Friday, February 17, 2012

Community and Second Hand Car Market

I never knew a parallel auto industry exists in New Delhi till last Thursday when for the purpose of some project research my colleague Saswata and I spent almost half a day in Mayapuri. I was astonished to see the strength of innovation that exists in India because of the entrepreneuring grey matter originating from the "Jugaad" zones of our brains.

Mayapuri, a place in West Delhi is marked by a wide array of shops that are dealing with all forms of second hand motor, auto components. It is also creating a value out of these second hand components. We realized that when we saw a jeep which looks like a new car. Some investigation revealed that the engine of that car is from Japan (a second hand engine), the tyre is from United States. I could not believe that a car can look so fresh and new even after its components are second hand and have been imported. The entire Mayapuri market is informal and unorganized and the health, safety aspects of the people working over there seemed to me of an issue of grave concern. But here, I wont get into all these. Rather, I would share another observation that was found in Mayapuri.

Most owners of all the second hand car manufacturing and motor shops were from Punjab. This was a real life example of how a certain community which can develop certain skill over a long period of time can understand the business of that sector. People from punjab have always been good mechanics, drivers and they understand the functioning of auto parts. Many of them, through historical land and family lineage have got exposed to the mechanics of how machine components of tractors, heavy vehicle cars behave. It is this exposure that have helped them to accumulate a skill over the years to understand how second hand car and motor components can be further reused. They have understood to create value out of these second hand components.

History and exposure of communities plays an important role to establish market share in a certain business. I was seeing the real life example of that. What was making me more surprised is the strength of human skill that each community of our country possess. We just need to provide the right environment, platform, infrastructure for these skills to be nurtured and bloom more. If we can really do that, with the big companies supporting the informal segments having their innate human skills, we can even have our own second hand car manufacturing industry which can meet the domestic market as well as the ones in other countries of South Asia, Latin America and other countries of South. We have the biggest strength to do that! Our strength lies in the continuous supply of innate human skills and craftsman/craftswomanship (disobeying the gender biasedness!) within our country.

Visit to Mayapuri not only revealed an entire new world but also made me realize our strengths and challenges as a nation. But, I am sure that the future is only towards the brighter side for us and for many of the people working in Mayapuri who possess skills no less than a highly qualified engineer working in the factory of Maruti/Honda/Hyundai. Its just that, we need to bring them together and exchange the skills in a similar platform which will do wonders. And when that happens, the next time during the visit to Mayapuri, I will feel more proud to be an Indian!

Learning bidding games from metro station

Every time, when the journey in metro from Jorbagh to its destination at Vaishali station comes towards an end, a feeling of repeatative memories arise. These memories arise, because most of the time when I come out of the Vaishali metro station, I see a real life example of competitive bidding games. It happens between the rickshaw drivers who are competing amongst themselves to catchhold of new passengers who will travel to various points of Ghaziabad from Vaishali metro station. The auto drivers come, bid for an auto customer by offering prices for certain destination points in Ghaziabad.

Auto drivers start competing amongst themselves and try to bid the lowest prices for any destination to win a customer. But last few months' observation shows that there is a lowest price below which auto drivers wont go even when they are competing amongst each other to win a customer. These base prices are different based on the distance of the place from Vaishali metro station. It also depends at what time in the night people want to go to these places from the Vaishali metro station. Generally after 10 p.m., the base prices are jacked up even if the auto drivers are bidding and competing. This is because in the base price the night charge is incorporated.

However, it is important to understand what determines this base price of auto drivers in a competitive bidding game where they are trying to win a customer. If the customer knows to what extent auto drivers' offer base prices can be reduced then sometimes the base price just goes down by Rs. 10.

Interesting number, isnt it! Why just Rs.10 and not Rs.5? Are the auto drivers ready to sacrifice Rs.10 in a competing game because for that amount of money sacrifice they can still accomodate the cost. Or is it the psychology to win against the peers is so high amongst the auto drivers that none of them reduce the base price by Rs.5 but rather by Rs.10? But, if the customer can read all these situations, most of the time in such a competiting situation, the customer is able to reduce the base price of the auto driver by Rs.10 and can be in a beneficial situation.

I have not come to any conclusion after observing these bidding games. I am sure, these kind of bidding games are happening in many of the other metro stations in New Delhi where most of the auto drivers are standing outside the metro stations. But surprisingly, outside the Jorbagh metro station, I have observed that the bidding games and competitive atmosphere between the drivers donot exist. They are more organised, stand in a line and are not competing amongst themselves to win a customer. So is it so, that the absence of prior organized structure of dividing the customer segment amongst the auto makers creating such competing bidding games amongst them.

Moreover, there can be a psychological window too for analysing what leads to these games. It will also be interesting to know driven by what psychology these auto drivers get indulged in these competing games that sometimes lead to a reduction in the base price. We also need to ask ourselves that what psychology of the auto driver leads them to sacrifice Rs.10 in the base price.

I dont know any of the answers to the doubts of my mind, as I need to observe a little more in the metro stations to arrive at some findings which are situational, time, context specific. May be some more indepth, time varying and segment specific research amongst these auto drivers at different points of metro stations will give future directions!