The Auto Glass Retail Business Factsheet
By Crack A Business Kenya
This factsheet looks at the auto glass retail business. It quickly provides you with information to help understand and start an auto glass retail business in Kenya. By auto glass we mean glasses used by motor vehicles.
Types of Auto glass
The first step before you enter into the business is to understand the various types of auto glass. The diagram below should help you identify the various glasses that can be found in a vehicle:
From the image above you can see the common types of glass you will find in a vehicle are:
- Front Windscreen
- Front Doors Glasses
- Rear Door Glasses
- Rear Windscreen
- Vent Glass
- Quarter Glass
Of course not all the vehicles will have all the types of glasses listed above, say sunroof.
Occasionally you will find people calling the glasses by different names. For instance windshield instead of windscreen, back glass instead of rear windscreen and so forth.
Luckily this is not the kind of business that is strict on linguistics; as long as the supplier, the customer and you can describe and agree on what glass is needed then you are good to go. The more crucial knowledge, as explained in the next section, is the vehicle model.
Most of the glass in Kenya is sold clear. Tints are applied by ‘sticking’ a ‘tint’ paper. This is because a motorist could want a tint today but next year she doesn’t. Or as happened two years the government could decree that no vehicle should have a tint and thus everyone scrabbling to remove it.
The front windscreen is the most ‘important’ glass in the vehicle. Usually it’s made of laminated glass which is two layers of glass sandwiching a special kind of resin called PVB. Thus when the front windscreen breaks it does not shatter to small pieces.
The rest of the glasses are often made of tempered glass which shatters to small pieces when it breaks. Sometimes these too can be made from laminated glass.
Glass and Vehicle Models
It’s important to note that auto glasses are tied to particular vehicle models. This is because different models have very specific measurements. For instance you can’t fit a Toyota Vitz old model windscreen into the Toyota Vitz new model (Unless with some modifications). There is no one size fits all for auto glass.
This fact has an impact on how you stock. How, if limited on capital, do you decide what to stock and what not to stock? Keeping in mind that there are hundreds models of vehicles?
We will come to that a little later.
As an aside it’s good to know although auto glass is specific to models it is sometimes possible and then necessary to modify the glass of one vehicle to fit that of another. For example in the
case of a vehicle which is no longer produced, or which is a very old model and its glasses are no longer produced.
Think of an old model of Datsun, if one can’t get a new front windscreen, then they have to go for second hand, and if they don’t get secondhand they have to buy new of a different vehicle and modify to fit. This could also be the case if the glass of the specific model is expensive while that of a close relative significantly cheaper.
Replacing Auto Glass
Auto glass is replaced for safety reasons, aesthetics purposes, to make a vehicle usable and of course stop harassment by the police.
In all the above cases a glass will be replaced because it’s fully damaged or with an irreparable crack.
At times when the damage is not extensive the glass can be repaired. This is more so when the damage is a ‘chip’ which in the case of a windscreen has not penetrated all the layers of the glass. There are various methods of repair which use of resin, UV and special adhesives.
Cracks are trickier and difficult to repair. And sometimes, depending on the position of the crack, can’t be repaired at all. The crack continues expanding further weakening the screen endangering the driver and its passenger.
Glass damage is thus caused by various types of accidents. An accident does not necessarily mean the kind where two vehicles collide, or where a vehicle rolls over and such other. It could also be caused by minor incidents like hitting a screen with an item you are carrying, a falling bird, and debris from the road.
Setting Up Process
Step 1: Location
Consider the location in terms of:
- Vehicle Population – Of course the higher the vehicle population the higher the likelihood of getting owners who need glass replacement. So locating in an area with high vehicles population is better than one with few.
- Repair and Mechanic Services – Few people repair or replace their own auto glass. They will either buy the glass and take to a mechanic to fit or take the vehicle to a mechanic who will buy the glass and fix.
There are also many cases where a vehicle owner will go with the mechanic to buy the glass, you know just to make sure the glass is the right one and also to protect against the price being inflated by the mechanic. The mechanic will then go fix the glass.
It follows then there is significant advantage in locating your shop near a place where there are many garages and mechanics; informal or otherwise.
