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Skill Gaps In Indian AutomotiveService Sector

K P M G I N I N D I A

I N D U S T R I A L M A R K E T S

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Over the past decade, India’s automotive sector has emerged as one ofthe most significant in the country’s economy, accounting for nearly 5percent of the GDP. Since the economic liberalization of the 1990s, thecountry has seen a steady influx of global automotive players into Indiaand increasing competition has triggered improvements in product range,quality, technology and service.

Automotive service is a key pillar supporting the growth of the industry.As the industry grows and transforms, it is imperative that the serviceaspect evolves correspondingly.To focus on this critical area, CII hasbeen conducting the AutoServ conferences, which seeks to bringtogether different players from across the automotive service industry, toexchange views and develop a common agenda for growth.

Given the evolution in vehicle technology, product range and quality inthe Indian market, the skills required to service vehicles have alsochanged. Today’s vehicles require sophisticated tools and equipment forproblem diagnosis and correction, which can be handled only by trainedtechnicians. Does the industry have adequately trained manpower tosupport the required growth in automotive servicing? Where are the gapsand how can they be addressed? To focus on these critical aspects, CIIhad asked KPMG to prepare this report on Skill Gaps in IndianAutomotive Servicing , to serve as a background note to AutoServ 2008.

Manpower capability is a critical enabler for development of automotiveservicing. At the same time, concerted skill development initiatives will

also create a larger pool of employable blue collar employees, which willaid in the growth of overall employment levels in the industry and thenation. This report is thus a timely initiative to throw light on thisimportant aspect.

R DineshConfederation of Indian Industry (CII)Event ChairmanAutoServ 2008

Foreword from CII

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India’s growing automotive sector has been one of the key successstories in the country’s economy over the past decade. The automotivesector reflects liberalization and in turn globalization in its true sense. InIndia the automotive sector contributes to roughly 5 percent of India’sGDP today, and is targeted to become 10 percent of GDP by 2016. Oneof the key enablers for this industry’s growth and consequentcontribution to GDP is Automotive Servicing.

Given an extremely competitive market scenario where product featuresand pricing are increasingly in capable of differentiating, Service depthand quality surfaces as a key differentiator and an effective tool to retaincustomers. Parellely, rapid improvement in vehicle technology andproliferation of multiple products and variants adds complexity to anyexisting model. Servicing of modern vehicles requires quite a differentset of skills and technology as compared to the past.

KPMG has been actively tracking the evolving automotive market in India,and through its thought leadership and association with industry bodies,has contributed regularly to stimulating ideas and discussions in drivingthis change. We have a strong and valued relationship with CII and seethis association as Knowledge Partner for AutoServ 2008 as a furtherstep. It is our pleasure to present this report on a topic of interest andtimely relevance to the automotive industry in India today.

Yezdi NagporewallaHead - Industrial MarketsKPMG in India

Foreword from KPMG

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Table of Contents1 Background 01

2 The Indian Automotive Market is getting increasingly crowded 02

2.1 Key drivers for growth 03

2.2 The imperative for effective Service 04

3 Service – the key differentiator 05

3.1 Automotive servicing is evolving 06

3.1.1 Spreading the service network into new markets 07

3.1.2 Number of new models 07

3.1.3 Need for improved customer service 07

3.1.4 Changes in vehicle technology 08

3.2 Key challenges and success factors for effective service 08

3.2.1 Key success factors 09

4 Skill Gaps in Servicing 10

4.1 Planning for manpower 10

4.2 Getting the right talent is an issue 11

4.2.1 Manpower availability – largely enough in numbers, but not in skills 11

4.2.2 Diagnostics and Body Repair skills are key gap areas 12

4.2.3 Perceived gap in both remuneration and image 14

4.3 Training – key focus area, but increasing capacity constraints 14

4.4 Manpower attrition is a key cause for concern 15

5 Addressing the gaps – what can be done? 16

5.1 Collaboration with institutes – the need of the hour 16

5.2 Employee retention requires a combination of factors 17

6 Conclusion 18

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India’s automotive industry is one of the key drivers of the country’s economy. At an estimated size of USD 38billion, it accounts for close to 5 percent of India’s GDP. 1 Over the past 5 years (2002-03 to 2007-08), theindustry has seen strong overall growth of 11.5 percent CAGR, with both domestic and export marketsgrowing during the period. 2 The Auto Components industry has grown in tandem, and had a turnover of USD18 billion in 2007-08, at a CAGR of 27.2 percent over the past 5 years. 3

The Government of India recognizes the significance of the automotive industry, and is actively involved inpromoting its growth. The government’s Automotive Mission Plan 2016 envisages the industry to grow to asize of USD 145 billion by 2016, so as to contribute 10 percent of GDP.

As population of vehicles increases, the need for an efficient service network becomes important. Every year,the new vehicles sold add to the overall vehicle population that needs to be serviced and maintained, asscrapping of vehicles is low. In addition, rapid improvement in vehicle technology and the number of newmodels being introduced each year, add to the challenges of providing efficient service.

An effective service network is built on three key pillars:

1 Service infrastructure – adequate workshops at the right locations, with proper machinery, tools and otherfacilities

2 Availability of spare parts3 Availability of skilled manpower.

Of the above, the third pillar – the availability of skilled manpower to service the ever growing vehiclepopulation – is seen as a critical area where there is a gap between the industry’s requirements and supply inthe market.

With this background, KPMG has prepared this report on Skill Gaps in India’s Automotive Service, to serve asa background paper to CII’s conference on Automotive Service, AutoServ 2008. The report has been preparedbased largely on primary inputs from senior service personnel across several OEMs and dealerships, as wellas independent service providers, representing a wide cross section of the industry.

1 Background

1 Automotive Mission Plan 2016 (Dept. of Heavy Industries – www.dhi.nic.in), KPMG research and analysis2 SIAM data2 ACMA data – www.acmainfo.com

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The Indian auto industry (vehicles) has grown at a CAGR of close to 12percent over the past 5 years. The domestic market has grown at a CAGRof 9 percent, while exports of vehicles have grown at nearly 27 percentover the same period.

