20101205mc india tirever1.4e as selected slides

8/8/2019 20101205MC India TireVer1.4e as Selected Slides

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Booz & Company

8 November 2010

Prepared for MC 120101205MC_India_TireVer1.4e_AS_selected slides.ppt

Larger fleet operators are expected to take the leadin moving towards radials to upgrade their fleets andreduce overall running costs

Vehicle buying & tyre selection characteristics

AS

Description Examples of Companies

New Vehicle BuyingCriteria

Issues faced Tyre Sourcing Strategy Preference for Radial Tyres

Size: 100 - 1400Type of Fleet: Trucks &TrailersAverage Speed: 50 KmphOffice: Transport HubsRepair: Transport Hubs

TCI

Fedex - AFL

RRRoadways

IdealTransport

All CargoGlobal

Client demand for newvehicles

Gradually upgradationfrom normal trucks toVolvos with higher technology

Reducing the age of their fleet

Getting loans for newvehicles

Time lag in gettinghypothecation doneonce a fleet operator decides to sell his oldvehicle

Waiting periods for some models of HCVs

Have long standingrelationship with tyredealers by region

Decision to change thetyre brand is taken bythe owner

Vehicles running for longer distances getradial tyres; localvehicles get bias tyres

Awareness in terms of benefits of radial tyres ishigh

Prefer radial tyres for longhaul distances to reduceoverall cost / mile

Prefer radials for new type

of vehicles - increasingrequirement as they areupgrading their fleet

Size: 25 - 100Type of Fleet: Trucks &TrailersAverage Speed: 50 KmphOffice: Transport HubsRepair: Roadsidemechanics

Omkar Logistics

GurusevakTransport

RajshreeCarriers

Prefer to buy secondhand vehicles

Change a vehicle

– Only when they attainthe maximumpermissible age as

per RTO norms – Maintenance costs

become very high

Getting loans for newvehicle especially for a second handvehicle

Repeat maintenancebecomes a problem

Affected by theseasonality of demand

Upfront capital is aproblem - prefers thecheapest optionavailable in terms of price & looks for themaximum credit

Prefer bias tyres due tolower upfront cost

Go for retreaded tyreswhen plying shorter distances

Awareness in terms of benefits of radial tyre isminimal; shift towardsradials is slower

Take big transporters asrole models & start shiftingto radials when they do

Will wait for marketfeedback rather than beingthe first one to take theplunge



Booz & Company

8 November 2010


Deals exclusively in used tyres,retreaders also exist nearby

Domestic and imported (mainlyChina) used tyres

Concentrated near transport hubs,dedicated markets in metros (e.g.Delhi)

Tend to get formed near areas of high fleet concentration

Tyre dealers are traditionallylocated around these areas

Even those not located here haveto deliver most of new tyres here onorder

Almost xx% of the retail tyre sales for new truck tyrestakes place in transport hubs located across thecountry

Tyre Markets – Example Delhi

PRELIMINARY

Government

Transport Hubs

Unorganized Transport

HubsUsed Tyre Market

Isolated Dealers Wholesale market

M a j o r i

t y o f r e

t a i l s a

l e o f n e

w t r u c k

t y r e s t a

k e s p l a

c e i n t

r a n s p o

r t h u b s

Developed outside of metrosand large cities, by localgovernments

Tyre dealers have re-locatedfrom inside cities to theselocations

Even those not located herehave to deliver most of new

tyres here on order

Located inside city, spreadacross

Many have moved totransport hubs as restrictionson activity/traffic have comeinto force

Business due to relationshipswith fleet operators,warehouses at hubs

Few wholesale marketsacross India, biggest locatedin Delhi (Novelty market)

Mainly B2B trade, with cashsales from bigger dealers tosmaller dealers from outsidetown

Deals only in new tyres

“…over 75% distribution in TN &

transport hubs …”

– Fleet Owner – Industry Expert – Tyre Dealer

InsideTransport Hub

OutsideTransport Hub

Tyre Fitment 65% 10%

Emergency

Servicing

10% 15%

Source: Booz & Company analysis, Interviews

Tyre Fitment & Servicing Locations

AS

WIP



Booz & Company

8 November 2010


There are three major types of transport hubs basedon types of activities and facilities available

Basic Intermediate Established

Parking

Taking Orders / Contracts Minimal

Maintenance & Servicing

Warehousing Facilities Minimal

Examples Wadala Truck Terminal,Mumbai

Kalamboli, Mumbai Ghazipur Freight Complex

Sanjay Gandhi Transport Nagar Namakkal Chennai Truck Terminal

Classification of Transport HubsBased on Facilities Available

AS Place


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8 November 2010


Activities Inside Transport Hub Outside Transport Hub

PublicSpace

MaintenanceFuel

Station

MaintenanceServiceCenter Fuel Station

PublicSpace

Transport Hubs usually have high fleet concentrationdue to industrial/logistics activity or traditional fleetrelated activities

AS

1. Waiting

2. Receive Orders

3. Loading

4. Transport

5. Fuel / Emergency

6. Unloading

7. Maintenance

Distribution of Activities Inside and Outside Transport Hubs

High Medium Low

Operator

Office

Operator

HubWare

houseWare

house

Place

0


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8 November 2010


0

Transport hubs are either naturally formed hubs ordeveloped by local governments, associations orcompanies Evolution of Transport Hubs

Natural /

Unorganized

Organized

(Government /

Association

Driven)

CompanyOwned/ Private

A B

C

Self-evolved transport

hubs near regions of

high fleet concentration

Government developed to

decongest cities or by

associations to organizelarge natural hub

Alternate line of business for

private logistics players or

property developers

Natural Organized Company Owned

% Desirablefor TC

30% - 50% 70% - 80% 95% - 100%

Spread Over large area Compact Compact

Ownership Private Association/ Private Private

Relative RealEstate Price

Medium High Low

O w

n e r s

h i p Time

Proliferation of naturalhub Decongestion of city

Expansion of private

transport hub to outsideplayers

Alternate revenue stream

AS

E.g., Kalamboli

E.g., Sanjay

Gandhi

Transport Nagar

E.g., TCI

hub near

Bangalore

Type A: Natural

Type B: OrganizedType C: Private

Place

8



Booz & Company

8 November 2010


8

Major Transport hubs in India are found outsidemetros and other large cities in the country

Location of Transport Hubs across India

Note: Tier 1 city defined as having population greater than 1.4 Mn by 2001 census. Tier 2 city : population between 1 and 1.4Mn in 2001 census.

Assume 3 hubs near Tier-1 city with population greater than 5Mn, 2 hubs at other Tier-1 cities and 1 hub near Tier-2 city

Source: Booz & Company analysis, Interviews

AS

North

WestCentral

South

East

22

44

7

3

1

4

6

2

East and

North- East

CentralSouthNorthWestTier II

Tier I

8

5

1515

17

West North South Central East and

North- East

Region-wise Tier I and Tier II cities

Estimated # of Transport Hubs by Region

Total # of hubs:

60

20101205mc india tirever1.4e as selected slides

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