BUSINESS PLAN:

ESTABLISHMENT

AND

OPERATION

OF A

VEHICLE

WHEEL ALIGNMENT

AND

WHEEL BALANCING BUSINESS

IN

KAMPALA, UGANDA

FEBRUARY 2020
 i
SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS
A. TABLE OF CONTENTS

S/NO. DESCRIPTION PAGE

1.0 INTRODUCTION 1

2.0 PRODUCT & ITS IMPLICATIONS 2

3.0 INDUSTRY OUTLOOK/TREND 3

4.0 MARKET POTENTIAL 4

4.1 Market Potential 4
4.2 Marketing of Wheel Alignment Business 4

5.0 RAW MATERIAL REQUIREMENTS 5

6.0 TECHNICAL ASPECTS 6

6.1 Land and Building 6
6.2 Machinery & Equipment 7
6.3 Process of Manufacture 11
6.4 Quality Control & Standards 11
6.5 Production Capacity 12
6.6 Pollution Control 12

7.0 MANPOWER REQUIREMENT 13

8.0 BASIS & PRESUMPTIONS 14

9.0 IMPLEMENTATION SCHEDULE 15

10.0 FINANCIAL ASPECTS 16

10.1 Cost of Project 16
10.2 Means of Finance 16
10.3 Working Capital Requirements 16
10.4 Profitability Calculations 17
10.5 Break Even Analysis 18

11.0 STATUTORY/GOVERNMENT APPROVALS 19

12.0 BACKWARD & FORWARD INTEGRATION 20

 ii
SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS
B. LIST OF TABLES

T/NO. DESCRIPTION PAGE

1 Land and Building 6

2 Machinery & Equipment 7

3 Annual Production Capacity 12

4 Manpower Requirement 13

5 Implementation Schedule 15

6 Cost of Project 16

7 Means of Project Financing 16

8 Structure of Working Capital Requirements 17

9 Calculation of Annual Turnover (@ 80% capacity utilization in Year 4 & Year 5) 17

10 Profitability Calculations 17

11 Calculation of Break Even Point in Year 5 18

 iii
SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS
B. LIST OF APPENDICES

A/NO. DESCRIPTION PAGE

I Wheel Alignment & Wheel Balancing Shop Tools 21

 SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS
1.0 INTRODUCTION

It is very essential that all the wheels of a vehicle are completely balanced otherwise
there will be bubbling of wheel and this will affect the steering control. Similarly, if the
wheel alignment of a vehicle is out of order, the rubbing of tyres will be more and free
movement of wheels will also get affected. This results into rapid wear of tyre treads.
To overcome these problems, computerized wheel balancing and wheel alignment
machines are used. These machines are fully automatic, very accurate, quick and precise
in their work.

Wheel alignment business is one of the easiest and great businesses to do. Wheel
alignment and balancing business have very good market scope in all cities and
towns. Owing to the great increase in vehicles, especially personal cars and cabs it
shows that wheel alignment business has a great future.

When vehicles are hit with hard potholes or speed breakers, the alignment and
balancing of wheel gets affected and this results in instability of vehicles on roads, rapid
tyre wear and tear and instability in steering control. This may be fixed with
computerized machines. First of all, tyres are checked with a wheel balancing machine
and balanced tyres are fitted to the vehicle. A few sensors are attached to the tyres and
the wheel alignment is checked according to steering and any required changes can be
done according to that. This is the process of wheel alignment and balancing.

1
 SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS
2.0 PRODUCT & ITS APPLICATIONS

For automobile wheels, there are wheel balancing machines available that are fully
automatic, accurate, quick and precise in their work. To reduce high wear tear of wheel
axles and other components and improve the steering control and safety on road, it has
become now essential to get the wheels balanced.

Similarly, the wheels once mounted on vehicles have to be properly aligned on its axles
so that the vehicle tyre is rotating in perfect axial position. If the wheels are not aligned,
the wear of tyres will be more and uneven and free movement of wheels will be
affected. The wheel alignment machines are also automatic in detection and suggestion
of corrective measure and are very quick.

2
 SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS
3.0 INDUSTRY OUTLOOK/TREND

The total number of registered motor vehicles in Uganda was 1.2 million as on 30.09.
2019. Most of the vehicle population is in 10 (ten) cities viz. Kampala, Mbarara, Masaka,
Entebbe, Jinja, Mbale, Gulu, Lira, Arua and Fort Portal collectively accounting for more
than 90 per cent of the registered vehicles in Uganda.