While the sale of vehicles has been increasing steadily over the years, theautomotive industry in India has also been getting increasingly crowded,with a plethora of models competing for market share. From just around10 OEMs in the 1980s, the market has grown to a situation where manymajor global players are present in the country.Today, there are over 35

OEMs across product categories in India 4.

In addition, the range of models operating in the Indian market has grownmanifold, driven by imperatives of customer demand, evolving emissionand safety regulations and improvement in technology. For example, inpassenger vehicles alone, there are over 50 basic models and hundredsof variants available in the market today, fighting for share in the crowdedmarket space 5.

The pace of new product introduction has also quickened, with OEMslooking to bring out new models and variants almost every year. Inaddition, vehicle technology has undergone significant improvement over

the past decade, with new materials, new features and increasing shareof electronics in new models.

2 The Indian automotive market is getting increasingly crowded

4 KPMG Research, SIAM (www.siamindia.com)5 KPMG research (data from various OEM websites)

Source: SIAM data (www.siamindia.com)

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2.1 Key drivers for growth

The above developments have been driven by several factors, but the keydrivers have been the sustained and rapid growth in the country’seconomy and changing customer preferences. Sustained GDP growthover the last decade has led to an increase in overall income levels, and achange in consumer outlook. At present, India has a large consumingclass population of over 450 million 6 (see chart), which has an increasingpropensity to spend on products for personal care, convenience andstatus. This, coupled with the ease in financing of vehicles, has been theprimary driver for growth in vehicle sales in India.

In spite of this growth, vehicle penetration in India is quite small, even incomparison to other Asian markets. In passenger vehicles, for example,India has 8 vehicles per 1000 people, which is lower than countries likeChina and Thailand. In two wheelers too, the penetration level in India –51 per 1000 – is low compared to other markets such as Indonesia,Malaysia andThailand (see chart) 7. This gap indicates the potential forcontinued growth in the industry over the long term.

6 Automotive Mission Plan 2016 (www.dhi.nic.in)7 KPMG Research (various sources)

Source: NCAER data

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2.2 The imperative for effective service

The Indian automotive customer today is well tuned to global markets andproducts, and expects the same levels of quality in products and services.The wide range of models and variants on offer, with little differentiationamong products within the same price band, also encourages customersto switch from one brand to another easily. As a result, retaining customerloyalty is a key concern for manufacturers in India.

In this scenario, providing effective after sales service for vehicles hasassumed increased importance for OEMs in India. Not only domanufacturers need to provide a range of services and have a widespreadservice network to cater to the ever increasing number of vehicles on the

road, but also ensure high levels of service quality and delivery, to retaincustomers. The proliferation of variants and rapidly evolving producttechnology are other dimensions that add to the challenge.

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In view of the evolution in customer preferences and increasedcompetitive pressures in the market, quality and delivery of after salesservice has assumed critical importance for manufacturers. In a studycarried out by KPMG earlier 8, quality of service was ranked as one of thekey factors to retain customers, by respondents across the industry.

Industry players agree that servicing today is a critical imperative toremain competitive; in fact, many of them feel it is the most critical factorfor competitiveness (see chart) 9.

In terms of turnover, the size of the automotive service market in India is

estimated at between USD 8 billion to USD 10 billion 10. OEMs arefocused on improving the reach and quality of their service networks. Inaddition to the service outlets of authorized dealers, many manufacturersare also actively developing independent workshops into authorizedservice centers, through providing training, tools and parts.

At the same time, feedback from industry players indicates that mostcustomers do not depend on the authorized service network for vehiclesbeyond about 7 years of age, but switch to local garages. Given thesizeable vehicle population in this category, it is evident that automotiveservicing in India is still largely unorganized. Estimates put the share ofauthorized service outlets at around 50 percent.

3 Service – the key differentiator

8 Source: primary interviews with industry players, 2002-039 Source: primary interviews with industry players, 200810 KPMG research and analysis

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Advent of independent multi-brand service providers – an emerging phenomenon

While OEMs focus on increasing their network penetration across the country, otherindependent players have also entered the organized automotive service sector, throughoffering post warranty services for multiple vehicle brands. Bosch Car Service and MyTVShave been established players in this segment for several years. Others like Reliance AutoZone, Mahindra First Choice Services are more recent entrants. Other new playersplanning entry into this segment include Altius Autoword and CarNation.

Such independent players pose competition to authorized service outlets who seek toretain their customers throughout the vehicle lifecycle. At the same time, they seek toaddress an anticipated demand-supply gap between the required service capacity in theindustry, and the capacity of authorized serviced outlets.

Recent trends in the industry, however, indicate that the trend is towardsdevelopment of more organized service. Driven by factors such asimproved vehicle technology, improvement in service quality andcustomer service at authorized outlets and initiatives taken by OEMs anddealers for customer retention, customers today have an increasingpreference to come back to authorized outlets for their service needs.

Another phenomenon indicating the increasing levels of organizedservice, is the entry of large organized players into the multi-brand, postwarranty service business (see box).

3.1 Automotive servicing is evolving

Several trends are driving change in automotive servicing today. Asdiscussed earlier, the four major drivers 11 for change are:

1. Changes in vehicle technology2. Proliferation of models and variants3. Need to penetrate new markets / geographies4. Need for improved customer service.

As part of the primary study to prepare thisreport, we asked respondents to rank thesedrivers in the order of importance / significance.The above chart indicates the ranking.

11 Source: Interviews with industry players, 2008

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3.1.1 Spreading the service network into new markets

While the overall vehicle penetration in India is low, as discussed earlier,the key metros and large cities are getting saturated. As a result,established players seeking to expand their market are looking to entersmaller towns and rural markets, where there is significant growthpotential.

In addition, improvements in road infrastructure and inter-city roadtransport are expected to increase. This would require increasedavailability of service outlets along highways.

The above phenomena are driving the need for players to increase the

geographic spread of their service networks. This poses two keychallenges – first, managing the time and cost involved in acquiring therequired real estate and putting up the infrastructure and second,recruiting and retaining skilled manpower in relatively remote areas.