Don’t just look at Nairobi and other major towns when thinking of location. Do also consider relatively small but busy towns. In some of these towns despite there being sufficient demand there are no shops selling auto glasses.
Step Two: Suppliers
Wholesalers import glass from various countries, largely Asian countries.
Major auto glass wholesalers in Kenya are largely located in Nairobi but a few have branches in other towns. Even for the ones located in Nairobi they will deliver to other parts of the country, often by courier and at the buyers cost.
The market has also attracted a few independent importers. However for a start it’s good to deal with established and reputable wholesalers. This way you are assured of quality, wider variety and sometimes even lower prices. The established wholesalers also have a pool of information gathered over time which you can tap on as you decide what to stock or how to run the business.
When picking a wholesaler, consider prices, variety and the relationship that you can build with them. The latter means simple things like how long they can take to send an item to you if you are not near any of their shops? If they recognize you as a retailer can they sell you a single glass at a wholesale price if need be? Are they able to advise you on the trends in the business?
Prices and terms will vary slightly between wholesalers. At times you find one wholesaler has glass A cheaper than wholesaler B and vice versa.
Do also look at the capital you have and the initial minimum quantity that you have to purchase in order to enjoy wholesale prices.
Customer service is also very important. Is there someone to answer you queries in a helpful manner? Can you get a sales contact you can easily call to take care of your order say you in a town far from Nairobi?
Among the major suppliers are:
- Hussein Glass Limited– Kirinyaga Road, Nairobi. 0798 079 980. Good reputation in the market. Great customer service. Contact person Paul.
- Impala Glass – Addis Ababa Road, Industrial Area, Nairobi. 0786606052, 0737553377 (www.impala.co.ke). Good reputation in the market.
- Hebattulah Brothers – Branches: Kirinyaga Road Nairobi.
Airport North Road, Nairobi.
Garage Road, Off Daresalaam Road, Nairobi
Malindi, Uhuru Road – 20 551744
Mombasa – Opposite Foton East Africa, Shimanzi, Taveta Road – 041 2220301
Step 3: Premises
The premises should be visible and easily accessible. If there are garages in the neighbourhood then ideally your glass shop should be located near them.
It could also be at a position where there are economies locations like near shops selling automotive spare parts. This means you will have access to consumers with vehicles and actively looking for parts; perhaps even glasses.
At times your shop could be located in an area where there are potential customers but who don’t necessarily repair their vehicles in the neighbourhood.
Renovation will involve setting the shop so it’s easy to store and retrieve glass. It also involves branding and adding the necessary props like a counter. For the shop to stand out and become easy to locate, brand with bright colours and large writings. The signage should be large and clear.
Step 4: Stocking
Like we mentioned there are hundreds of vehicle models in the country. Capital limitations could make it impossible to stock glasses for all types of vehicles. But even where capital is not a problem you don’t want to end up with dead stock. Hence the need to stock intelligently and what is in higher demand.
How you stock should be determined by:
- The common types of vehicles in the area
- The common types of vehicles being repaired in the garages around your premises
- National trends.
Talking to experienced mechanics in your location is always a good starting point. From experience wholesalers could also give a good hint of what to stock.
It might never be practical or possible to stock all glasses. And here is also where a good relationship with a wholesaler comes in. For there are times a customer will request for a glass model which you don’t have in stock but which the wholesaler has. You can hold the customer for a few hours or a day depending on your location and order it from the wholesaler. Great wholesalers will understand the urgency and seek to get you the item as soon as it’s possible.
Step 6: Licenses
The licenses you require to run an auto glass business are:
Single User Business Permit – This is issued by the county government to all businesses operating within the county. The cost will depend on the county and often size of the premises. Budget at least Kshs.15, 000 for this. Exacts will depend on the county and size of premises.
Fire Clearance Certificate – County governments require you to have fire fighting equipment in your business premises. They will come and inspect your premises to gauge your fire readiness. You will then be issued with a Fire Clearance Certificate. Budget at least Kshs.4000 for this. The cost exact will depend on the county and size of premises.
Signboard License – You needs a license to put a signboard announcing your business. Budget at least Kshs.4000 for this. The exact cost will depend on the size of the signboard and the county.
