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