3.1.2 Number of new models

The rapid increase in number of new models and variants introduced byeach OEM is another factor driving change in servicing. Servicetechnicians today need to handle an ever increasing range of vehicles. Inmany cases, new models incorporate improved technology as well.

Building up the required skill and expertise across the range of productsand technologies is a key challenge that OEMs are grappling with.

This poses an even greater challenge to independent multi-brand players,as the range of products they would need to handle is much larger, andcuts across brands.

3.1.3 Need for improved customer service

Today, automotive customers, across product segments, are more awareand demanding. At the same time, the variety of choices available has

made them more prone to switching loyalties if not completely satisfied.Public surveys like JD Powers CSI, SSI studies etc, have made it easy forthem to compare different manufacturers. OEMs agree that customerstoday have less tolerance for delays, poor quality service or repeatcomplaints. As one respondent put it, “Ten years ago, customers used tobe willing to come to our office and wait for long to meet a serviceengineer. Today they expect us to go and attend to them at theirpremises, at their convenience”.

As a result, service providers today are keenly focused on improving notonly the technical aspect of servicing, but also the softer aspects ofcustomer management. Continuous improvements are made in improvingservice quality, vehicle turnaround times and customer satisfaction.Thisunderscores the need for consistently upgrading the technical and softskills of service manpower.

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3.1.4 Changes in vehicle technology

Improvement in vehicle technology is impacting the way in which vehiclesare serviced, in a number of ways. With improvement in technology, thefrequency of regular servicing is coming down. For example, oldergenerations of vehicles required more frequent engine tuning, oilchanges, faster replacement of maintenance parts, etc, than modernvehicles do. These vehicles could also be easily repaired or serviced bymechanics in local garages with basic tools.

Modern vehicles have much more embedded electronic components andcontrols that require a higher degree of sophistication for testing andservicing, as well as special diagnostic tools and instruments.Today, mostautomotive systems, such as engines, braking, transmission, and steeringsystems, are controlled primarily by computers and electroniccomponents. In addition, an increasing number of high end vehicles havefeatures such as air-bags, global positioning systems, automatic climatecontrols, etc., with which technicians need to be familiar. Also, with theincreasing interest in alternate-fuel vehicles, automotive servicetechnicians in the future would need to learn the technology behind thesevehicles and how to repair them.This underscores the importance ofdeveloping the right skill sets in the service manpower.

3.2 Key challenges and success factors for effective

serviceGiven the above trends and imperatives, automotive service providerstoday face several challenges. The top of mind issues for serviceexecutives across different segments have to do with service manpower.Acquiring, training and retaining a highly skilled workforce is a constantchallenge.

In our discussions with industry players, the following issues emerged asthe critical ones impacting effective servicing:

Source: KPMG Research - Interviews with industry players, 2008

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Managing high levels of manpower churn emerged as the single biggestchallenge, as this figured in the list of top three challenges with everyrespondent. Across players, average manpower turnover appeared to bein the order of 30-40 percent, varying across different levels.

High manpower churn impacts players in different ways. On one hand, itcreates a continuous need to recruit and train people, just to maintaincurrent levels of service. The need to expand the network createsadditional pressure. At the same time, losing skilled and trainedmanpower, especially to competition, impacts not only the quality ofservice but also the competitiveness of players.

Lack of training is the next critical challenge, as this directly impactsservice quality and delivery. While ensuring continuous skills upgradationfor existing service manpower, players also need to provide training fornew joiners. Given the high levels of churn and need for expansion,several players feel that their service capacity – number of trainingfacilities, instructors, etc – are likely to be under pressure to meet futuretraining needs.

3.2.1 Key success factors

In view of the scenario discussed above, industry players identified threekey success factors for automotive servicing:

1. Ensuring availability of adequate numbers of skilled manpower, acrossdifferent locations and different levels. Skills include not only technicalskills, but also business management skills (for senior management)and customer management

2. Continuous improvement in productivity and quality, to reduceturnaround times, improve capacity utilization, reduce costs andincrease customer satisfaction

3. Focus on softer aspects of customer management and innovate toretain customer loyalty

4. Effective project management to ensure timely expansion of network.

Expansion of service capacity and reach is a critical requirement, andtypically, this gets delayed due to difficulties in acquiring real estateand constructing the required infrastructure. Players need to ensurethat expansion projects are managed efficiently to minimize time andcost over-runs.

The above assessment of the automotive service landscape clearlyhighlights that manpower availability and skills are the key challengesplayers face in providing quality service to their customers. In theremainder of this report, these aspects are dealt with in detail.

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As in any service industry, automotive servicing is also dependent on thequality of its manpower, to deliver effectively. This involves four aspects:

1. Effective planning for the short, medium and long term2.Recruiting the right manpower (‘right’ both in terms of numbers and

skill sets)3.Providing effective training to ensure the skill sets are always updated

and continuously upgraded4.Developing and retaining the manpower.

We have assessed the above aspects for manpower across three levels –Technicians, Supervisors and Managers. These are discussed at length,

below.

4.1 Planning for manpower

Most players plan their service requirements based on their assessmentof the market potential and their targeted market share. Based on thevehicle population projections, each player uses his own norms forassessing the number of service bays to be added and the number ofservice personnel required at different levels. One aspect that impactseffective planning is the high levels of churn, which many players finddifficult to cope with.

4 Skill gaps in servicing

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4.2 Getting the right talent is an issue

Manpower for automotive servicing is typically recruited from threesources:

1 InstitutesEntry level personnel – trainees and technicians, are recruited directlyfrom Industrial Training Institutes (ITIs) or Polytechnics. Typically, studentsof motor mechanic trade are preferred, though for specific requirements,other trades like electricians may also be considered. Most players absorbsuch fresh recruits after putting them through an induction and initialtraining period of about six months.

2 CompetitionGiven the high level of competition in the industry, it is natural for playersto look at trained manpower from their competition, as potential recruits.This is more applicable for middle and senior levels such as supervisors,service advisors and service managers, which typically require diplomaholders or graduates with three to five years of experience.

3 MarketFor senior management levels, most players advertise for positions andrecruit from the market. Such positions require engineering graduates,preferably with post graduate diplomas, with 8-10 years of experience.

