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Old 29th October 2013, 12:14   #1
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Default Average Sales / Dealership : Indian Car Manufacturers


NOTE: If any of you can, please share (with source) the exact number of dealerships for the brands marked with an * here. Thanks!

Last edited by GTO : 30th October 2013 at 12:55. Reason: Updating Chevy & Tata dealership numbers, thanks to BHPians!
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Old 29th October 2013, 12:34   #2
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Default Re: Average Sales / Dealership : Indian Car Manufacturers

Very interesting statistics . I think we can safely categorise the dealership brands into 4 categories:

High volume + Good profits:
  • Hyundai (i20, Verna, Elantra are premium priced). Servicing costs are higher as well. Maximum average sales / dealer of any brand. If you were to put your $$$ on a dealership, it would be this. Future potential includes compact SUV, 7-seater MPV, compact sedan etc.
  • Mahindra. Mostly UVs costing 8 - 10 lakhs and over. Sales / dealer on par with Maruti. Rural area dealerships cost less $$$ to operate.
  • Renault. Surprised? Don't be. 4th highest sales per dealer. Entirely driven by the Duster story which is premium-priced, thus resulting in good margins too. Problem is, Renault is currently looking like a 1-trick pony and the Duster is already losing steam in the wake of competition.
  • Toyota dealers make a chunk of their profits off the expensive Innova & Fortuner. Discounting is far & few between. However, the Liva & Etios have left them disappointed.

High volume + Thin profits:
  • Maruti. Mostly hatchbacks and sub-8 lakh cars. Slim margins yet high turnover. Needs popular products costing a million rupees and over. Excellent earnings from the servicing business. Maruti's maintenance costs aren't as low as you'd think.
  • Honda. No 6 on the list in terms of sales / dealer. Most sales made up of competitively priced Brio & Amaze with slim margins (compared to the ol' days of City, Civic etc.). Honda's hitting 10K / month now, and dealers will average 64 cars / month over the coming calendar year. More diesel cars in the pipeline.

Middle-of-the-way brands:
  • Tata dealers move an average of 45 cars / month. Margins on slow-moving passenger cars will be thin, but made up by that of the UVs. Dealers selling far lesser than they used to earlier. New products desperately required.
  • VW. Mostly Polos, followed by Ventos and a sprinkle of juicy profits from the 20 lakh Jetta.
  • Ford. Even though Ford's volumes have shot up in the last 3 years (Figo & EcoSport), the dealership network is unnecessarily strong. Net result of 24 cars / dealer.
  • Chevrolet & Nissan. These dealers might be barely scraping through. Either they're making minuscule profits or incurring losses. Chevy has way too many dealers for its current sales volume. Notice how both Americans suffer from the same symptom.
  • Skoda's market share has dipped tremendously in the last 2 - 3 years. The only saving grace for dealers is that margins on the Octavia & Superb are fat.

Poor volumes + Thin profits (loss making):

This is the category where manufacturers subsidise the dealer's operational costs to keep the lights on.
  • HM-Mitsubishi. Enough said. With an average of 3 cars / dealer, it's no wonder that these are a disappearing breed.
  • Fiat. Two products, both heavily discounted & flopped.

Related Thread:

Link to Businessworld Article:

Excerpts
  • One-in-five dealers expected to make a loss, up from 9%, in the financial year 2012-13. Only 44% of dealers anticipated to make a profit, down from 62% the previous year.
  • Toyota and Maruti-Suzuki were notable for the high ratings their dealers gave on measures around the support and concern provided by the OEMs on their business requirements.
  • After-sales and the spare parts represent more than 40% of the revenue for dealers. New car sales account for only 28% on average.
  • The top three (car) rejection reasons are related to high fuel consumption, the purchase price and thirdly the exterior design.

Last edited by GTO : 30th October 2013 at 10:37. Reason: Typo
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Old 29th October 2013, 12:54   #3
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Default Re: Average Sales / Dealership : Indian Car Manufacturers

Quote:
Originally Posted by GTO View Post
Very interesting statistics . I think we can safely categorise the dealership brands into 4 categories:

[
Interesting - another thing to look at may be the installed base of vehicles for each of the brands (maybe cumulative 5-7 year sales). This would be some indicator of the service/ spares business. Going by personal experience at TASCs in Bangalore, they are generally crowded with vehicles for service/ repair. Would be generating decent profits for the dealers/ service centers
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Old 29th October 2013, 13:43   #4
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Default Re: Average Sales / Dealership : Indian Car Manufacturers

Quote:
High volume + Thin profits:
[list][*]Maruti. Mostly hatchbacks and sub-8 lakh cars. Slim margins yet high turnover. Needs popular products costing a million rupees and over. Excellent earnings from the servicing business. Maruti's maintenance costs aren't as low as you'd think.
Maruti is working on improving profitability, with both reduced costs and increased pricing. Please see link to Mint article here.

http://www.livemint.com/Companies/Xi...import-co.html

Last edited by GTO : 29th October 2013 at 14:29. Reason: Fixing quote
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Old 29th October 2013, 13:46   #5
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Default Re: Average Sales / Dealership : Indian Car Manufacturers

Quote:
Originally Posted by GTO View Post
Very interesting statistics . I think we can safely categorise the dealership brands into 4 categories:

High volume + Good profits:



High volume + Thin profits:


Middle-of-the-way brands:

[
Poor volumes + Thin profits (loss making):

T
So what is the way out? My take!