Step 7: Manpower
If you won’t be running the business yourself then you need to hire someone to do it. Though this is not a very technical job the ideal hire should at least have more than basic knowledge of vehicles and some enthusiasm for them. This will help them guide at times clueless customers. Being knowledgeable helps the attendant confidently converse with customers; this makes them trust and even recommend the shop.
There is also the question of honesty. The person should be honest. Although just by looking you can tell what are the day’s sales the fact that they are handling cash requires they be honest. This is more so if you only visit the shop occasionally say weekly.
Be real to the fact that negotiations are part of the business. Therefore set some base prices so that the assistant does not swindle money in the name of negotiations. Well you can’t expect to monitor everything, and in all likelihood the assistant will take a hundred here, two there but as long as it’s within some manageable levels and then from the main till then you can live it. Still it’s not something to be encouraged.
A bigger danger lies where the assistant can order directly from the wholesaler. This is more so in shops located near the wholesaler. So a customer comes and asks for the Front Windscreen of a Toyota Hiace which definitely you have in stock. But the clever attendant spots an opportunity. He tells the customer that the glass is out of stock but he can get it in two hours time. In those two hours he orders the glass from the wholesaler and resells it to the customer as his own, keeping all the profit despite your business being the contact point.
You cannot totally control this that’s why you have to start with honest employees. Still you can be the contact person between you and the wholesaler such the employee can’t order directly. A clever employee will find ways of going round this. Put systems and controls without suffocating the employee to the extent that they are demotivated.
Step 8: Open and Start Operations. (See business models below for a little more on this)
Revenue and Margins
Margins in this business often range between 15 % and 25%. They could be slightly higher or lower depending on the location, competition and negotiation skills.
There are no set retail prices. Once you acquire an item at wholesale you decide how to price it. The price should be within what is accepted in the area as the market rate. When unsure start with a 25% margin.
Sample Wholesale & Retail Prices
To illustrate here are some wholesale and retail price from one retailer. The prices are as of June 2017.
|Vehicle||Type of Glass||Wholesale Price||Retail Price (Kshs.)|
|Nissan B14 / Nissan||FWS||4000||5000|
|Nissan B15 / Nissan||FWS||4300||5000|
|Toyota Vitz New||FWS||4200||5500|
|Toyota Fielder (New||FWS||4500||5400|
|Mazda Demio (New||FWS||4400||5500|
|Nissan Wingroad Y11||FWS||4400||5200|
|Toyota Voxy YR 70||FWS||4300||5000|
|Mitsubishi Pajero New||FWS||3100||4500|
|Don’t invest blindly||www.kenyaknowhow.com||0712 473 455||Page 9|
FWS – Front Windscreen
From the above case study the highest margin is Kshs.1400. The price listed as selling prices are not fixed. For instance the seller above could lower the price say after negotiations or as a way of beating competition such that he makes a profit of Kshs.900 instead of Kshs.1400. The wholesale price is from a particular wholesaler. Prices could change and vary with different wholesaler. Use the above as a guideline only.
There are no first hand rules on pricing; simply make a decent margin to meet your business costs and remain with a profit. The major fixed costs will be salaries and rent. Variable costs will be transport and communication. That said when pricing think of the competition, how the vehicle is used and attitudes of consumers or mechanics in the area.
So how much should you budget for stock? First consider the attached list of wholesale prices from one of the leading wholesalers. The list is not exhaustive but includes Front and Rear Windscreen prices of some of the common vehicles.
If you were to purchase a single item of each then it could cost at least Kshs.600,000
But then you don’t need to necessarily buy all the glasses. Front Windscreens are in higher demand than rear windscreens. Then there are the other glasses Front and Rear Door, vents and quarters which you should stock a little of.
Most wholesalers will sell you stock worth as little (relatively) as Kshs.200, 000. (At an average price of Kshs. 4500 these could be 40 windscreens). And thereafter you can buy one or two glasses at wholesale price. Once a good wholesaler recognizes you as a retailer then they will be very flexible after the initial purchase.
Kshs.200, 000 stock is enough to get you started. But the wider the variety the better because that way you get to sell to more customers
Then it’s important to have working capital. See a customer will come ask for a glass type you have not stocked, you should have cash to order from the wholesaler immediately. And for a start you can start with relatively low stock and increase as per the actual demand.