4.2.1 Manpower availability – largely enough in numbers, butnot in skills

Most players feel that they are able to get an adequate number of peopleto meet their planned requirements. However, getting people with theright skill sets is an issue, especially at supervisor levels and technicianlevels.

Source: KPMG Research – Interviews with industry players, 2008

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The perceived shortfall in numbers is largely in lower and middle levels –Technicians and Supervisors – where respondents anticipated a shortfallof between 30 percent and 50 percent.The middle (supervisor) level isconsidered critical in terms of skill requirements, as it is here thatproblem understanding, diagnostic and troubleshooting, and vehicletesting are carried out. Hence, these personnel need to be able tounderstand modern vehicle technology, know how to use testing anddiagnostic equipment, identify and rectify problems and also monitor andmanage technicians under them.

The key reason for the perceived high gap in this area is the churn. Mostplayers have seen trained manpower with a few years of experienceleaving for other opportunities. While some do leave to join competition,in most cases, people leave to join manufacturers or go abroad. Accordingto one of the respondents, attrition levels are higher in Kerala, as peopleprefer to seek more lucrative jobs in the Gulf countries after a few yearsof experience here. As trained people leave, they are replaced with newrecruits who need to be trained. Hence, it is a constant effort to findskilled manpower at these levels.

As discussed earlier, technician level personnel are typically freshgraduates from ITI and Polytechnics. However, many players still perceivegaps in skills, as they feel the curriculum in these institutes are notaligned to the needs of the modern industry. Hence, these recruits needto undergo a learning curve, through both formal training at trainingcenters and on-the-job training, before they can be considered adequately

skilled.

Here again, there is an issue of churn, as many employees look foralternate career options once they are trained and gain some experience.

4.2.2 Diagnostics and body repair skills are key gap areas

Apart from the level-wise skill availability and gap discussed above, wealso assessed the skill availability across different service areas. For this,the types of services were segregated into four categories:

1 Regular / routine maintenance

2 Diagnostics / trouble shooting

3 Accident repairs / body work / painting

4 Customer management.

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We asked industry players to assess the availability of manpower acrossthese four areas. The responses are captured in the figure below:All respondents agreed that routine maintenance activities have not

changed significantly over the years, and as these jobs do not requirespecialized skills, there is not skill gap here. Similarly, people withcustomer management skills are available in other service sectors, andcan be recruited and trained easily.

The key gaps are perceived in the diagnostics / troubleshooting area. Withchanges in vehicle technology, problem analysis and diagnostics have

become highly sophisticated and involve the ability to use special toolsand instruments, interpret the results and take corrective action. Suchspecialized skills are not imparted in the institutes, and have to beprovided through training by the OEM. Getting acquainted with diagnosticinstruments requires a higher level of education and intelligence ascompared to routine maintenance. Hence after training, such resourcesthat are skilled in diagnostics become valuable and it is important to retainthem.

Accident repair is another area where many respondents feel adequateattention is not being paid. Despite modern tools and techniques for bodyrepairs being available, most personnel still prefer to go by traditional,

manual methods that have been used by earlier generations ofmechanics. Such activities are also outsourced to local unorganizedplayers in many cases. Another issue that some respondents expressedis that this specialized skill is not imparted in any of the institutes.In the absence of adequate exposure to modern vehicle technology at theITIs and polytechnics, OEMs and dealers are forced to depend entirely onin-house training in these areas.This puts a burden on training resources.There is hence an urgent need to modify the curriculum at the institutesto reflect industry requirements.

Source: KPMG Research – Interviews with industry players, 2008

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4.2.3 Perceived gap in both remuneration and image

Some of the respondents felt that they were not able to attract the righttalent as they are not able to match the remuneration offered by othersectors. While they could be competitive within the industry in India,many employees go abroad or join other sectors such as Insurance orBPOs, as the remuneration is much more attractive.

Another opinion holds that automotive servicing has a rather poor imagewhen compared to other options.There is a perception that whileservicing today is very different from what it used to be, and many OEMsoffer attractive opportunities for learning and growth (including trainingabroad) for talented employees, these facts have not been effectivelypercolated to potential employees.

4.3 Training – key focus area, but increasing capacityconstraints

OEMs have their own service training centers where they impart trainingto personnel from authorized service outlets. Such centers provide aseries of training programs to cater to the needs of different levels ofemployees.These programs range from foundation courses to refreshercourses and advanced courses. Apart from technical training, employeesin the relevant positions are also provided training in soft skills, customer

management and business management. It is also common for players tomaintain detailed skill matrices that are used to identify skill gaps and planout training requirements.

In most cases, training at the OEM’s training center is augmented bytraining at the dealer premises and on-the-job training at the serviceoutlet. Some players like Ashok Leyland operate mobile training vans, inwhich the company’s service training personnel travel to differentlocations to impart training at the work spot.

Given the continuous expansion of the service network and increase inmanpower to be trained, many players feel that their in-houseinfrastructure for training may prove inadequate. Some of the respondentsfelt that they were unable to adhere to the training norms set for differentemployees, as the number of people has grown much faster than thetraining infrastructure. The high level of churn further adds to the problem.

Another issue is that dealers are sometimes reluctant to nominate orsend their personnel for training, as it may impact their operations.

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Most industry players feel the solution to meeting the increasing trainingneeds for service is two-fold:

1 Ensure the right skill sets are in place while recruiting, so as to reducethe need for additional training

2 Retain trained employees, so as to reduce the need for repeatedtraining.

4.4 Manpower attrition is a key cause for concern

The automotive service sector is rapidly growing and offers adequateopportunities for growth. Most players have several programs to identify,nurture and develop talent. Skill levels are assessed against detailed skillmatrices and required skills are imparted through a range of trainingprograms. There are also several reward and recognition systems in placefor exceptional performers.

The typical career path of a technician would see him become aSupervisor or Service Advisor in about 7-8 years, and a Works Manager inabout 12-15 years (See box).

Most players take an active role in helping employees grow. For example,some help ITI trained technicians to go in for diploma courses after threeyears, and graduates go in for post graduate diploma courses.

