Re: ETAuto Videos: Industry leaders speak on challenges & opportunities for Indian car dealerships Talking mostly about great 'customer experience' is what you would expect in a public industry meet shown on a Business Channel, but privately (behind closed doors) things like revenues, profitability etc is what matters to these guys.
Car dealership is a tough business to be in because of high monthly expenses (salaries, rentals etc) and customer expectation of a Rs. 4,000 bill for the service of Rs. 10 Lac car. A restaurant has good pricing power (can increase the price of Masala Dosa from Rs. 30 to Rs. 45 if required), but a car dealership does not.
Car dealership revenues are primarily dependent on -
1) Good demand for product (new sales). Dealer does not have much control over this - ask Ford, Chevrolet, Nissan or Fiat dealers.
2) How good the sales advisors are in pushing unwanted stuff down the throat of customers.
The latter can really mess up customer experience. These days, visiting a car dealership for service is as fun as going to dentist or listening to the sales pitch of a "life insurance advisor".
1) I think the real challenge for the dealers is to somehow remove the perception that car service costs have to be equal to one full tank of petrol. Do a good job of servicing but charge appropriately.
2) Some sort of industry consolidation, entry of large players (Mr. MoneyBags) and listing in the stock markets to access public funds can help a lot in increasing profitability. Example: CarMax (NYSE) has $15 billion in revenues and $500 million in profits and a marketcap of $200 billion. There are many listed companies in Europe too.
When dealer is making decent money, customer satisfaction will generally go up. There is less incentive for the dealer to push for "teflon coating" or "brake cleaning" (and hence ruining customer experience) if he is already making decent profits. |