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Old 27th September 2007, 13:47   #31
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They dont? That means if you have 50 Hondas lying in your dockyard...they are costing you 5 lakhs a month in interest alone!!

No wonder dealers want to move inventory so fast. Or keep only certain colours in stock while the rest are "ordered".
I think it justifies why we have only one Honda dealer for whole Hyderabad and Secunderabad together.
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Old 30th September 2007, 00:10   #32
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I heard that that the free services offered are actually paid by the car company to the dealer. so if you buy your car at a certain dealer and get the free services done at another, you would generally see the newer service station smiling at you. however, if you do that for your paid services, the smile decrease slightly.

anyone can confirm this ?

if this is true, then an additional margin of 5-10k for the 3 (usually) free services.
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Old 1st October 2007, 13:12   #33
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cos very less number of people buy accessories from dealers cos they are far costly
You will be surprised at the number of corporate / company-owned cars that buy accessories from the dealership itself. Even many privately owned cars dont want to go through the hassle / risk of getting accessories fitted by the roadside pappus.

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I heard that that the free services offered are actually paid by the car company to the dealer.

if this is true, then an additional margin of 5-10k for the 3 (usually) free services.
Yes they do get reimbursed. But your numbers are far too optimistic.
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Old 30th March 2008, 22:45   #34
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Default Planning to take a Dealership for Honda

I am actually planning to take a Dealership for Honda.

I want to know will it be profitable ?

What will be the magin of profit.

Expected Investment for it.
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Old 6th August 2008, 02:06   #35
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Originally Posted by crkishore View Post
I heard that that the free services offered are actually paid by the car company to the dealer. so if you buy your car at a certain dealer and get the free services done at another, you would generally see the newer service station smiling at you. however, if you do that for your paid services, the smile decrease slightly.

anyone can confirm this ?

if this is true, then an additional margin of 5-10k for the 3 (usually) free services.
free service money is included in dealers margin which they include in with new car discount and if you take your new car free service to another dealer then that dealer gets paid by the selling dealer normally company does all this credit and debit so that no dealer defaults dealers never earns any money from new car sale and free service they don't gain anything they just try to get free service car of another dealer to minimize there loss.

Last edited by Rehaan : 6th August 2008 at 12:43. Reason: quote fixed
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Old 6th August 2008, 02:25   #36
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I am actually planning to take a Dealership for Honda.

I want to know will it be profitable ?

What will be the magin of profit.

Expected Investment for it.



if you want to take honda dealership expect investment of 25 to 35 cr or even more and margins you get in a city is 18k and you have to keep atleast one month stock 100% paid and for that you have to find very big and safe godown normally dealers are giving 10 to 15k discounts so you will earn only 3k or acording to market condition it can even go in minus and be prepare it will take atlest 5 to 7 years to just break even.
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Old 6th August 2008, 10:07   #37
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I tried to get a Tata Motors Authorized Service Point. They quoted Rs.9 Lakhs for the equipment. Land and building are extra. Also, they wouldnt give you spare parts directly from Tata Motors unless you do business worth 20 lakhs with them. I dropped the idea. For that kind of money, I can easily setup a far more profitable business.
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Old 6th August 2008, 10:20   #38
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it can even go in minus and be prepare it will take atlest 5 to 7 years to just break even.
Nasty situation for the budget brands. No wonder so many dealerships have shut shop in the last 2 years. Come to think of it:

1. If you own the land, leasing it out will prolly give you the same returns. And peace of the mind.

2. If you invest those multi-crores sensibly (elsewhere), you'd make more $ than the dealership could ever dream of.

3. If you have the land + the capital, there are several other business opportunities which can give you far better returns.

Again, there will always be exceptions to the rule. I am told that dealerships of some brands (Benz, Toyota etc.) do extremely well for themselves.
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Old 6th August 2008, 11:19   #39
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Companies force dealerships to invest heavily in decoration of showroom space which is unproductive. In case of anything going wrong, the dealer cannot reclaim much of what he had setup in terms of finishing. This trend is same even in towns and districts. A 30-35 lakh investment for a two wheeler showroom is a bit too much. I have seen a person go in for Insolvency Petition . He invested heavily in Yamaha showroom. That was the phase when the RX 100 was stopped and the RX 135 isnt doing well. He setup showroom just as the YBX was launched. Both YBX and Crux didnt do well and he went under.
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Old 8th August 2008, 07:57   #40
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I had recently explored this avenue. Spoke to some people in the business. Everyone in the business says "stay away" (read we don't want competition)

The main cost of running the dealershop / workshop is the land. With prices of land being what they are today, it does not justify the investment as GTO said, "if you have the kind of capital, there are other avenues to make a hassle free living".

What about the passion GTO ? U are running this website because of passion & not profit .

So yes the dealership business is capital intensive & hassly but at times passion rules !!! Though honestly I have yet to come across any dealer BUT one who is running the show for passion (needless to say his pocket are DEEP).

I think one can look at a minimum of 15 Cr to setup shop today. The figure is variable depending on location / ownership / tenancy etc etc



Cheers
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Old 8th August 2008, 11:17   #41
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What about the passion GTO ? U are running this website because of passion & not profit
Aha, very valid point and one that we overlooked. But again, Team-BHP's part-time commitment allows me to run my education business full-time for a profit. A car dealership ain't no part-time job
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Old 8th August 2008, 13:09   #42
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Thanks GTO for sharing some gems.

Good news is that some luxury brands are coming. And they need businesses to import them. Exotics, Specialists, Trophy-motorcycles.

But only for medium to large businesses. With a healthy appetite for funding. And extra dozes of passion for this exciting, prestigious business.

PM me for more!
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Old 8th August 2008, 15:32   #43
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What about the logic I once heard about how some people are in dealerships as status symbols, esp people with non-taxable sources, and who use it to convert black from white? So the losses are a minor blotch on the overall profits, and bring limelight/respectability as well.

Comments, GTO?
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Old 8th August 2008, 17:17   #44
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My 2 cents -

In Hosur (a tiny town near bangalore) there is a brand new Maruti shwrm - Amman Cars. The shwrm itself is nearly on the 10th KM after hosur on the chennai GQ (which is FAR by town standards).

The land spread of this shwrm (+ service station at the rear) is around a acre - of course OWNED by the guy. Over and above this the guys has spent nearly 2Cr on the contruction/civil work - another 2Cr on the equipment - nearly 1Cr as working capital. So expect a BARE MINIMUM of 5C + Land. (Land cannot be quantified, bcoz land differs place to Place)
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Old 8th August 2008, 17:21   #45
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PM me for more!
Why PM?! Put it up here so that everyone can benefit from the information.

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What about the logic I once heard about how some people are in dealerships as status symbols, esp people with non-taxable sources, and who use it to convert black from white? So the losses are a minor blotch on the overall profits, and bring limelight/respectability as well.

Comments, GTO?
Well, thats applicable to any business, isn't it? I know black-to-white fund managers (believe me, there are) use the entertainment, hospitality & export-import industries to convert. But this is the first time I am hearing of a car dealership being used for this purpose. Quite frankly, I think it will be difficult for them via this route. On the land acquisition, sure....but I'd presume its hard for black money to see a place in any other area of a car dealership.
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