However, despite these efforts, attrition levels in the industry continue tobe high. The key reasons for churn appear to be better remuneration andbetter career options with other companies. In most cases, employeeswho leave remain within the automotive industry, but prefer to move from

a dealer to a manufacturer or from one dealer to a competitor, or to asimilar job abroad.

Career path for a typical technician

1) Trainee (Fresh ITI) + training for six months to a year -> Technician

2) Technician + ~ six to seven years -> Supervisor / Service advisor

a. There are several levels of Technicians in-between:

i. Junior Technician

ii. Technician

iii. Expert Technician

iv. Master Technician

3) Supervisor + ~ seven to eight years – Assistant Works Manager

Further progress depends on attitude and achievements.

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The two key issues that emerge from the above discussion on servicemanpower are:

1 New recruits do not have the right skill sets appropriate to industryneeds

2 Trained employees leave their jobs, creating a void that cannot beeasily filled.

The above issues need to be addressed separately. While the formerneeds active collaboration of industry players with technical traininginstitutes, the latter is to be addressed by the players themselves.

5.1 Collaboration with institutes – the need of the hourMost of the respondents to our survey pointed out that the curriculum inthe relevant courses at ITIs and polytechnics do not reflect the changedrequirements of the industry. As a result, the students coming out ofthese institutes do not have the specialized skills required to servicemodern vehicles.This issue needs to be addressed jointly by the industryand institutions, by developing / modifying the curriculum to reflect theindustry needs. For example, specific courses on new technologies suchas automatic transmissions, engine control systems, alternate fuels, etc.,with a focus on servicing such vehicles, could be designed jointly, andstudents opting for these could be directly absorbed into industry.Industry players can also contribute the necessary equipment such asaggregate models, vehicle models, special tools and equipment, andknow-how for the instructors to teach these courses.

Some of the larger players are already working on such initiatives, withselect institutes. However, this can also be looked at a wider industrylevel, as the need is felt across the industry.The Automotive Mission Plan(AMP) of the Government of India envisages the setting up of a NationalAutomotive Institute, to co-ordinate training in various disciplines relatedto the automotive sector. While the institute would prepare the coursesand materials for training and development of manpower for the industry,the same would be implemented through the various ITIs. AMP alsoenvisages the setting up of Automotive Training Institutes for trainingmechanics 12 .

5 Addressing the gaps – what can be done?

12 Automotive Mission Plan 2016 (Department of Heavy Industry, www.dhi.nic.in)

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Such institutes could develop and run certification courses for mechanics,which could not only help employers to assure themselves of the skilllevels of employees they hire, but also provide value to potentialemployees and help them get employed faster (see box for example fromthe US – National Institute of Automotive Service Excellence)

5.2 Employee retention requires a combination of factors

The two key reasons give by industry players for attrition of their servicepersonnel are better remuneration and better career prospects offered byalternate career options. Hence, these issues need to be addressed forretaining talent.

At the recruitment stage itself, an attempt could be made to identifypersonnel who have an interest and affinity for automotive servicing. Thepresence of a certification program, as discussed above, would help in

this regard, it is fair to assume that someone who undergoes thecertification course might have not only the required skills, but also aninterest in the chosen area. In the absence of such a course, greaterinteraction with students in the technical training institutes, much beforeactual recruitment starts, could help in identifying such students early.This could be followed by initiatives such as offering industrial training atdealer workshops, conducting tests / competitions at the institutes, etc.,to identify potential candidates.

Matching the salary levels of other sectors is not likely to be a viableoption; however, industry players can take steps in providing goodworking conditions, learning and growth opportunities within the

company, and putting fast track growth options for exceptional performersin place.

National Institute of Automotive Service Excellence (US)

In the US, acquiring the National Institute for Automotive Service Excellence (ASE)certification is important for those seeking work in large, urban areas. ASE certification hasbecome a standard credential for automotive service technicians. While not mandatory forwork in automotive service, certification is common for non entry-level technicians in large,urban areas.

Certification is available in one or more of eight different areas of automotive service, suchas electrical systems, engine repair, brake systems, suspension and steering, and heatingand air-conditioning. For certification in each area, technicians must have at least two yearsof experience and pass the examination. Completion of an automotive training program inhigh school, vocational or trade school, or community or junior college may be substitutedfor a year of experience. For ASE certification as a Master AutomobileTechnician,technicians must be certified in all eight areas.

By becoming skilled in multiple auto repair services, technicians can increase their value totheir employer and their pay. Experienced technicians who have administrative abilitysometimes advance to shop supervisor or service manager.Those with sufficient fundsoften open independent automotive repair shops. Technicians who work well withcustomers may become automotive repair service estimators.

Source: US Department of Labour, www.bls.gov

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There is no doubt that automotive servicing in India is poised for growth.Even if new vehicle sales do not grow as expected, the requirements forservicing the existing vehicle population is not expected to diminish.Hence, a strong service sector is needed to support and sustain growth inthe automotive industry.

As in any service sector, manpower plays a critical part in the success ofautomotive servicing. Currently, the sector faces key gaps in terms ofnumbers and skilled manpower.

It is estimated that the automotive service sector would requiremanpower of about 0.5 million over the next 10 years.To meet thisrequirement, industry players may need to closely collaborate withtechnical training institutes to ensure a steady supply of trainedemployees. At the same time, players need to take steps to improve theiremployee retention, through focused recruitment and improved careerplanning and management. Some of the key initiatives that could beimplemented include:

1. Expedite the implementation of ATIs, as envisaged in the AMP.Develop certification courses based on industry requirements

2. Industry players and institutes to jointly refine the curriculum ofrelevant courses, to meet the servicing requirements of vehicles withmodern technology

3. Industry players to provide assistance to the institutes they work with,

in terms of equipment and know-how, as well as training for theinstructors4. Industry players could also look at conducting tests, contests or other

filters to select promising students as potential employees, andproviding industrial training, scholarships, etc, to them

5. Focus on employee retention through employee friendly processesand policies and a conducive work environment.

The thrust on servicing is expected to continue in the long term, asvehicle volumes increase and technology continues to evolve. Therefore,getting the right manpower in place is one of the key cornerstones forsuccess.

