Spare Part Manufacturer

C: I would like to ask some clarifying questions. First, are we talking about the market for both OEM parts and the local spare parts and second, we are doing it for the Indian market?

I: Yes market sizing for the entire India, and we are only talking about the spare parts in local garages.

C: Okay got it. I’ll take a few seconds to structure my thoughts.  I’ll first estimate the number of cars running on roads in India followed by proportion of cars that’ll get repair done through local garages and then the market size according to the frequency of such repairs and spare parts cost per repair.

I: Yea this sounds good you can go ahead with it.

C: I’ll break down Indian population into no. of households, divided on the basis of rural-urban, the interviewer asked to ignore rural, broke down urban further on the basis of income levels, and estimated number of cars within)

I: This is good, now how would you estimate what proportion of these cars would go to local garages?

C: I would assume that most cars owned by high-income class people are more luxury cars and they won’t trust their car repair with local garages and would go to the OEM-certified repair stores. So I’ll take a greater percentage of middle-income group car owners and a less percentage of high-income group people going to local garages.

I: Sounds fair but what other factors can you divide the people going to local garages and OEM-certified garages?

C: Quality of service provided by local garages, time taken to repair in both cases (if someone is in a state of urgency), repair cost (if car isn’t in warranty period), accessibility to such repair shops.

I: All this is right, but I’m looking for some criteria for grouping that can help you to get to a more accurate estimate

C: On the basis of how old the car is. Older cars people will take to local garages more whereas newer cars to OEM-certified stores.

I: Yes, that’s what I was looking for. Now let’s divide cars on basis of age 0-3 years, 4-6 years, and 7-10 years old. Which category do you think would have the maximum number of cars and why?

C: Maximum cars would be in 0-3 years as the income groups we are talking about people switch cars faster due to reasons like mileage, new models coming up, living standards etc.

I: No, but then there is also a second-hand market and the old cars remain in circulation. What other reason can you think of? Think specifically wrt a country like India.

C: As India is a growing economy, much more people own a car now than they did earlier. There is a good growth rate in car sales. 

I: Exactly, now say on the basis of this we arrive at a number of 80,000 cars running on roads in India that’ll go for repair to local garages. How will you go further?

C: Let’s assume that each car needs a repair twice a year. Do we have numbers on how much an average car repair costs?

I: Yes, on average a car repair costs 15000.

C: But, I’m assuming this is the cost to the customer, thus it includes both spare parts cost and service cost, is that right? And do we have the split of the two?

I: Yes that’s right, spare parts cost to the garage is Rs 10,000 and service cost (of labour and other things) is Rs. 5,000. Also do you think you’ve missed any category in your estimation?

C: Okay then the market size for local spare parts should be 80000*10000*2. At the same time, as we started with households approach, we haven’t talked about the commercial cars (used by Ola, Uber, Taxis etc.) Do you want me to estimate that as well?

I: Great thought. But that won’t be necessary.