HVGP

These folks need to continuously up their game. The i10 Grand is a clear measure of this. Renault might lose it if they do not create significant brand value, the CMFA platform might pull a few surprises if the branding is right. They should make the latest Logan derivatives available at a realistic price.

HVTP

A good midrange SUV will help Maruti. Large cars do not cut it for the brand although the SX4 replacement could challenge the forthcoming Honda City (next big battle!)

Honda - the forthcoming City could help assuming it is a leap ahead and not an incremental improvement. Unless Honda make a "superb" Accord, Honda's premium branding will diminish

Mahindra is a strong niche player, the Verito should be chopped, no demand and hopelessly outdated

All Toyota need is a powerful corolla diesel and the Vios

MOW

Tata need new models badly else it potentially becomes an also ran.

VW needs a smaller car to bring in volumes, if skoda gets it right, then there is economies of scale for competitive pricing

Ford always depends on a one trick pony - Ikon, Figo, Ecosport. It needs a small car, a new Figo and may be a well priced Focus saloon to compete and provide reasonable margins

Chevrolet - if you notice, most large dealer principals now use the smaller shabbier spaces for Chevrolet - crappy branding, insipid products (Beat and Cruze excepted) spoil thegame, that too consideirng GM have huge resources in India for R and D

Nissan - Datsun might pull in more volume for little margin. Only hope is if the Sunny is sold in big numbers to the fleet market. Terrano and X Trail might make life a little easier though.

Skoda blew it with the Fabia pricing and service. If they can switch to the euro Rapid and next Fabia, we might see some action.

PVTP


Mitsubishi need to market themselves better, stick within their niche and also make pickup trucks. A friend of mine went ot buy a Pajero but chanced upon the Pajero Sport only since he found one in the showroom

Fiat – Keen pricing is not enough, service needs to be good but it it needs to launch a highly desirable car to get people back into the showrooms. Jeeps will provide some profit only if the marketing is good.

If the MOW and PVTP manufacturers want to stay on then they should allow multi-franchising in order to offer a complete product range and broader support. It works in the US, it works in India with white goods, why not for us motorists

Last edited by ajmat : 29th October 2013 at 13:52.
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Old 29th October 2013, 17:26   #6
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Default Re: Average Sales / Dealership : Indian Car Manufacturers

I have query on the number of dealerships being operational for the full year and the city based as some dealerships gets added and some move out. A tier I city dealership will do more numbers but will require more investment too. Tier II city dealership will do lesser numbers and the investment would be lesser too.

For the sake of an example - Fiat did not have all the 79 dealerships operational for the past 12 months. The average sales per dealer number can give a skewed picture. Bangalore does a good 120 numbers of the total sales with 3 dealers. But having just two products and more dealerships did not get Fiat mind boggling numbers in terms of sales

Nevertheless, a good perspective to the numbers of dealers to sales and GTO's analysis is spot on
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Old 29th October 2013, 18:56   #7
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Default Re: Average Sales / Dealership : Indian Car Manufacturers

Very interesting thread.

Profitability at Hyundai dealerships has translated into larger and better 3S facilities (as seen in Bangalore) and the customers have a better buying experience.

Profitability leads to higher investments for newer and better models. The new models are also priced better because customers feel happy with the latest technologies and these cars are perceived to be VFM.

Important additional revenue streams for Hyundai over say Maruti, is that parts can be sourced only from the dealerships and there is no concept of Authorised Service Station.

Cheers

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Old 29th October 2013, 19:55   #8
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Default Re: Average Sales / Dealership : Indian Car Manufacturers

Parrys,

Awesome data there! gives a very good insight.

One could use this to his/her advantage viz. push the dealership hard to extract a good deal! . Of course will apply to the ones that have lower average sales per month.

If you are doing some kind of group buying, then you can surely get the dealer to throw in a lot of freebies perhaps!

Thanks!
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Old 29th October 2013, 20:30   #9
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Default Re: Average Sales / Dealership : Indian Car Manufacturers

Wow Parry, a very nice piece of information indeed. The next logical thought to this is how much do these dealerships make from selling each car and their ROI model.