6 Conclusion

18

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KPMG is a global network of professional firms providing Audit, Tax and Advisory

services. We operate in 140 countries and have 123,000 people working inmember firms around the world. The independent member firms of the KPMG

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The Confederation of Indian Industry (CII) works to create and sustain an

environment conducive to the growth of industry in India, partneringindustry and government alike through advisory and consultativeprocesses.

CII is a non-government, not-for-profit, industry led and industrymanaged organisation, playing a proactive role in India's developmentprocess. Founded over 113 years ago, it is India's premier businessassociation, with a direct membership of over 7500 organisations fromthe private as well as public sectors, including SMEs and MNCs, and anindirect membership of over 83,000 companies from around 380national and regional sectoral associations.

CII catalyses change by working closely with government on policyissues, enhancing efficiency, competitiveness and expanding businessopportunities for industry through a range of specialised services andglobal linkages. It also provides a platform for sectoral consensusbuilding and networking. Major emphasis is laid on projecting a positiveimage of business, assisting industry to identify and execute corporatecitizenship programmes. Partnerships with over 120 NGOs across thecountry carry forward our initiatives in integrated and inclusivedevelopment, which include health, education, livelihood, diversitymanagement, skill development and water, to name a few.

Complementing this vision, CII's theme "India@75: The EmergingAgenda", reflects its aspirational role to facilitate the acceleration inIndia's transformation into an economically vital, technologicallyinnovative, socially and ethically vibrant global leader by year 2022.

With 64 offices in India, 8 overseas in Australia, Austria, China, France,Japan, Singapore, UK, USA and institutional partnerships with 271counterpart organisations in 100 countries, CII serves as a referencepoint for Indian industry and the international business community.

Reach us via our Membership Helpline:+91-011-43546244 / +91-09910446244

The Confederation of Indian Industry (CII)

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HEAD QUARTERS

The Mantosh Sondhi Centre23, Institutional AreaLodi RoadNew Delhi 110 003Tel: 011-24629994-7Fax: 011-24626149Email: [email protected]

CORPORATE OFFICES

New DelhiIndia Habitat CentreCore 4A, 4th Floor, Lodi RoadNew Delhi 110 003Tel: 011-24682230-35011-41504514-19Fax: 011-24682229Email: [email protected]

Gurgaon249-F, Udyog Vihar,Phase IV,Sector 18Gurgaon 122 015 (Haryana)Tel: 0124-4014060-67Fax: 0124-4014080Email: [email protected]

OTHER CORPORATE OFFICES

Kolkata6, Netaji Subhas RoadKolkata 700 001Tel: 033-22315571 / 5574Fax: 033-22315577Email: [email protected]

MumbaiC/o Godrej & Boyce Mfg Co Ltd.

Godrej Bhawan, 5th Floor4-A, Home Street, Fort,Mumbai-400 001Tel: 022-22076087Fax: 022-22076086/24939463Email: [email protected]

CENTRES OF EXCELLENCE

CII-Institute of Quality (CII-IQ)Near Bharat Nagara2nd Stage, Magadi Main Road,Vishwaneedam PostBangalore - 560 091Tel: 080-23289391/6085Fax: 080-23289388/ 23580314Email: [email protected]

CII-Institute of Quality (CII-IQ)249-F, Udyog ViharPhase-IV, Sector-18Gurgaon 122 015, HaryanaTel: 0124-4014051 / 4309447 / 401460-67Fax: 0124-4014051

CII-ITC Centre of Excellence forSustainable DevelopmentIInd Floor, Thapar House124, JanpathNew Delhi 110 001Tel: 011-41502301-02Fax: 011-41501924/25Email: [email protected]

CII-Sohrabji Godrej Green BusinessCentre

Survey No.64, Kothaguda PostNear Hi-tec CityRanga Reddy DistrictHyderabad 500 032Tel: 040-23112971-73Fax: 040-23112837Email: [email protected]

CII-Naoroji Godrej Centre ofExcellenceGodrej Station-side ColonyOpp Railway Station, Vikhroli(E)

Mumbai 400 079Tel: 022-25745146/5148Fax: 022-25743361Email: [email protected]@ciionline.org

CII-Institute of Logistics(Old No.21) New No.33Velacherry Main RoadNagendra NagarNear Guru Nanak CollegeChennai 600 042.Tel: 044-22551343-45 / 22551342Fax: 044-22551341Email: [email protected]

CII-L M Thapar Centre forCompetitivenessBlock No.3, Dakshin MargSector 31-AChandigarh 160 030Tel: 0172-2602365 / 2605868/2607228Fax: 0172-2606259Email: [email protected]

Regional Offices

Eastern Region6, Netaji Subhas RoadKolkata 700 001Tel: 033-22307727 / 28 / 1434 / 22303354Fax: 033-22301721 / 22312700Email: [email protected]

Southern Region98/1, Velacherry Main RoadGuindyChennai 600 032Tel: 044-42444555Fax: 044-42444510Email: [email protected]

Western Region105, Kakad Chambers, 1st Floor132, Dr Annie Besant Road

Worli, Mumbai 400 018Tel: 022-24931790 / 24964792Fax: 022-24939463 / 24945831Email: [email protected]

Northern RegionBlock No. 3, Dakshin MargSector 31-AChandigarh 160 030Tel: 0172-2602365 /2605868 / 2607228Fax: 0172-2606259Email: [email protected]

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STATE OFFICES

Eastern Region

Assam“Ratnapeeth”59, M G Road, UzanbazarGuwahati 781 001Tel: 0361-2731966Email: [email protected]

BhubaneswarPlot No.8, Forest Park1st FloorBhubaneswar 751 009Tel: 0674-2533514 / 3299907Fax: 0674-2531013Email:[email protected]

BiharM-3/24 S.K. PuriNear Basawan ParkPatna 800001Tel: 0612-6450301Fax: 0612-2238572Email: [email protected]

ChhattisgarhP25, Sector-1 Extension

Near CSEB Sub StationAbanti ViharRaipur - 492 001Tel: 0771-4013520 / 6532992Telefax: 0771-4093299Email:[email protected]

