Why there are so many tire repair shops in my locality?

There are just too many tire repair and air shops around my locality. When I say “Too many” I mean if you walk 200 meters in any direction you will find one. These shops are typically tin sheet huts with gloomy interiors and a quintessential yellow painted tire tube tied outside indicating the service offered. You can safely extrapolate this to any other urban/semi-urban Indian locality. There are just too many tire shops; period.

These shops offer two services : air filling and tire repairing. There are two core assets, a compressor, and a semi-skilled man who has no clue where his life is headed. But kudos to the huge risk he has taken to open such business. At-least he can call himself an entrepreneur.

Anyway, sometimes I wonder what so many tire shops are doing in one tiny locality. Are they getting enough business? how many customers do they service every day? There is no way to do micro-math here. There are just too many variables.

But we certainly can do the macro math. There are around 200 million registered vehicles in India. Now let us calculate the revenue of only tire filling operation. I will conveniently discount tubeless tires here for ease of calculation.

Every filling operation charges Rs 10 on an average.

200*10 =  Rs 2000 million ie. 200 crores, assuming every vehicle owner does 20 transactions around the year that equals to Rs 40000 million.

But hold on to your horses! We are not even considering tire repair revenue. Assuming every vehicle undergoing at-least 1 puncture:

So we have Rs 300 ( average charge per puncture)* 200 million vehicles.That is Rs 60000 million

  1. Air filling operations Rs 40000 million
  2. Tube repairing service Rs 60000 million

Total = Rs 100000 Million

To convert into dollar = 100000/76 = 1.3 Billion Dollars

Area of India is 3.2 million sq km

Let us assume that 95% of area is inaccessible, there are no roads, forests, low human density, rural etc. Only 2.7% of worlds land is urbanized. source: how much of the world is covered by cities

Since India is so densely populated, we can assume 5% of India is urbanized/ semi urbanized.That leaves us with 0.16 million sq km (5% of 3.2 million sq km)

So potential revenue per square km = 1300/0.16 = $8000 dollars per sq km

I googled per capita income of India and that came out to be $ 7680  PPP for 2018. Let us assume it to be $8000 in 2020 for ease of calculation.

So how many tire repair shops should 1sq km of land support in India?

The answer is Revenue per sq km/ per capita income

= $8000/$8000 = 1 shop

Clearly there are more tire shops in my locality. Even if my estimations are 50% wrong, that gives us 2 shops per sq km, even then we might have 3 or 4 extra tire shops in a typical Indian locality.

Phew*

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