The performance factorVivek SahaiSegment Manager – VR Premium, IndiaAkzoNobel

Industry Advancement

What has changed

Paint Technology Advancement

No infrastructure, traditional tools and equipment

Basic infrastructure, with traditional tools and equipment

Improved infrastructure with manual tools and equipment

Infrastructure with Basic tools and equipment

Advanced infrastructure with advanced tools and equipment

NC base 1K Technology P U base Acrylic Basecoat with 2K Solvent base technology

Advanced Technology Waterborne Basecoat

The Indian automobile repair industry development history goes back just 20 years.We have witnessed a lot of change and also seen the market maturing faster then rest of the world.

Key Performance Indicator/Time line

Avg. bodyshop load

Avg. bodyshop bays

Job mix

Heavy repair (> 6 panels)

Medium repair (4 – 5 panels)

Small repair (< 3 panels)

Avg. custody time

Avg. manpower cost (% to BP labor rate)

Repair industry – KPI changes

Pre Year 2000

60 – 80 cars/month

4 – 5 bays

50 %

30 %

20 %

> 15 days

< 18 %

Yr 2000 - 2005

100 – 120 cars/month

8- 10 bays

40 %

30 %

30 %

10 – 12 days

18 % - 19 %

Yr 2005 - 2010

150 – 180 cars/month

10 – 12 bays

30 %

30 %

40 %

7 – 8 days

18 % - 19 %

Yr 2010 till now

> 200 cars/month

> 15 bays

20 %

30 %

50 %

3 – 4 days

19 % - 20 %

* Industry Avg. based on the various bodyshop sizing time to time

The past 20 years has brought significant changes and the KPI parameter has been drastically changed, leading to a change in the adaptation requirements

Technology elevations/Time line

Sanding systems

Denting/panel beating

Cutting and welding

Sanding process

Paint systems

Repair industry – technology and process

Pre Year 2000

100% wet

Manual denting

Gas welding

Hand sanding

1K NC acrylics paints with NC undercoats

Yr 2000 - 2005

70% wet & 30% dry

Manual denting

Gas/spot welding

Sanding with blocks

PU topcoats with NC undercoats

Yr 2005 - 2010

30% wet & 70% dry

With hand tools

Spot/MIG welding

Sanding with blocksand hand tools

2K paint system with solvent basecoat

Yr 2010 till now

100% dry

With dentpuller

Spot/MIG welding with pneumatic cutter

Pneumatic sanding tools

2K paint systems with solvent/WB basecoat

*Various bodyshop evaluations time to time

There has been a significant acceptance of various technological advancements and the Indian market was able to lead positive change management

OEMs’ BP program offerings – defined program

Yr 2005 till now

BP equipment standardization and mandate

Layout and design mandate

Vendor selection and alignment

BP operation manual

Own BP team and training centerestablishment

Comprehensive BP program offering with well-defined process, systems, insurance

and vendor offerings

* Various OEM offering evaluations time to time

Pre 2000….

Basic BP program guidance with very little control/focus in bodyshop

operations.

OEM offering

1. Tools and equipment

2. BP facility

3. Approval and quality of equipment

4. Standard BP guidelines

5. Knowhow and training commitment

6. Process control

OEMs’ focus in the past few years have been phenomenal with dedicated BP program offerings. Dedicated BP teams have been formed with focus on standardization

Job mix vs labour mix movement

* Avg. mix and labor mix for various Bodyshop evaluations

The change in the job mix has impacted the individual bodyshop approach towards the floor coordination and job allocation so as to remain productive and improve profitability

• Though the mix is changing however it’s more of repair v/s replacement now..

• Good for Repairer and good for Insurer.

Job mix impact on profitabilityAverage bodyshopload

Job mix @avg. labourmix

Heavy Repair (> 6 panels)

Medium Repair (4 – 5 panels)

Small Repair (<3 panels)

Total labour (INR)

Avg. labor/car (INR)

Pre Year 2000

80 cars/month

Mix % Cars Labour rate Labour

50 % 40 8K 320K

30 % 24 6.5K 156K

20 % 16 4K 64K

5,40,000

6,750

Yr 2000 – 2005

120 cars/month

Mix % Cars Labour

rate Labour

40 % 48 10K 480K

30 % 36 8K 256K

30 % 36 4K 144K

8,80,000

7,333

Yr 2005 - 2010

150 cars/month

Mix % Cars Labourrate Labour

30 % 45 12K 540K

30 % 45 8K 360K

40 % 60 5K 300K

12,00,000

8,000

Yr 2010 till now

200 cars/month

Mix % Cars Labourrate Labour

20 % 40 12K 480K

30 % 60 10K 600K

50 % 100 6K 600K

16,80,000

8,400

30 %

25 %

22 %

8.4K/car

8K/car

6.7K/car

3-4

Days

5 -7

Day

s

10 –

12 d

ays

2.3 Panel/car

3.0 panel/car

3.5 panel/car

What is changing

* Industry dynamics based on the various Bodyshop situation

YR 2010 YR 2016YR 2016 YR 2010

High

Medium

High

Medium

Low

Job size

Accident ratio

Labour/car

Custody time

The world around us is continuously changing…

Technical advancement of the bodyshop

*Industry dynamics based on the various bodyshop situation

Early year 2000 scenario

Crash repair guideline

Well defined layout HSE Focus

Quality & warranty

Sanding process

Painting processPainting process

Sanding process

By virtue of all the stakeholder participation, the system and process improvement have been drastically achieved in the bodyshop and there has been a remarkable upgrade since then

Key concerns of the bodyshop

*Industry dynamics based on the various Bodyshop situation

Key concerns

Technological advancement

Skill standardization

Preventive maintenance

Job variability

Cost mindset

Belding, merging & fadeout

Upskilling and fresh skilling

Manpower attrition

Skill standardization

Manpower attrition

Upskilling and fresh skilling

Preventive maintenance Technological

Belding, merging &

Machine

ManMethod

When the industry is maturing, they are facing difficulty on man management, standardisationand operational challenges due to fixed mindsets

Key performance differentiators

* AkzoNobel Vehicle Refinish - PCE services for best of bodyshop performances

Paint materials

Layout and design

Estimation

Training and certifications

Accurate and time bound

Quality output

Advance and efficient

Based on the current jobmix

When the market becomes more challenging and competitive the overall efficiencies and effectiveness will be of important use

What can we do to ensure performance

* AkzoNobel Vehicle Refinish - PCE services for best of Bodyshop performances* AkzoNobel Vehicle Refinish PCE services for best of Bodyshop performances

Customer centricity

OEMs

Insurance companies

Bodyshoprepairers

Paint and allied

partners

We all have to ensure we act so as to lead the industry in a sustainable way, to have a win-win solution for all the stakeholders and to achieve long lasting credible relationships

Thank youVivek Sahai National segment manager, vehicle refinish, AkzoNobelvivek.sahai@akzonobel.com