JharkhandRoom No. 7 & 8Centre for ExcellenceJubilee Road

Jamshedpur 831 001Tel: 0657-2225213 / 2232637 / 2224670/27-28Fax: 0657-2225213Email: [email protected]

Mizoram1st BasementMUP Building, M.G. Road, KhatlaOpp. Raj Bhawan, South GateAizawl - 796 001Tel: 0389-2301087Fax: 0389-2315168Email: [email protected]

NagalandJail Colony, Kohima 797 001Tel: 0370-2243048Email: [email protected]

TripuraIndustries Building (1st floor)Pandit Nehru ComplexP.O. KunjabanAgartala 799 006Tel: 0381-2221687Email: [email protected]

West Bengal6, Netaji Subhas RoadKolkata 700 001Tel: 033-22307727 / 28 / 1434/22303354Fax: 033-22301721 / 22312700Email: [email protected]

Northern Region

Chandigarh (UT)Block No. 3, Dakshin MargSector 31-AChandigarh 160 030Tel: 0172-2602365 / 2605868 / 2607228Fax: 0172-2606259

Email: [email protected]

Delhi (NCR)249-F, Udyog ViharPhase IV, Sector 18Gurgaon-122 015 (Haryana)Tel: 0124-4014072 / 73 / 4014060-67Fax: 0124-4014070Email: [email protected]

Haryana249-F, Udyog Vihar

Phase IV,Sector 18Gurgaon-122 015 (Haryana)Tel: 0124-4014071/ 401460-67Fax: 0124-4014070Email: [email protected]

Himachal PradeshBlock No. 3, Dakshin MargSector 31-AChandigarh 160 030Tel: 0172-2602365 / 2605868 / 2607228Fax: 0172-2606259Email: [email protected]

Jammu & KashmirA2/305, South Block (3rd Floor)Bahu Plaza ComplexJammu 180010Telefax: 0191-2477374Email: [email protected]

PunjabBlock No. 3, Dakshin MargSector 31-AChandigarh 160 030Tel: 0172-2602365 / 2605868 / 2607228Fax: 0172-2606259Email: [email protected]

RajasthanD-24, Subash Marg1st Floor, C-SchemeJaipur 302 001Tel: 0141-2370349/ 2365844 / 5118440Fax: 0141-5118389Email: [email protected]

UttrakhandNepal House, First Floor30/1 Rajpur RoadDehradun 248 001Tel: 0135-2745120

Fax: 0135-2745121Email: [email protected]

Uttar PradeshPlot A, Vibhuti KhandGomti NagarLucknow 226 010Tel: 0522-2721950-52Fax: 0522-2721953Email: [email protected]

Southern Region

Andhra Pradesh1-11-252/9, Regal HousePlot No 7Moti Lal Nehru NagarBegumpet, Hyderabad 500016Tel: 040-27765964 / 66 / 67 / 27765934Fax: 040-27766116Email: [email protected]

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KarnatakaNo.1086, 12 MainHAL 2nd StageIndiranagar, Bangalore 560008Tel: 080-25276544 / 545 / 706 / 707Fax: 080-25276709Email: [email protected]

KeralaOpp. Cochin Passport OfficePanampilly NagarKochi 682 036Tel: 0484-4012300Fax: 0484-4012800Email: [email protected]

Puducherry56, First FloorRue Desbassyns de RichemontPuducherry 605 001Tel: 0413-2226201Email: [email protected]

Tamil Nadu98/1, Velacherry Main RoadGuindy, Chennai 600 032Tel: 044-42444555 / 42444516Fax: 044-42444510Email: [email protected]

Western Region

Goa502 Unitech City CenterOpp. Hotel ShivsagarM G Road, PanajiGoa 403 001Telefax: 0832-2422790-6Email: [email protected];[email protected]

Gujarat

203-204, Sears TowersGulbai TekraNear Panchvati EllisbridgeAhmedabad 380006Tel: 079-26469843 / 26469346Fax: 079-26462878Email: [email protected]

Madhya PradeshE-2/109, Arera ColonyBhopal 462 016Tel: 0755-4293792 / 2425752-53Fax: 0755-4271824Email: [email protected]

Maharashtra105, Kakad Chambers1st Floor132 Dr Annie Besant RoadWorli, Mumbai 400 018Tel: 022-24931790 / 24964792Fax: 022-24945831 / 24939463Email: [email protected]

ZONAL OFFICES

Eastern Region

Haldia (West Bengal)HPL Guest HouseSwati Housing ComplexPh-1, Hatiberia, P.O.Township Dist.Purba MednaporeHaldia 721607Tel: 03224-266121/262805Fax: 03224-262805Email: [email protected]

Ranchi (Jharkhand)391B, Road No. 4CAshok NagarRanchi 834 012Tel: 0651-2240040Email: [email protected]

Siliguri (West Bengal)C/o Ravi Auto House2nd Mile Sevoke RoadSiliguri 734 012Telefax: 0353-2544766Email: [email protected]

Northern Region

Amritsar (Punjab)SCO - No.32, Pal Plaza

District Shopping CentreRanjit AvenueAmritsar 143 001Tel: 0183-5061607Email: [email protected]

Ludhiana (Punjab)C/o Majestic Auto LtdC-48, Focal PointLudhiana - 141 010Tel: 0161-2676241 / 2670233-37Fax: 0161-2672790 / 2674238Email: [email protected]

Noida (Uttar Pradesh)CMA TowerA-2-E, Sector 24Noida 201301Tel: 0120-4345972 - 4Fax: 0120-4345970Email: [email protected]

Southern Region

Coimbatore (Tamil Nadu)Door No. A-305 & 306Raheja Centre3rd Floor, Avanashi RoadCoimbatore 641018Tel: 0422-2248410 / 2249488 / 2247456Fax: 0422-2244709Email: [email protected]

Chennai (Tamil Nadu)98/1, Velacherry Main RoadGuindyChennai 600 032Tel: 044-42444555 / 42444516Fax: 044-42444510Email:[email protected]

Madurai (Tamil Nadu)