Also another interesting fact is that it is Hyundai selling most cars per dealerships and not Maruti as imagined by default. The laggards should learn a lesson or two from them to shore up their numbers or become extinct soon.
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Old 29th October 2013, 20:35   #10
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Default Re: Average Sales / Dealership : Indian Car Manufacturers

Interesting analysis, however adding another dimension to it would be to consider one more parameter, i.e. the number of models in the market.

It would be interesting to see if the market dimensions change in case we account for the number of models in the market too. That would give us a more specific idea on how effectively the company as a whole is performing. For eg. Chunk of Maruti's numbers come from 4 models, but there are quite a few models that are not moving. Taking into account the number of models too would give us yet another dimension to the complete picture.

I dont intend to say that this model is flawed or anything and I do agree that by adding a lot of models a company is increasing their top line, but by dividing the number of cars per dealership with number of models in the market, we can probably identify companies that have potential and are not featuring in the top just because the number of models are less.

Also in conjunction with the average number of cars per dealership, if we consider average number of cars per dealership per models we can probably identify which companies are in a whole having a lot of non productive products.

This is just an idea and I have not done any calculations as yet and dont even know that if such a calculation would make any difference to the final picture or even if it would be of any use.
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Old 29th October 2013, 20:42   #11
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Default Re: Average Sales / Dealership : Indian Car Manufacturers

Since Parrys asked for a confirmation, MSIL had a total of 1191 sales points(Need not be dealers IMO) as on 1st March 2013 and this info is obtained from one of the brochures I had.

Last edited by GTO : 30th October 2013 at 15:11. Reason: Quoted post deleted. Thanks for sharing the Maruti numbers
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Old 30th October 2013, 10:42   #12
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Default Re: Average Sales / Dealership : Indian Car Manufacturers

Chevrolet has 285 dealerships in India (Source: we are an automotive retail consultancy, if that works). The website for obvious reasons is not updated.

These are some really interesting figures. The analysis by GTO is the icing.
What would be even interesting is to see how skewed are these figures towards sales in metro cities compared to Tier 3 and Tier 4. Which will also speak of the readiness and the acceptance of these brand in diverse markets.
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Old 30th October 2013, 12:12   #13
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Default Re: Average Sales / Dealership : Indian Car Manufacturers

Dealer figures have been revised.

Thanks to Maverick & Insouciant for providing the dealer numbers for Tata & Chevrolet respectively.

Last edited by GTO : 30th October 2013 at 12:57.
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Old 30th October 2013, 13:17   #14
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Default Re: Average Sales / Dealership : Indian Car Manufacturers

Thanks for the statistics.

It will be interesting to see if High volumes & thin margin categorized cars have frequent service intervals. The way I see it, apart from the immediate profit made when selling a car, genuine accessories + service bills will definitely add up and make up for the profit sacrifice made on the ex-showroom bill.
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Old 30th October 2013, 14:48   #15
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Default Re: Average Sales / Dealership : Indian Car Manufacturers

Interesting data points parrys. Appreciate the efforts taken to built the details and share with us all. This is quite helpful.

Couple of points :

(1) the data doesn't take into account the metro/non-metro break up : so sales per dealer will appear positively skewed for Honda/VW/Renault/Toyota given more cars sold in these markets. However, given limited product portfolio, the avg sales are still lower than leaders. On the other hand, companies like Maruti/MM/Hyundai (though the avg sales are higher), will include the lower sales/dealership in the smaller cities/towns. What in effect I am highlighting is the difference in sales/dealership in the metro/non-metro markets. Similar effect will be visible with the newer entrants expanding their network outside the top cities (avg sales will drop).

(2) the data doesn't account for the DSA/associate sales (sales that happens outside the dealerships)

(3) while calculating the profitability/viability of various manufacturers' dealers, we also need to factor in the age of the dealership (no of years in operation). Dealers of Maruti/Hyundai/MM have seen high growth cycles and are geared much better for weak demand times, like present.

(4) Car park (or population) makes a huge difference as that helps generating additional income from insurance renewal/accidental damages/paid services/used cars.

Believe me (and this is with some experience of interacting with dealers), most of the dealers run the show profitably, earning profits from service/spares/incentives/accessories/insurance/used cars (associated revenue stream). New car sales help them build the customer base and hence associated revenues consistently, while an ASS/Service center has to attract customers away from the dealership from where they have purchased the vehicle. If the dealers won't be making money (and they are hard core businessmen, not enthusiasts - true in ~80% cases) they would have shut shops and moved on. I have known owners, for many years now, expanding with other brands. A close friend and an enthusiast himself has managed to break even withing 2 years (excluding the land cost) !!!

Hope this is relevant and adds value

Sorabh
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