With the growing population of Vehicles, the auto servicing business in Uganda is
expected is grow exponentially in the near future. In terms of revenue, the car servicing
industry in Uganda is estimated to be currently worth about US$16 million [UGX 59.2
billion] annually and projected to grow to about US$26.37 million [UGX 97.58 billion]
by 2025.

Within the auto service activity, wheel balancing and alignment service has emerged as
one of the most prominent and promising segments of the industry in view of the
importance of ride quality and overall longer life of crucial suspension as well as auto
engines.

The car servicing market is mostly served by a vast network of unorganized multi-
brand (local garages). These units depend on special service units viz. car battery
replacement, wheel balancing and alignment, engine emission test, injector
cleaning/engine tuning, glass repair, etc. in urban areas. The market of authorized
workshops and SME independent small garages can be tapped by the new unit, mostly
for the post-warranty vehicle service market.

3
 SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS
4.0 MARKET POTENTIAL

4.1 Market Potential

There is a very good market potential for the computerized wheel balancing and wheel
alignment workshop. Nowadays, these workshops are very common in urban areas,
and suitable for all passenger cars, light trucks and motorcycles (with a special flange1
in case of wheel balancing). With the decline in passenger car prices and availability of
easy finance for passenger and commercial vehicles, the demand for such computerized
workshops is rapidly increasing coinciding with increase in number of vehicles.

The awareness of the quality of ride that can be improved with wheel alignment and
balancing and advantages of lower wear and tear of tyres and suspension link bushings
etc. has now made these services almost part of regular service schedule. Therefore, the
demand for such computerized workshops is rapidly increasing coinciding with the
increase in number of vehicles.

4.2 Marketing of Wheel Alignment Business

This is a crucial part of this business. Starting wheel balancing and wheel alignment
business is easy but running and getting consumers is not all cake walk.

You need to concentrate the customer satisfaction with your services.

 Display the flyers and hoardings with special discounts rates near petrol stations,
four wheeler parking places, mechanic shops and commercial areas.
 Offer pickup and repair-done service to busy people.
 List in Google my business page, local classifieds and social media platforms.
 Affiliate with local mechanics, cab associations and drivers by offering fixed
commission or discounts.
 To boost sales, start car wash service and engine oil service (as optional car
service add-ons).
 Send a message to existing customers on the time period with discounted prices.
 Don’t forget to take feedback and improve according to it.

1A projecting flat rim, collar, or rib on an object, serving for strengthening or attachment or (on a wheel) for maintaining position
on a rail.
4
 SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS
5.0 RAW MATERIAL REQUIREMENTS

There is very little raw material need as this is a corrective alignment and fitting service.
In wheel balancing, small weight placement along wheel rims requires especially cast
zinc or lead weights for attachments. These are readily available in the market.

5
 SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS
6.0 TECHNICAL ASPECTS

6.1 Land and Building

Table 1: Land and Building

S. No. Particulars UOM2 Qty Rate Total Value
(UGX) (UGX)
1 Land Sq. Mtrs 200 30,000 6,000,000
2 Cost of land development, fencing, approach road,
inside roads, landscaping, drainage etc. Sq. Mtrs 200 50,000 10,000,000
3 Total built-up area Sq. Mtrs 150 270,000 40,500,000
4 Water System (including over head tank, etc) _ _ _ 5,500,000
Total Civil Cost = Cost of Land + Building 62,000,000

Suitable Locations:

 @ Petrol Stations
 @ Mechanical Workshops
 At busy road intersections
 Close to car parks
 Close to spare parts shops
 In busy commercial areas

2 UOM = Unit of Measurement

6
 SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS
6.2 Machinery & Equipment

Table 2: Machinery & Equipment

S. No. Particulars UOM Qty Rate (UGX) Total Value
(UGX)
A. Main Machinery/Equipment
1 3D WHEEL ALIGNMENT MACHINE with 2 camera system Nos 1 18,500,000 18,500,000
Computerized Sensors (with 14" color monitor, key board, disk
drive, 4 Sensors, printer, and other standard accessories
2 Computerized Wheel Balancing Machine for Wheels up to 65 kg. Nos 1 11,000,000 11,000,000
Weight and maximum 850 mm of external wheel diameter with all
standard accessories
3 Hydraulic Jacks Nos 4 850,000 3,400,000
4 Tool Kit Nos 4 2,000,000 8,000,000
5 Automatic Tyre Changer with Tilting Pole, Integrated Pneumatic Nos 1 9,250,000 9,250,000
bead breaker, Mounting Lever, Inflating Gun and Manometer,
Plastic Protection of Beed Braking Blade and clamps
6 Air Compressor system Nos 1 2,120,000 2,120,000
7 Pit construction and installation cost _ 1 6,880,000 6,880,000
Sub-Total 59,150,000
B. Tools and Ancillaries
1 Tools and gauges _ 1 300,000 300,000
2 Miscellaneous tools, etc. _ 1 300,000 300,000
Sub-Total 600,000
C. Fixtures & Electrical Installation
1 Storage racks and trolleys _ 1 300,000 300,000
2 Other Furniture _ 1 2,650,000 2,650,000
3 Telephones/Computer _ 1 1,600,000 1,600,000
4 Electrical Installation _ 1 4,000,000 4,000,000
Sub-Total 8,550,000
Other Assets/ Preliminary and Preoperative Expenses 1 4,000,000 4,000,000
TOTAL PLANT MACHINERY COST 72,300,000

