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Future Looks Grim for Auto Dealers in India

By Motortrend India Staff   |   31 May,2013

As per the J.D. Power Asia Pacific 2013 India Dealer Satisfaction along with Automotive Manufacturers Index (DSWAMI) StudySM released today, one in five auto dealers in India expect to take a financial loss in 2013 double the number, as compared to 2012. And only 44% are expected to make a profit in the FY 2012-2013.

Mohit Arora, executive director, J.D. Power Asia Pacific said, “Declining profitability for dealerships in India not only highlights the impact that the slowdown in new-vehicles sales has on the viability of a growing number of dealers, but also underlines the importance placed on automakers to provide adequate support to their respective networks.”

The study measures dealer satisfaction with vehicle manufacturers or importers in India by examining nine factors: marketing and sales activities; product; vehicle ordering and delivery; sales team; parts; warranty claims; after-sales team; training; and support from the manufacturer. The study is able to provide automakers with important information on how best to assist dealers in achieving their overall business objectives.

In 2013, the largest decline in dealer satisfaction is in parts operations, with notable brand level declines around the prompt delivery of parts and ease of ordering parts. An attractive range of vehicles remains critical for both dealers and automakers to succeed in any market. On average, 82 percent of dealers indicate their brand provides a model range that can effectively compete in the highly contested Indian auto market. However, fewer than 65 percent of dealers for some of the volume brands indicate the same. Arora said, “With changes in customer preferences, the industry needs to adapt by providing a contemporary line-up across the main and niche segments.”

The study finds that the main revenue sources for dealerships are service (29%), new-vehicle sales (28%) and spare parts (14%). Among the manufacturers included in the 2013 study, Maruti Suzuki and Toyota perform particularly well in overall satisfaction. Dealer satisfaction for both manufacturers has improved from 2012. On average, 88 percent of dealers believe that they definitely would continue to work with their automaker in two years. Among dealers in the top quartile of satisfaction, 98 percent expect to be working with the same auto maker in 2015. In contrast, dealers who rate their experience with the automaker in the bottom quartile of satisfaction, only 72 percent expect to be working with the same nameplate in two years’ time.

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