Standalone Dealers May Shut: Are Multi-Brand Dealers the Future?

[TAUREAN CZAR]

Do you think that most of the neighbouring dealerships are doing good? Think again.

Most of the dealerships are running at losses only saving graces are some gains in services and selling add-ons/ non-OEM stuff. If a car is a slow seller or previous year models and stocks pile up, the dealer may have to clear stock off at his own expenses as manufacturers rarely entertain clearing stocks with the distributors. There have been instances where manufacturers push stocks forcibly on dealers to clear up the piled inventory at the factories.

Maybe, except Maruti and Toyota, i think most of the car dealers should in this position. The cost of training the sales and service advisers and retaining them will be another huge cost overruns. Toyota dealers have an extremely long break-even period IMHO, but they somehow keep their dealers happy and loyal.

In the developed world, read US and EU, except for a few company run display centres most of the showrooms are multi-branded outlets which stock most of the brands' vehicles. It is also easy for the customer to walk into one and choose from the wide range of choices he is displayed with. Comparison and back to back test drives will enable a quicker pick of the lot. Also in India multi-brand service centres have sprung up. like Bosch, Carnation Auto, MyTVS, etc., who have a good expertise on all kinds of vehicle and get authentic spares and engine oils and lubs.

Now in such environment, single brand dealers are facing a tough time and such pains (as in the first para) are costing them huge losses and many are on the verge of pulling down the shutters. Also e-retailing in the car space has also started eating into the retailers margins. (TATA-Big baazar for the Nano and Mahindra-Sanpdeal for the Scorpio)

So the future of retailing is now multi-brand sales and service centres. This piece of news will explain you in more detail how the new emerging market trends are dealing a blow after blow to the traditional car dealers. Also the internet (or say IIN ) also has been helpful a lot for the prospective customer on choosing their dream car.

Car Dealerships Could Close Down In A Few Years, Here Is Why

 

[Akash1886]

Re: Stand alone dealers may shut - Are Multibrand dealers the future?

TC, even Maruti ASC has been facing this issue since long. My uncle had to sell inventory worth 3 lac for 80k to open markets. Multi brand dealerships like we have in used cars is surely helpful. This trend should pick up. E-sales of cars is a big reason surely for decline of single brand dealerships but at the end its customer's choice of how and where from he or she shall purchase. You see same is the scene in consumer goods sector too today. People line up at stores like Vijay Sales, Hometown et al instead of a brand's own showroom mainly due to choice factor. Also e-portals like snapdeal, homeshop18 etc have further made it worse for single brand showrooms to exist. Hence, simply in Indian customer's context the major factor is choice and price which is sorely missing in single brand outlets right now.

Regards

Akash

 

[generalmax]

Re: Stand alone dealers may shut - Are Multibrand dealers the future?

If this happens the sooner the better.Car dealers out of pressure from the manufacturers and to get the investment back ,plays all types of strategies and the end loser is the customer.Maruti dealerships are real haven of organized cheating centers by due of there long term existence.

@Akash e commerce portals are not killing the market.If somebody wants a test drive where will the customer go?They definitely needs to go to a dealership.
Actual problem resides with the manufacturers.They give unreal targets to the dealerships and unhealthy competition between dealers. I had once talked to an MD of a Maruti dealership,who got one of the best performance award for the year.I congratulated him for his success .He said "thanks, but for us next year targets is an issue ,I have no idea how I will get it with so much of competition". His face was not showing happiness.

 

[Akash1886]

Re: Stand alone dealers may shut - Are Multibrand dealers the future?

@Akash e commerce portals are not killing the market.If somebody wants a test drive where will the customer go?They definitely needs to go to a dealership.

See buddy, Test drives is something which can either be done at dealer or the car comes home for a TD, real issue is with purchase. Manufactures set sales target on monthly/annually basis and not the TD targets.

Actual problem resides with the manufacturers.They give unreal targets to the dealerships and unhealthy competition between dealers. I had once talked to an MD of a Maruti dealership,who got one of the best performance award for the year.I congratulated him for his success .He said "thanks, but for us next year targets is an issue ,I have no idea how I will get it with so much of competition". His face was not showing happiness.

A Sales job is like that only. At the end the Sales Team often suffers. The dealers are a subsidiary of OEMs so the dealers need to align themselves as per OEM. In today's competitive market, one can't expect any OEM to just rely on physical dealerships. Every OEM is looking out for other portfolios that can help it sell the product be it a CAR or any other item. Therefore, E-commerce tie-up with automobile OEM does have certain impact on the dealers. How many people do actually buy accessories from Dealer? Maybe out of 100 only 5-10 and on the other hand, the accessories sold on e-portals for a car generates more revenue for the OEM. The reason why these dealers are given "un-real" target is because of rising competition and the reason why these dealers are cribbing is because they are still not conversant with the targets and in 2015 they still want the ease of 2005 which is impossible and not going to happen ever. So, the easiest way out is shut the dealership!

Regards

Akash

 

[TAUREAN CZAR]

True. Let us take the example of our forum. Many of us were in search of cars and landed in our forum. The advise and feed back from existing owners have helped many making a good purchase rather than a sheepish follow or blind faith just in one brand. We come to know from the existing ownership and dealers around that area for the best available service.

E commerce is surely a boon for customers but also a big blow for retailers too as they have to create necessary infrastructure to entertain customers where as an e-tailer can sit in any outskirts region or a small underground godown and present all his products on the screen. He just requires a computer to take orders and dispatch goods. So it is cheaper for him to maintain stock and will sell at cheaper prices.

Similarly multibrand dealers get an advantage of space where they can stock multiple brands in one space and sell them. He will be at advantage of squeezing maximum from the manufacturer and pass on better discounts to the customers too.

 

[TAUREAN CZAR]

Now VESPA too has moved to online sales.

Just like the Mahindra for the Scorpio, now Piaggio's Vespa too has tied up with SNAPDEAL to offer its vehicles on online sale.