Some Dynamics of How Dealer-Automaker Relationships Work in India

Mohit Arora

A strong relationship between automakers and their dealers is the core for success of any car brand in any market. A car model may receive rave reviews, have a good track record and advanced technology, but without an invested dealer to represent the brand well, the brand’s model will not flourish.

The joint venture between Tata and Fiat in India is one interesting example. While Tata Motors was experiencing strong growth in fiscal year 2011, Fiat was experiencing a double-digit decline in sales. In widely published interviews, Fiat officials said they felt that there was no real attempt at the dealerships to promote the Italian brand and therefore decided to end their venture of selling Fiat models at Tata dealerships.

While we don’t intend to assign blame of the breakup for the joint venture, and while it remains to be seen whether the dissolution of the partnership is a good long-term move for Fiat and Tata, the example does provide an important illustration about why automakers need to have strong alliances with their dealer networks. Continue reading ›

Dealers in India Offset Slowdown with More Diverse Revenue Sales Sources

Mohit Arora

Dealers in India expect to generate more than one-third (34%) of their revenue this year from sales of parts and accessories, auto insurance, and commissions on loans, which is an increase from 22% in 2011, based on analysis from our 2012 India Dealer Satisfaction with Automotive Manufacturers Index Study.

Finding new revenue opportunities is a way to manage risks of a slowdown in the auto market since the growth rate of passenger-car sales in India this year has been the weakest since the 2008-09 fiscal year, when sales were hurt by the global financial crisis.

On a more positive note, this year’s study finds that overall dealer satisfaction with automakers has increased 71 points to 820 (on a 1,000-point scale) from 749 points in 2011. According to the study, satisfaction improves across all nine measures,* with the largest improvement in support from the manufacturer—the factor with the most weight in our index. Continue reading ›

Growth in India Auto Market Spurs Dealer Optimism

India’s light-vehicle market is growing rapidly, and the changing market environment underscores the need for automakers operating in the country to develop strong and competitive dealer networks.

Mohit Arora

In our initial study to measure dealer satisfaction with auto manufacturers in India, we find that more than 60% of dealer principals or general managers throughout India said they expect to be profitable by the end of the fiscal year. In addition, more than 80% of respondents who expect a profit this year indicate that their 2011 profits likely will exceed 2010 profits, based on findings in our J.D. Power Asia Pacific 2011 India Dealer Satisfaction with Automotive Manufacturers Study.SM

India Dealers Expecting 2011 Profits are More Satisfied with OEMs

It’s no surprise, then, to find that the staffs of dealerships who are expecting to be profitable this year are more satisfied with their vehicle manufacturers or importers and the automotive sales business than those who expect a financial loss in 2011. In fact, satisfaction among the dealers who expect to earn a profit averages 780 (on a scale of 1,000 points), which is 170 points higher than the satisfaction average of 609 for dealers expecting a financial loss. Continue reading ›