Team-BHP (https://www.team-bhp.com/forum/)

-   Indian Car Dealerships (https://www.team-bhp.com/forum/indian-car-dealerships/)

-   -   Hyundai to exit its 'Company Owned & Company Operated' Showroom in New Delhi (https://www.team-bhp.com/forum/indian-car-dealerships/164012-hyundai-exit-its-company-owned-company-operated-showroom-new-delhi.html)

Hyundai Motors India Limited has decided to shut its Company Owned and Company Operated showroom popularly known as Hyundai Motor Plaza (HMP) at Mathura Road, New Delhi with effect from 19th June 2015.

The company has already shut its body repair shop and has stopped taking the bookings of new cars as well. The company has also stopped taking cars for service at their service outlet which was running in the same premises behind the showroom.

The company has decided to appoint a new dealer who would run the showroom after renovations. It is rumoured that Mr. Bhatia who currently owns Delight Honda (Authorised Dealer for Honda Cars) and has a showroom just next to the Hyundai showroom has signed an agreement to run and operate the new dealership. It is also said that the name of the new dealership would remain HMP so as to avoid confusion.

This step would certainly effect the sales of the High End cars of Hyundai like Elantra and Santa Fe as many few dealers in Delhi or NCR would keep these cars for Test Drives or Display. This was the only place where one would get to see all the products manufactured by Hyundai under one roof.

A company person on the condition of anonymity said that the company outlet was finding it difficult to sell cars as they were not allowed to offer discounts where as the dealers were happily offering discounts. The showroom was witnessing a steep drop in the foot falls because of the Standard operating procedures that were being followed.

The staff that was on Hyundai payroll has been transferred to various locations while the contractual staff is being offered a Golden Handshake.

Picture Source: Google Images, Credit to the respective owner.

Thread moved from the Assembly Line to the Dealership Section. Thanks for sharing!

Good for Bhatia! He's got a ready showroom & running business, hopefully at a good price too.

On the other hand, I'm sure that the service standards of this COCO outlet were excellent.

I see dealerships as an unnecessary cost-adding layer between the manufacturer & customer.

1. If a manufacturer can efficiently run a 500 acre plant with 20,000 employees and manage logistics from sourcing pressed steel to R&D, operating a dealership has got to be a walk in the park. In the ideal world, manufacturers would run their own dealerships.

2. With the increasing penetration levels of the internet, it's only a matter of time before the shopping experience moves completely online. I'd like to touch & feel a new car before I buy it, but can schedule an appointment to do it down my house online, can't I?

Countries like the USA have strict laws protecting auto dealerships, we don't. If my bread & butter depended on my car dealership, I'd be worried about its long-term potential.

Thanks for the information mints21.

I doubt that the company first started the showroom to set a good model for other dealers but later realised that they cannot run the show better than the dealer.

Or maybe, the company was looking for this first hand experience only for a short period of time, as a source of information for re-framing their dealer policy.

COCO model may be OK for selling the commodities like petrol. Car dealership, IMO, shall have an owner who is a businessman. He can exhibit good balance of efforts, cost-cutting, motivation, flexibility and profits.

Many successful dealerships are owned by family businesses and they have a different DNA. At the scale of a dealership, it is difficult for the manufacturer to compete with their involvement, dynamism and risk appetite.

That's some knowledge to me, I never knew there were COCO outlets for cars. Have seen fuel outlets only. Sad that this initiative had to wind up. But the day isn't far when most people will prefer to have the cars to be experienced at the convenience of own homes. Besides the real estate cost in most cities is prohibitively costly.

I doubt that the fact that they would not be able to offer discounts was what killed it. If it was, Hyundai must have been extremely green to the retail business , which I'm sure they are not, looking at their sales numbers. Every manufacturer who opens an own branded showroom knows that he will not be able to compete with the local and online sellers who can offer discounts (official and unofficial) while his hands are bound from offering any sort of discount - this is Channel Management 101 - avoiding channel conflict.

Most manufacturers run such showrooms for brand building/marketing purposes mostly. My guess was that this would have been opened as such an exercise, but is being shut down due to some sort of cost cutting, or change in management priorities.
Running a showroom is a very capital intensive process
http://www.team-bhp.com/forum/indian...p-india-2.html
To set up a decent network, you would be looking at raising a very substantial chunk of equity/debt. Why bother when you can let someone else do it for you! Else you need to have an entire organization doing it, like Tata's concorde, or even better, have a monopoly on it, like Tesla - because running a single dealership is too much overhead, and diverts the organization's focus.

Have fond memories of Hyundai Motor Plaza from 2005 to 2009, when I owned an Accent Viva CRDi.

The showroom never offered discounts or freebies unlike all the dealers, nor did they overcharge and try to hard-sell accessories at inflated prices. At the time of buying the Accent (a very high-demand car at that time, with 2-month waiting periods and premiums charged by dealers for immediate delivery), I was assisted by a close friend who was a senior official at Hyundai Motors. He managed to get me a car in 3 days flat, with a 20k discount to boot - except, I had to pick it up from a dealer, because HMP could not offer me that discount (it is another matter that the dealer tried to sell me accessories at 3x market prices, for which he was suitably reprimanded later on).

Service quality in the earlier years was outstanding. But there was a gradual decline in standards towards the end of 2008 / early 2009, when a lot of churning happened in Hyundai's top management, and my friend quit too (maybe my car got extra attention in those days, belonging to the boss' friend! - but I had not heard of other customers complain either). There was also a technical training centre attached, where dealers' mechanics were imparted training on the various models.

There was hardly any sale from this showroom even 7-8 years ago, and I had then heard talks about the showroom being closed down, with only the service facilities remaining. Remember a Korean Hyundai top official chatting with me, being very upset about how Indians keep asking for discounts, which creates an environment of unfair business practices by the dealers.

Wonder what took them so long to actually take the call. I wish they'd transfer the showroom to a dealer, and keep the service centre on a company-owned-company-operated basis.