ESTABLISHED WAY BACK in 1935, TSM is a testimony to the entrepreneurial spirit of the business world in Tamil Nadu. Significantly enough, it also reveals how Tamil Nadu has evolved in family business tradition. Today, TSM is driven by the third generation of the family. Trust is the fulcrum and remains the core even today despite the fact that the pre-owned car business has turned highly competitive in the post-liberalisation era where car makers are a dime a dozen and car models aplenty.
THE EVOLUTION OF TSM
With around 150-200 cars traded month-on-month across its four branches. TSM has chosen to adopt a customer-centric approach. “A customer today is a customer forever”. TSM is fixated on this idea. Today, TSM is being run by Balasubhramanian, his cousins K Mahalingam and K Ravishankar. Even the fourth generation has gotten into TSM now. Balasubhramanian’s son Aniruth Natrajan has already come on board. The corporate office continues to function from Royapettah – a stone’s throw from where their grandfather first started dealing in used cars from under a tree.
What began as a facilitator role by their grandfather in buying and selling second-hand cars has now transformed into an organised business for TSM in pre-owned cars. The break away from the mere facilitation role happened sometime in the 1990s when his grandchildren chose to offer end-to-end service on a commercial basis. But it hasn’t been an easy ride for TSM. Ask Ravishankar, he will readily concede this. Second-hand car business(which is now known as pre-owned car, a fashionable nomenclature) hasn’t been an attractive job destination for automobile engineers. Infact it has to rely on mechanics. Not surprisingly, TSM has grown with the enormous on-the-job learning of these mechanics who dive deep into the mechanical and structural aspects of a car. “I myself worked with mechanics and the Maruti service people. It was fascinating to work with them and gain hands-on experience,” he says. TSM has a staff strength of around 50 people.
TRUST AND CUSTOMER-CENTRIC APPROACH
The digital world has pushed the business into a new path which has become even tougher. Indeed, the advent of a number of online dealers for second-hand cars in the wake of the Internet explosion has completely redefined the game. The entry of OEMs has further compounded the market dynamics.
All these developments have perhaps pushed the TSM people to do a rethinking on their approach. Perhaps for the first time in the long history of the company, the owners have got on to the social media bandwagon to reiterate the values that TSM stands. That speaks for the changing dynamics that dominate the used car space. In a highly disaggregated and largely unorganised second-hand car market, TSM stands out – both from commercial and ethical angles.
In a sense, it sort of plays the OEM role in the pre-owned car industry! It has long since moved on to offer a hassle-free and end-to-end service where buyers and sellers of used cars go home satisfied – money-wise and otherwise. Given the nature of the industry, this business comprises largely individual traders. TSM does not deal with cash and walks away from cash deals even if there is a lot of money to be made. This can cut both ways! It is an advantage since it enhances the brand value. And, it acts as a disadvantage since it eats into the margin. (The introduction of a uniform GST across models for pre-owned cars may have simplified the taxation as such).
Has it helped the cause of encouraging organised players in the pre-owned car space? This remains a moot point. After all, the GST is levied on the margin that a second-hand car dealer makes. However, the dynamics of the business has transformed dramatically over the years with many dealers investing in refreshing a used car, giving guarantees and adding a lot more services over and above the normal operating costs.
What makes TSM stand out in this scenario? Simply put, it all boils down to the trust that TSM has assiduously built over several years. Also, it facilitates customers – both sellers and buyers – do the deal peacefully, quickly and profitably sans worries related to assorted paper works in the process. It isn’t easy to do an ethical execution in an unorganised play field. But TSM has driven along this route.
According to Ravishankar, the challenge is on the pricing front. With plenty of players, pricing in the second-hand car turf has become competitive. Often, the price offered has tended to border on unreal. Even in the digital age, Ravishankar believes that the role of an intermediary like TSM will only grow. “Checking the authenticity of documents and ensuring their proper transfer needs a lot of running around and maintaining record,” he avers.
NAVIGATING CHALLENGES
But the road ahead remains bumpy for organised players like TSM. Clearly realising this, TSM has moved into adjacent areas such as distribution of financial services products, car grooming (establishing spa for car wash in select malls in Chennai) and the like. Through its foray into distributing financial services products, TSM has helped banks and institutions improve their car loan portfolio by Rs.150-200 crore annually across south India.
Not just that. It has signalled its entry into real estate by developing plots in strategic locations in Chennai. Through a diversified initiative, TSM is not only seeking to smother the vicissitudes in the pre-owned car business but also trying to leverage the brand image by expanding to other related segments. TSM people are aware that the ride isn’t going to be smooth going forward. Not surprisingly, they focus on the road ahead. Trust, thy name is TSM!
