[TusharK]

According to a media report, Maruti Suzuki is planning to set up smaller Nexa showrooms and mobile outlets with an aim to reach customers in small towns and rural areas.



Reports suggest that the new showrooms will have a 2-car display but it will offer the same customer experience as any other Nexa dealership. Also, the investment required to set up these showrooms is expected to be lower than a conventional Nexa outlet.

At present, Nexa dealerships are restricted to top cities. There are over 360 outlets in more than 200 cities and they contribute to more than 20% of Maruti Suzuki's total sales. However, falling sales have prompted the company to focus on smaller towns and cities. The cost of setting up a dealership in tier-I cities has increased due to high real estate prices, while operational costs have also gone up.

Maruti is also building new showrooms at its own costs and leasing them out to dealers to minimize capital costs of its dealers.

Source: LiveMint

Link to Team-BHP News

[libranof1987]

I don't quite see the point of this. Nexa currently has four cars on offer; they now plan to have a sub-dealership for two of them?! Are the margins on Nexa cars are so abysmal that the cost vs. benefit analysis highlights that the operational costs (rent etc.) >> margin on cars sold.

Fair assumption that very few tier 2/3 towns have Nexa? As if not having every car available in a town isn't bad enough, not making every car available through a select channel is perhaps worse!

[AkMar]

Originally Posted by libranof1987

I don't quite see the point of this. Nexa currently has four cars on offer; they now plan to have a sub-dealership for two of them?! Are the margins on Nexa cars are so abysmal that the cost vs. benefit analysis highlights that the operational costs (rent etc.) >> margin on cars sold.

I think you have misunderstood. The news says that the new smaller dealerships will have display space for 2 cars. Nowhere does it say that these dealerships will sell only 2 of the cars available through NEXA.

[libranof1987]

Originally Posted by AkMar

I think you have misunderstood. The news says that the new smaller dealerships will have display space for 2 cars. Nowhere does it say that these dealerships will sell only 2 of the cars available through NEXA.

That'd perhaps be worse, isn't it. You can't have customers for two cars relaxing in an a/c environment, being tended to with beverages while those for the other two cars sweat it out in the sun and dust; all this in the brand's supposed exclusive channel.

Maruti might be gunning for something similar to what retailers do; Reliance for eg. They'll have a full-fledged Reliance Digital store and also something smaller (a stall/kiosk at the airport) that sell only a handful items. Selling two out of just four is incredulous.

[headbanger]

Originally Posted by AkMar

I think you have misunderstood. The news says that the new smaller dealerships will have display space for 2 cars. Nowhere does it say that these dealerships will sell only 2 of the cars available through NEXA.

Does it mean like an arrangement where 2 cars are displayed in store and 2 outside or in basement ? I mean at the end of the day, expectation to see a display car will still be there by prospective buyers. If true, that's a little sad way. Imagine whole family goes to see Ciaz only to see the display vehicle in hot and sweltering June sun outside OR pitch dark dirty basements trying to figure out the look and feel of vehicle.

[hserus]

Originally Posted by headbanger

Does it mean like an arrangement where 2 cars are displayed in store and 2 outside or in basement ? I mean at the end of the day, expectation to see a display car will still be there by prospective buyers. If true, that's a little sad way. Imagine whole family goes to see Ciaz only to see the display vehicle in hot and sweltering June sun outside OR pitch dark dirty basements trying to figure out the look and feel of vehicle.

I am sure they can park the other two cars in a covered basement parking or shed or something of the sort and bring them in for display or test drive when required. Or they can source it from the nearest large Nexa dealership in a nearby city. Most of these are going to be sub dealerships of a big city Nexa anyway.

[GTO]

The market has slowed down & the automotive horizon is going through drastic changes. Convincing any businessman to open big showrooms now is akin to trying to sell heaters / sweaters in this scorching summer .

I don't think we're going to see large showrooms for a while now, sole exception being Kia who has bagged quite a few contracts. The chaps at Citroen actually tried to put a positive spin on their small showrooms (related post).

Originally Posted by headbanger

Does it mean like an arrangement where 2 cars are displayed in store and 2 outside or in basement ?

Yeah, totally manageable. I'd guess that important cars like the Baleno & Ciaz will be chilling in air-conditioned comfort, while the S-Cross & Ignis will be sweating it outside.

[volkman10]

Maruti Suzuki closes gap with customers, brings in Nexa Terminal.

[arjab]

Saw one such small NEXA outlet when I was travelling in and around Siliguri. Frontage around 25-feet, but prominently visible from the main road. Two vehicles, one Baleno and one S-Cross was displayed inside.

An approach like this makes rational sense. With high real estate prices a smaller , less expensive outlet means lesser capex spend on part of the dealer.
Also, another aspect is that customers in smaller cities feel more "comfortable" entering less ostentatious and grandiose looking outlets, as they feel less intimidated by the overall milieu.