The further away from the wholesaler you are the bigger the stock you should have.
There are various loose business models that exist in auto glass retail:
Windscreen Repair Only – These kind of businesses only offer windscreens (or other glass) repair services. They don’t offer glass replacement services.
Windscreen Repair and Replacement – These offer businesses offer repair and whole glass replacement services.
Windscreen Retail Shops – These only sell auto glass and don’t offer any kind of fixing. A customer buys and goes to fix elsewhere.
Windscreen Retail with Fixing – These businesses sell auto glasses and also fixing services. There are two types of these. First are those who have their own permanent staff to do the fixing at no extra cost.
Secondly are those who partner with mechanics such that when a customer buys they call the mechanic to come fix the screen. Of course this is at a fee negotiated between the shop and the mechanic. Sometimes the price of fixing is bundled together with the cost of the screen such that it’s “buy and we will fix it free of charge”. Prices can also be negotiated directly between the mechanic and the customer.
So which model should you adapt?
If possible being an all rounded auto glass shop would be the best; that is offer repair services, sell glasses and fixing services. But sometimes this is not possible because of skill, space and the extra management hustle that could come with it.
Although we have not covered screen repair in this sheet it’s a mid difficulty skill. The learning curve is not so steep and then nowadays the number of people with the right skills to repair screens is on the rise. The differentiating factor between various repair services is the skill and the technology they are using. We will cover windscreen repair in another factsheet.
The easiest way to start is by selling the auto glasses without extra services. But as a value addition offering fixing services free or at a fee would go a long way in winning more customers and getting recommendations. Free here would mean that you have your own permanent staff to fix the screens. The rationale would be that the extra revenue from the “free fixing “ would be enough to cover their salaries and still leave you with some extra money.
Customers would prefer to purchase and fix their glass the same place where they buy it. One because it could be hectic to transport the glass. Secondly because they want to be sure it fits. Thirdly some trust the shop that sells more than their own mechanics.
Still at times it may not be possible for the customer to fix the glass at the shop. For instance if the glass is so damaged that the vehicle cannot be on the road. The owner or mechanic has to buy and go fix at a garage.
If you are in an area with garages you can start by selling only, then if it becomes necessary partner with skilled and honest mechanics in the neighbourhood to do the actual replacement. Observe the response decide whether to have permanent staff or not.
As a marketing strategy you need to network with as many mechanics as possible. You can offer incentives such as a commission of sort when a mechanic leads a customer to your shop.
You could also offer mechanics “special prices”. In this business you cannot underestimate the power of mechanics.
If you decide to include fixing in your glass shop think of it as a value addition rather than as a major source of income. The cost of fixing a windscreen ranges between Kshs.800 and Kshs.1500 (June 2017), depending on the mechanic and the vehicle. Adding a premium to this may not necessarily be profitable.
Another value addition could be adding tints to the glasses. Even in this case it’s best to partner with someone with the necessary skill. Putting tints starts at Kshs.300.
To repair or fix you need space to park the vehicles as you work on them in a process that could take between an hour and four hours.
|Single User Business Permit||1||15,000|
|Fire Compliance License||1||4,000|
|Office Furniture||3 Chairs and a Table||12,000|
|Signboard||1 and neon signs||15,000|
|Receipt and Record Books||All||3,000|
|Rent||2 months deposit + 1||45,000|
|month rent. Will|
|depend on location.|
|(@ Kshs.15,000 per|
|Renovation and Remodeling||Repainting, shelves||25,000|
|and any branding|
|Don’t invest blindly||www.kenyaknowhow.com||0712 473 455||Page 12|
|Salary||3 months @||30,000|
|Kshs.10000 per month|
|Grand Total ( Adding all the above sub totals)||504,000|
Notes on Capital
The above is just a guide based on some case studies. You can adjust accordingly. For instance the stock could be more or slightly less. (At least keep the stock at Kshs.200, 000).
Rent and licenses could also vary with the location. You could also pay your worker more. You might also need to spend more on marketing.
Still the above gives a very good idea of the amount you need to start a simple but decent auto glass business.
Critical Success Factors
- Wide variety
- Great location
- Intelligent stocking
- Good customer service
- Good product knowledge
- Good relationship with the wholesaler