All the equipments and tooling are available from local manufacturers/suppliers. The
entrepreneur needs to ensure proper selection of equipments. It may be worthwhile to
look at reconditioned /used equipments and toolings.

Wheel Balancer
Wheel balancing—also known as tire balancing—is the process of equalizing the
weight of the combined tire and wheel assembly so that it spins smoothly at high
speed. Balancing involves putting the wheel/tire assembly on a wheel balancer, which
centers the wheel and spins it to determine where the weights should go.

7
 SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS

Tyre Changer

The tyre changer was discovered by Victor du Quesne in the year 1929. The wheel
changer is equipment used to change the tyre, it makes changing tyre easy with less
effort and time. The wheel changer comes with two types one is with chain and other
one is hydraulic. The one with chain is basically local changer. The other one is
hydraulic as shown in the figure above, it operates on compressor and is very easy to
use with perfection in work. It helps to dismount the different tyres like tyre of, truck,
car, motor cycle it has three foot pedals in front and one on right hand side. The tyre
changer fulfills the basic need of the workers who work in the shop who have task
related to tyres. It helps to save money and time and also shows efficiency in work. It
only takes less than 2 minutes to change any of the tyre.

8
 SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS

Wheel Alignment

The wheel alignment machine is a machine to adjust the wheel angles so that to ensure
that they are perpendicular to the ground and parallel to each other. The first dynamic
wheel balancer was introduced in the year 1934 but in the year 1947, the John Bean
visual liner became the first optically based alignment machine maker in the world.
Regular wheel alignment helps to increase tyre life, less wear, increases mileage and
enables a vehicle to track in a straight manner without pulling in one direction. It helps
in adjusting the angles of the wheel to the manufacturer specifications. The alignment
angles can also be changed beyond manufacturer’s specification because ―motorsport
and off road race may want angles to be adjusted beyond maker’s specification because
of many reasons.

9
SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS

The Ravaglioli 8-liner is a non-tower system which uses 8

sensors and features a smart phone or tablet remote control, and
as mentioned previously, the ability to quickly scan vehicles with
mobile sensors that be taken out of the alignment bay and used
in the parking lot. Another advantage of the tower-free 8-liner is
that it can be easily moved to different lifts in the shop which
provides maximum flexibility.

Ranger makes the Target 3Dpro which features a rapid scan

system. It uses a tower system which houses the LEDs, similar
to the Hunter equipment. A tower based system may be an
obstacle and create challenges with space limits in a busy
automotive shop.

The Hunter ProAlign alignment system is a popular alignment

system that also uses a tower configuration. It features a rapid
scan system.

10
 SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS
6.3 Process of Manufacture

It is very essential that all the wheels of a vehicle are completely balanced and aligned
with each other as far as possible. If these are not properly balanced, the dynamic forces
are set in motion. These forces increase the load on bearings, stress on various members
of a vehicle, and unpleasant and dangerous vibrations in members of a vehicle. Besides,
when the wheels of a vehicle are not properly aligned, the free movement of wheels
gets obstructed and tyres start bubbling, which results into lesser life for tyres. These
machines display faults on the screen automatically and are equipped with automatic
self check, user-friendly calibration and protection in wheel clamping.

Working Process:

 For Wheel Balancing: The machine is fully automatic. The wheel is to be loaded
on a turn table for balancing and sensor holders are attached to it. All front and
rear wheel values for the measured value printout are calculated in a single
wheel alignment run. Cordless remote control is provided with the machine to
enable the operator to operate the machine from the steering wheel. In these
machines, normally there is a castor-like adjustment and simultaneous display of
castor, camber and toe readings on computer screen. The alignment data are
displayed in figures and also in graphic form on screen.
 For Wheel Alignment: The measuring process in these machines is normally
automatic. After the wheel data is entered by potential meters and the machine
started, the measuring run is made automatically until the wheel comes to a
stand-still at the point to be balanced. The degree of precision for measurements
is determined as fine, medium or average. The data of rim width, rim diameter,
distance can be stored in the machine along with the method of compensation
(weight). The computer automatically runs the standard programme for the two
side balancing using hammer on weights. Special programmes for other types of
balancing are also possible in the machine. The size of the weight required and
the attachment point are calculated exactly and stored by the computer.