Plot No. 518, 1st Floor4th Main Road, K K NagarMadurai 625020Tel: 0452-4391434 / 4210979 / 2522743Fax: 0452-2521705Email: [email protected]

Trichy (Tamil Nadu)3rd Floor, GVR Complex6A Lawsons RoadContonment

Trichy 620 001Tel: 0431-2410641 4000641Fax: 0431-2410655Email: [email protected]

Visakapatnam (Andhra Pradesh)Flat No.3A, 4th FloorRednam Alcazar10-12-1, Rednam GardensOpp. SBI Main BranchVisakapatnam - 530 002Telefax: 0891 - 2555535Email: [email protected]

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Mysore (Karnataka)8/1A, Temple RoadJayalakshmipuramMysore 570012Tel: 0821-2516319 / 2517003Fax: 0821-2515513Email: [email protected]

Western Region

Chhindwara (Madhya Pradesh)58, Madhuban ColonyChhindrawa - 480 001Tel: 07162 - 222777Fax: 07162 - 223777Email: [email protected]

Gwalior (Madhya Pradesh)C/o SRF Ltd.Industrial AreaMalanpur 477116Tel: 07539 - 509227-28Fax: 07539 - 283555Email: [email protected]

Indore (Madhya Pradesh)402, Sapphire TwinsScheme No. 54, 16, A B RoadIndore 452010Tel: 0731-5041694 / 5040390 /

5090478Fax: 0731-2432913Email: [email protected]

Nashik (Maharashtra)C/o VIP Industries Ltd.A-78 MIDC, SatpurNashik 422 007Tel: 0253-2350862Fax: 0253-2350756Email: [email protected]

Pune (Maharashtra)Bungalow No. 2Ganeshkhind RoadNear Rahul CinemaShivajinagar, Pune 411005Tel: 020-25536159 / 6590 / 4296Fax: 020-2350756Email: [email protected]

Vadodara (Gujarat)201-203, Abhishek ComplexAkshar Chowk, Old Padra RoadVadodara 390 020Tel: 0265 - 5532016-17Fax: 0265 - 2327108Email: [email protected]

Southern Region

Erode (Tamil Nadu)79, State Bank RoadErode - 638 001Tel: 0424 - 4272460Email: [email protected]

Thoothukudi (Tamil Nadu)106 J/30, First Street,MillerpuramThoothukudi - 628 008Tel: 0461-2312177Email: [email protected]

Karur (Tamil Nadu)9-D/1, PKG Building50 Feet Road, RamakrishnapuramKarur - 639 001Telefax: 04324 - 230012Email: [email protected]

OVERSEAS OFFICES

Australia(CII Representative Office)P.O. Box No. 91,Yarralumla, ACT 2600, AustraliaTel: 0061 - 2 - 62821551Fax: 0061 - 2 - 62324218Email: [email protected]

Austria

(CII Representative Office)16, Rohrergasse 5A - 1160 Vienna, AustriaTel: 0043 - 1 - 4853398 / 4807767Fax: 0043 - 1 - 4807767Email: [email protected]

China(CII East Asia RepresentativeOffice)Room No 11-A 47/49Shanghai Mart2299 Yanan Road (West)Shanghai 200336

People's Republic of ChinaTel: 0086 - 21 - 62360969Fax: 0086 - 21 - 32283510Email: [email protected]

France(CII Representative Office)6 Passage des Arts, 75014ParisTelefax: 0033 - 1 - 40475481Email:[email protected]

Japan(CII Representative Office)C/o Taj Hotels Resorts &Palaces9th Floor, Onarimon Yusen Bldg3-23-5 Nishi ShinbashiMinato-ku Tokyo 105-0003JapanTel: 00-81-3-3432-4530Email: [email protected]

SingaporeSoutheast Asian Region Office47 Hill Street#07-02 SCCCI BuildingSingapore 179365Tel: 0065 - 6 - 3334363

Fax: 0065 - 6 - 8830658Email: [email protected];[email protected]

UKC/o Confederation of BritishIndustry (CBI)Centre Point103 New Oxford StreetLondon WC 1A 1DUTel: 0044 - 20 - 78364121 / 73797400 (Extn. 8076)

Fax: 0044 - 20 - 72401578 / 73958178

USA1700 North Moore StreetSuite 1928Arlington, Virginia 22209Tel: 001 - 703 807 0310Fax: 001 - 703 807 0315Email:[email protected];[email protected]

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This report was prepared as a background note for Auto Serve 2008

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in.kpmg.com

MumbaiKPMG House, Kamala Mills Compound

448, Senapati Bapat Marg,Lower Parel,Mumbai 400 013Tel: +91 22 3989 6000Fax: +91 22 3983 6000

Delhi4B, DLF Corporate ParkDLF City, Phase IIIGurgaon 122 002Tel: +91 124 307 4000Fax: +91 124 254 9101

Pune703, Godrej CastlemaineBund GardenPune 411 001Tel: +91 20 3058 5764/65Fax: +91 20 3058 5775

BangaloreMaruthi Info-Tech Centre11-12/1, Inner Ring RoadKoramangala,Bangalore 560 071

Tel: +91 80 3980 6000Fax: +91 80 3980 6999

ChennaiNo.10 Mahatma Gandhi RoadNungambakkamChennai 600 034Tel: +91 44 3914 5000Fax: +91 44 3914 5999

Hyderabad8-2-618/2Reliance Humsafar, 4th FloorRoad No.11, Banjara HillsHyderabad - 500 034Tel: +91 40 6630 5000Fax: +91 40 6630 5299

KolkataPark Plaza, Block F, Floor 671 Park StreetKolkata 700 016Tel: +91 33 2217 2858Fax: +91 33 2217 2868

© 2008 KPMG, an Indian Partnership and a member firmTh i f i i d h i i f l d i i d d dd h i f i l i di id l

KPMG in India

Pradip KanakiaExecutive Director

Head - Marketse-Mail: [email protected]: +91 (80) 3980 6100

Yezdi NagporewallaExecutive DirectorHead - Industrial Marketse-Mail: [email protected]: +91 (22) 3983 5101

Arun KrishnanManager

Advisory Servicese-Mail: [email protected]: +91 (44) 3914 5000

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