Marketplace for Auto Service and Repair | IoT Startup Ideas

Sourav Paul

This Transportation & Logistics startup idea from YoStartups is to use an IoT based Vehicle Diagnostic System to create a marketplace for Auto Service and Repair. The startup shall deploy and install the diagnostic hardware for measuring and monitoring various vehicle parameters. Based on the need for repair or servicing, the vehicle owner would then search for local servicing stations on an online marketplace. The startup aims to tap the expertise of local service centres, create a trusted market and remove any uncertainty regarding service quality. It thus promotes the timeliness and efficiency of vehicle servicing, which in turn helps in reducing the carbon emissions from the road transport sector.

Market Definition for Marketplace for Auto Service and Repair

In India, the vehicle service market is estimated to be around $5-6 billion. 34% of this market is dominated by cars, and the overall market is expected to grow at 11%. Currently, 53% of this market is serviced by the unorganised sector. In the US, the average age of a vehicle has increased by 17% and average ownership has increased by 60% in the last decade.

It has been noticed that in India 65% of post-warranty repair is done in local service workshops. Similarly, in the US, 75% of the servicing and repairs is done by independent garages. These local garages provide economical services; however, service quality and originality of spare parts always remain a concern.

Competitor Analysis for Marketplace for Auto Service and Repair

AutoPair is an e-commerce platform and connected car app for vehicle owners that addresses their primary fear of being taken advantage of when their vehicle is serviced. The connected car app allows the mechanic access to the condition of the vehicle that helps easy diagnosis of the issue.

MeriCAR.com, Gaadifix and Bookmycarservice are marketplaces and aggregators for the after-sales automotive market in India. Their apps allow the customer to locate and choose the nearest service centre. Carzippi and Gaadi360.com are companies that offer doorstep vehicle services.

Pain Point and Target Audience for Marketplace for Auto Service and Repair

The target customers for this business are both vehicle owners and local service mechanics.

Vehicle owners highlight that vehicles are complex machines and there is a vast knowledge gap about the functioning of various parts. As a result in case of a malfunction, the owner depends solely on the expertise of the mechanic, who may over-emphasise the issue to increase his revenue.

Local mechanic shops were in existence even before auto brands started setting up single-brand service stations to give a hassle-free experience to the customer who owns a vehicle of their brand. Such single-brand garages have high overheads, which are then directly or indirectly charged to the customer. There has always been a trust gap between the local mechanic and the vehicle owners due to which customers prefer the brand garage. As a result, vehicle maintenance has become inefficient in spite of the availability of local expertise.

Value Proposition for Marketplace for Auto Service and Repair

The value proposition is to deploy and install the diagnostic hardware for measuring and monitoring various vehicle parameters. The IoT based system is connected to an app on the smartphone that analyses the data to display status updates of the vehicle parameters, gives warnings highlighting the need for repairs, and alerts the owner regarding scheduled service. The vehicle owner then uses the information to search for local mechanics in an online marketplace. As the information and knowledge gap between the owner and the mechanic is now bridged, the repair service deal is transparent and quick.

The company acts as an aggregator to supply the spare parts and other materials required. It can also offer logistics support to pick-up and deliver the vehicle to the owner.

Business Model for Marketplace for Auto Service and Repair

A good way to set the ball rolling would be to tie up with fleet owners and ride hailers. Such stakeholders in the transportation business usually avail the services of a few selected garages, and the company must target those garages to start building the network. An on-time alert along with comprehensive information of the repair need would help the owners to keep their fleet well serviced, that would translate into fuel savings. The garages, on the other hand, get a regular flow of business and revenue. The owners are charged an initial cost for installing the diagnostic system. The garages are charged a commission based on the order value.

Way to market for Marketplace for Auto Service and Repair

The startup should focus at first on cars of fleet owners and subsequently expand to two-wheelers. Cars and two-wheelers form the largest segment of urban transportation, and garages in popular residential hubs would be a good starting point to demonstrate the benefits and expand to other areas. The company should tie up with spare parts and other accessories manufacturers to be able to offer the required parts for all brands and makes, which will attract more customers.

Milestones for Marketplace for Auto Service and Repair

The startup should focus on developing and packaging the diagnostic kit and the app, conduct trials and then launch a basic version. By the end of a year, the startup should target to expand to major cities in a country.

Investment Needed for Prototyping this IoT startup Idea

The initial significant costs are development and testing costs, customer acquisition and marketplace development cost. The startup should target to raise around $200-250 thousand from angel investors and incubators, for developing and testing the concept. Angel investors or incubators such as Startup Autobahn, Lab 1886, Techstars Mobility, DRIVE Automotive Technology Incubator, TAMO provide both the seed money and domain-specific guidance.

Team Capability for this IoT startup Idea

The core team would be comprised of Automotive, AI and IoT engineers. It would be good to have Automotive engineers with strong coding and analytical background, in the team.

Investors/ Expert Take on Marketplace for Auto Service and Repair using IoT

It is estimated that fuel mileage of vehicles can be improved up to 4% with a proper tune-up, and up to 40% by timely identification and repair of severe other maintenance issues.

According to Google, 49% of mobile phone owners use their smart devices to search for services. This trend would lead to the quick adoption of any internet-based technology that can create an organised marketplace and contribute to reducing the carbon footprint of the transportation industry.

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This article is from Yostartups, YoStartups is a Pre Accelerator, and it empowers entrepreneurs to propel their business ideas into successful ventures. Yostartups’ core mission is to take the message of entrepreneurship to 1 billion people globally by 2020.

In case you are looking at scaling or launching a venture on similar lines, you can apply for our virtual acceleration program Excelrate on our website, Yostartups.com, Yostartups’ Excelrate program will help you in streamlining and structuring your startup idea. We have limited scholarships and discount packs for deserving business ideas, depending on the strength of your startup ideas, you may qualify for a discount.

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