TATA Motors, India’s second-largest car maker, faces the prospect of a churn in its distribution network with rival companies luring away two of its top dealers by offering better margins. A slow-pick up in sales of Fiat Auto, whose vehicles are distributed in India by Tata Motors, may also have contributed to the exits. Pune-based BU Bhandari Auto , which became a Tata Motors dealer more than a decade ago when the automobile major entered the passenger car market by launching Indica, will distribute products of German car-maker Volkswagen , which is eyeing a larger market share in the booming Indian automobile market. Delhi-based dealer A-One Motors , promoted by Yadur Kapur, will focus on distribution of cars from Honda, BMW and Rolls-Royce. The promoter of Bhandari Auto, Shailesh Bhandari, is currently in Germany to get a feel of the operations of his new partner. These two dealers together contribute 5-6% of Tata Motors’ passenger car sales, according to automobile industry executives. Tata Motors sold 1.3 lakh units for the period from April to September. The Tata Motors spokesman confirmed the exit of the two dealers, but said that only seven dealers had left in the past three years. “This has nothing to do with their business or relationship with Tata Motors,” he added. Over the past six months, it has added 10 new dealers taking its total dealership network to 247 as its passenger car sales have been growing at the rate of 44% till September this year, the spokesman said. The company’s new CEO Carl Peter Forster is understood to be overhauling the entire passenger car segment by adding more dealerships to push volumes in a growing market. Some of the existing ones are expanding network. “Margins are improving, and in the product schemes offered by the manufacturer, the contribution of the dealers has significantly reduced,” said Vinod Sharma, MD, Fortune Motors, a major distributor of Tata Motors vehicles in Maharashtra. Car sales in India are set to rise 12-13% in 2010-11. The Society of Indian Automobile Manufacturers (SIAM) forecast car sales to rise to 1.7 million units in the year to end March 2011. Stagnating sales from Fiat was an issue, said one of the dealers. “There have been stagnant margins with our A-One business that caters to Tata Motors, while they are much higher in our other dealerships. The overall effect is also coming from Fiat cars whose sales have not grown as expected,” Mr Kapur said. Sales of Fiat cars dropped 8% to 11,863 cars during the past six months. “When we take up dealerships, we never leave it. However, this is a commercial decision,” said a senior offical at BU Bhandari. Multinational companies like Volkswagen, BMW, Nissan and Audi, which are ramping up their India presence, are poaching dealers of Tata Motors, Hyundai and Maruti-Suzuki to access central locations in major cities. These players are offering 6-8% of the price of a car against 3-4% being given by Indian majors. Not many new entrepreneurs are venturing into the auto dealership business as it involves heavy overhead costs. The dynamics of the auto dealership business is undergoing a change with companies forcing dealers to dole out freebies leading to major decline in margins. |
Originally Posted by jinojohnt
(Post 2114300)
IMO, 'other car companies luring away dealers' is not good news for the Customer. |
Originally Posted by ACM
(Post 2114358)
Won't Read too much into this. 1) Dealer who exit are at times kicked out by the vendor company - that is mostly the case. Else they do add on companies but do not need to give up a company dealership to do this. Case to point. 1) Bharti Motors - Stopped GM (chevrolet) and have moved to TATA & FIAT. This happened to coincide with an errant dealier malpractice news. 2) Skoda kicked out Numer Elins - The same guy has now started a multi brand outlet. 3) Wasan Mumbai was originally TATA, then TATA and Ford, then TATA, Ford & FIAT and finally is now for TATA, Ford, Fiat and Toyota. To take one - one does not need to give up another, no business man would give up an dealerhip for one brand - one does not know when the next upswing of a product will happen, in anycase, TATA and FIAT have been JOINTY registering month on month highs for the last few months when put together. Don't believe in this Luring away bit at all. It's just a pure business for them. |
Originally Posted by Palio_2005
(Post 2114423)
Well BU Bhandari also has dealership of Mercedes. so he is familiar with the erman way of working. Maybe he was fed up with the hapazhard way of working by Indian/Italian companies (both are not known for structured way of working). On other hand they also had dealership of Honda but closed it in 3-4 months |
Originally Posted by ACM
(Post 2114463)
your post leads one to further feel that if they did not manage to get along with the Japs, indians and Italians, etc, it may actually be the other way round and it may be the companies that felt that they need something / someone better? |
Originally Posted by ACM
(Post 2114358)
Don't believe in this Luring away bit at all. It's just a pure business for them. |
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