leading value added product and service providers for tyres, batteries, car detailing, accessorizing and windshield replacement among other things.

JV Partners:

The Carnation business model requires significant number of auto solution hubs to be created in cities across India to meet the above defined customer needs. To achieve its network spread, Carnation will be creating a certain number of fully owned and operated auto solution hubs in each state. To further augment the depth and spread of the network, Carnation Auto is creating Joint Ventures in key states with entrepreneurs who have the capability of running successful automobile dealerships. This would provide Carnation Auto with not only critical local insights but also help in an accelerated roll out of its operations. The JV organization will operate 5-8 multi-brand auto solution hubs across a state depending upon the potential.

These Joint Ventures will be 49% owned by the JV Partners with 51% ownership remaining with Carnation and would run as an independent profitable enterprise under the aegis of Carnation brand. The real estate for setting up operations could be invested by the JV partner or our subsidiary Carnation Realty which would lease the same to the JV organization. The business model is different from the franchise model and here Carnation would be investing financial and other required resources to ensure that we jointly work together to create a successful business enterprise.

We have already established JV partners for:

Andhra Pradesh - 10 Locations
Maharashtra - 7 Locations
West Bengal - 4 Locations
Madhya Pradesh / Chhattisgarh / Vidarbha - 7 Locations

Carnation is looking for potential partners who can contact Felix Louis at felix.louis@carnation.in or +91-9717093205 and also send us an information pack containing:

• Company background
• Experience
• Details of the management team
• Financial resources
• Any other relevant information

Auto Malls/Auto Cities
Carnation has launched the concept of multi-brand auto mall destinations to be created in select locations across India.

The current auto market has single brand sales and service showrooms. The customer has to go to these individual brand showrooms across the city for car purchase and car services. The concept of Auto malls is based around creating one stop shops for purchase/auto related services from a selection of multiple brands. Ideally these destinations would be located on city periphery, high traffic highways or a strategic customer accessible location and would be 2 to5 acres in area size depending on the scale of operations. The customer has one location where he gets to experience all the brands while making his purchase decision. This is further backed by offering all car related services including car servicing from trained technicians, finance, insurance, accessories etc. Similar Auto destinations exist around the world, e.g. Autocity in Penang, Malaysia (www.autocity.com.my).

In addition to the auto experience, the malls can be enhanced into family destinations by providing food and entertainment. These would include and not limited to entertainment zones, shopping complex, markets, theme shows etc to make it an all round destination.

Carnation is looking for potential partners who can contact us with the detailed company profile including details on suggested property and location to Yadvender Yadav at yadvender.yadav@carnation.in or +91-9717093202.

Accessories and car customisation
With the accelerating new car sales and changes in customer lifestyle and aspirations, there is a growing awareness and opportunity in car accessories and car customization.

The OEM outlets are focused on sales and service of cars and display a very limited range of accessories. Largely the accessories and customization market is unorganized and genuine parts with transparency in pricing, warranty and fitment are the main concerns for the customer.

Carnation intends to diversify into this area as an organized player to provide comprehensive solutions to the customers with a nation-wide presence. In car customization, we will focus on mid-value customization of cars as applicable to the young and aspiring generation.

Carnation is looking at a local or international partner of repute to go forward on the above business vertical. The partnership will cater to the needs of carnation sales and service showrooms network and also expand into branded retail chain of auto accessories and customizations. There is also potential to expand beyond cars into other categories of automobiles like motorbikes etc.

If you have the experience and passion to create a pan India retail chain of accessories and car customization , send your company profile to Amit Grover at amit.grover@carnation.in or +91-9650988787.

Innovation - New Concepts
Carnation is fast evolving new concepts to meet the customer needs in the auto solutions sector. We are looking to associate with people who have ideas and suggestions in the sector to create new customer value propositions. Please spare a moment to share your thoughts and write to info@carnation.in.