#62- Our investment in GarageWorks

This week, our investment in the GarageWorks Pre Series A round was announced (Read here). We first invested in the company in 2018 when Shishir & Prabudh were trying to reimagine the 2 wheeler (2W) doorstep servicing space by offering a comprehensive suite of services to retail customers, and fleets.

4 years, many pivots, couple of business line closures, a global pandemic, and a newly imagined business later, today we stand at the cusp of a massive opportunity which may translate into GarageWorks being India's biggest 2W servicing company.

Why 2Ws?

While the Indian road vehicle registrations have grown at a CAGR of 9% in the past 5 years...

2Ws have gained market share by growing faster...

The growth has been aided by rising fuel costs making car travel expensive…

And the more affordable public infrastructure, at its brink, uncomfortable…

Personal incomes are rising…

…And credit is more cheaply available than before

All these combined paint a picture that the Indian middle class is earning more, availing cheaper credit, is tired of traveling in low quality public transport, and prefers her own vehicle for ease and convenience. This means that 221 million vehicles need frequent servicing to keep up with growing commutes.

2W servicing industry

Unlike the 4W industry where after sales is a business segment that earns a car dealership almost 80% of its annual profits, most 2W dealerships are standalone sales shops (read this). This means a majority of 2W owners rely on the unorganized service stations with their own issues:

Whether it is a 10 year old moped or a brand new KTM Duke, your service station will probably look like this...

..that has a tie up with a local store selling (often cheap quality) spare parts that are fast moving, offer them greater discounts

These are big head aches for 2W owners. Lack of good quality service stations, trained mechanics, and timely availability of good quality spares make the ownership experience sub par. The new age owner wants to graduate from local and unorganized shops to quality organized service stations.

But lets go deeper

Most 2W owners use their vehicle to commute daily. Getting their vehicle serviced during the week is not possible, and taking it to a service station takes away a few hours of their weekends which they could have utilized productively.

A 2W owner spends around Rs 4000-4500 per year on vehicle management during her 5-year vehicle ownership cycle. This is excluding fuel & value write-off while selling the vehicle.

Jio phenomenon followed by the pandemic has pushed internet penetration and adoption of online services and payments into Tier 2 & Tier 3 India that we call Bharat. Demand for quality & convenience will follow in multiple aspects of user's life generating business opportunities beyond metro cities.

And that is the proposition of GarageWorks!

Leveraging technology to deliver timely, organized services, trained mechanics, best quality spare parts, and doorstep 2W servicing!

Another huge problem waiting to be solved

Getting trained, quality, timely service is just not the headache of end users, but also of insurance companies. Insurance companies need quick disbursals of claims to maintain quality, and customer experience. And by tying up with quality players like GarageWorks, they are able to maintain and grow their efficiency while delighting customers. Today GarageWorks is working with India's top insurance companies as a prefered vendor and hoping to expand to multiple cities to grow volumes multifold. GarageWorks also has other partnerships in stealth mode, with a first mover advantage in the industry promising to bring a huge amount of volumes their way.

But what about EVs?

Agreed, EVs are coming. And they may require a lower quantum of servicing than their ICE counterparts. However, we already have 220+ million 2Ws on roads in India which will require servicing till they ply. Although EVs are growing by the day, they will stand at sub 1mn EV 2Ws by end of FY24. Having said that EVs will continue to require maintenance and repairs of non engine parts.

A bet on the founding team

There is a good article that says 'Resilience is about Capabilities not Plans', and we have seen first hand how Shishir & Prabudh have taken challenges head on in the face of uncertainties. The aftermath of the coronavirus pandemic and the work from home phenomenon which meant most folks went back to their hometowns, daily commute stopped, entry of outside mechanics into residential communities was restricted, affected GarageWorks like every other company, maybe more.

Not backing down, doubling down

These folks looked after their mechanics while paying them full wages, set up a training program to retain and train mechanics in an attrition heavy industry, set up processes to automate their technology at the back end when there was no load of daily service orders, and silently worked to win partnerships making them first movers the industry.

L-R: The founding team comprising Prabudh, Ravi, Shishir

We are proud to back GarageWorks again, and welcome a new set of investors who understand this space, have deep conviction in the model, and most importantly want to back these passionate founders who are building something amazing.