6.4 Quality Control and Standards

Developed according to the company’s own specifications

11
 SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS
6.5 Production Capacity (per Year)

Table 3: Annual Production Capacity

Wheel Balancing 5,400 Vehicles
Wheel Alignment 13,500 Wheels
Other Miscellaneous Repairs of Vehicles #
Motive Power 2.0 Kilowatts

6.6 Pollution Control

No Pollution Control device is required as this activity is non–polluting.

12
 SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS
7.0 MANPOWER REQUIREMENT

The unit shall require highly skilled service persons. The unit can start from 4
employees initially and increase to 11 or more depending on business volume.

Table 4: Manpower Requirement

S. No. Type of Employees Monthly Salary No of Employees
(UGX)
Year 1 Year 2 Year 3 Year 4 Year 5
1 Skilled Operators 1,500,000 1 1 2 2 2
2 Semi-Skilled/Helpers 800,000 2 4 6 6 6
1 Supervisor/Manager 2,000,000 0 0 0 1 1
2 Accounts/Marketing 1,600,000 1 1 1 1 1
3 Other Staff 800,000 0 0 0 1 1
TOTAL 4 6 9 11 11

13
 SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS
8.0 BASIS & PRESUMPTIONS

1. The Project is based on single shift working of 8 hours a day and 80% efficiency.
2. The cost of land & workshop has been taken at prevailing rates.
3. The cost of machinery and equipment indicated in the Profile refers to a
particular make and prices are approximate to those prevailing at the time of
preparation of the Project Profile.
4. The provision made in respect of consumables, personnel, and overhead etc., has
been made at the prevailing rates and are approximate only.
5. The rate of interest has been made @ 12% per annum.
6. The labour charges are based upon those prevailing in the local market.

14
 SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS
9.0 IMPLEMENTATION SCHEDULE

The main activities in the implementation of the project have been listed and the
average time for implementation of the project is estimated at 4 - 4½ months as many
activities can be taken up simultaneously.

Table 5: Implementation Schedule

S. No. Activities Time Required in Months
1 Acquisition of Premises _
2 Construction (if Applicable) _
3 Procurement and Installation of Plant and Machinery 2
4 Arrangement of Finance 2
5 Installation and Electrification 1
6 Manpower Recruitment and Start-Up 2
Total Time Required (some activities run concurrently) 4

15
 SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS
10.0 FINANCIAL ASPECTS

10.1 Cost of Project

The unit will require total project cost of UGX 143.70 million as shown below:

Table 6: Cost of Project

S. No. Particulars Total Value Annual
(UGX) Depreciation
(UGX)
1 Land 6,000,000 _
2 Building 56,000,000 1,400,000
3 Plant and Machinery 59,150,000 5,915,000
4 Fixtures and Electrical Installation 8,550,000 855,000
5 Other Assets/ Preliminary and Preoperative Expenses 4,000,000 _
6 Margin for Working Capital (for 2 Months) 10,000,000 _
TOTAL PROJECT COST 143,700,000 8,170,000

10.2 Means of Finance

The project will require promoter to invest about UGX 60 million and seek bank loans
of UGX 78.70 million based on 55% loan on fixed assets.

Table 7: Means of Project Financing

S. No. Particulars Amount (UGX) %age
1 Promoter’s Contribution 60,000,000 41.75%
2 Loan Finance 78,700,000 54.77%
TOTAL PROJECT FINANCE 143,700,000 100.00%

10.3 Working Capital Requirements

Working capital requirements [Year 1] are calculated as below:

16
 SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS
Table 8: Structure of Working Capital Requirements
S. No. Particulars Gross Amount Margin % Margin Amount Bank Finance
(UGX) (UGX) (UGX)
1 Inventories 10,049,368 40 4,019,747 6,029,621
2 Receivables 27,914,912 50 13,957,456 13,957,456
3 Overheads 31,543,851 100 31,543,851 0
4 Creditors 10,049,368 40 4,019,747 6,029,621
TOTAL 79,557,500 53,540,802 26,016,698

10.4 Profitability Calculations

Table 9: Calculation of Annual Turnover (@ 80% capacity utilization in Year 4 & Year 5)
Item Quantity Rate (UGX) Amount
(In UGX)
Wheel Alignment 18 Vehicles/ day × 300 Working days per Alignment rate of UGX 216,000,000
year (5,400 vehicles) 40,000/ vehicle
Wheel Balancing 9 vehicles per day (Considering 5 wheels UGX 10,000/wheel 135,000,000
per vehicle) × 300 days per year (13,500
wheels)
Charges for other Misc. Vehicle # 175,000,000
Repairs (including tyre
changing)
Total 526,000,000

Table 10: Profitability Calculations

S. No. Particulars UOM Year-wise Estimates
Year 1 Year 2 Year 3 Year 4 Year 5
1 Capacity Utilization % 50 60 70 80 80
2 Sales UGX 328,750,000 394,500,000 460,250,000 526,000,000 526,000,000
3 Less: Raw Materials & Other
Direct Inputs UGX -79,557,500 -95,469,000 -111,380,500 -127,292,000 -127,292,000
4 Gross Margin UGX 249,192,500 299,031,000 348,869,500 398,708,000 398,708,000
5 Less: Overheads except Interest UGX -207,600,000 -207,600,000 -207,600,000 -207,600,000 -207,600,000
6 Less: Interest UGX -15,740,000 -12,000,000 -9,000,000 -6,000,000 -3,000,000
7 Less: Depreciation UGX -8,170,000 -8,170,000 -8,170,000 -8,170,000 -8,170,000
8 Net Profit Before Tax UGX 17,682,500 71,261,000 124,099,500 176,938,000 179,938,000
9 Net Profit on Turnover Ratio % 5.38% 18.06% 26.96% 33.64% 34.21%
10 Profit on Investment Ratio % 12.31% 49.59% 86.36% 123.13% 125.22%

The basis of profitability calculation:

17
 SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS
The Unit will have capacity of thousands of vehicles like Cars/ Vans/ Jeeps/ SUVs etc.
per annum as displayed in Table 10 above. The prevailing service charges are ranging
from UGX 5,000 to UGX 40,000 per vehicle. The material requirements are mostly
utilities. In case of repair/ replacement material costs are charged extra at cost and
labor. Consumables costs also considered based on prevailing rate. Energy Costs are
considered at UGX 444 per Kwh. The depreciation of plant is taken at 10 % and Interest
costs are taken at 20% p.a. depending on type of industry.

10.5 Break Even Analysis

The project is can reach break-even capacity at 34.37% of the installed capacity as
depicted here below:

Table 11: Calculation of B. E. P. in Year 5

Fixed Cost (per annum) (In UGX)
Depreciation 8,170,000
Interest (Year 5) 3,000,000
40% of Fixed Costs (Overheads except Interest) in Year 5 83,040,000
Total 94,210,000
B.E.P Fixed Cost × 100
---------------------
Fixed Cost + Profit
Where, F.C. = 94,210,000 × 100
Profit = 94,210,000 +179,938,000
= 34.37%

18
 SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS
11.0 STATUTORY/GOVERNMENT APPROVALS

The unit will require registration as a business entity with the Uganda Registration
Services Bureau (URSB) to obtain the Memorandum and Articles of Association and the
Certificate of Incorporation. The unit will also apply for a Trading License from the
local urban authority (in this case KCCA). No other procedures are involved. Before
starting the unit will also need URA (TIN & VAT Nos.) registration for procurement of
materials and also for sale of goods. As such there are no pollution control registration
requirements, however the unit will have to ensure safe environment through
installation of chimney, etc. as per rules. Solid waste disposal shall have to meet the
required norms. Entrepreneur may contact the National Environment Management
Authority (NEMA) for pollution control procedures and regulations wherever it is
applicable.

19
 SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS
12.0 BACKWARD AND FORWARD INTEGRATION

As such there is not much scope for organic backward or forward integration. The
entrepreneur needs to ensure service speed to build up reputation, reliability and
quality of services rendered. Also, personal rapport of key persons can generate good
business volumes.

20
 SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS
APPENDIX I: WHEEL ALIGNMENT & WHEEL BALANCING SHOP TOOLS

 Truck dollies
 Welding equipment
 Water hose
 Engine hoist
 Transmission Service Tools
 Tool Box
 Transmission Jack
 Sheet Metal Brakes
 Meter
 Safety Apparels
 Pressure Washers
 Power Tools
 Motor Oil Flush
 Machine Generator
 Fuel System Cleaners

21
 SET UP & OPERATION OF A WHEEL ALIGNMENT & WHEEL BALANCING BUSINESS

Truck Dollies

Welding Equipment Engine Hoist

Transmission Service Tools

Tool Box

Transmission Jack

Fuel System Cleaners

Sheet Metal Brake

Motor Oil Flush

22