Changing Face and Role of Automobile Dealerships

Jose Paul, Industry Analyst, Automotive & Transportation Practice, Frost & Sullivan, India

The Indian automobile industry has been through exciting times and is on an enviable growth pace. In the last 10 years, the face of the Indian automotive industry has taken a significant leap. Picture the following facts about India: One of the most populous countries in the world, an economy growing at over 8 per cent and a density of vehicle population of just 7 per 1000 people. From just a handful of companies rolling out about twice the number of models, today we have over 25 mainstream two and four wheeler manufacturers offering over 100 different vehicle models across various categories and segments.

 
With such intense competition in the market and products within a segment becoming increasingly similar, vehicle retailing has become a key differentiating factor. There is no more any dearth of choice for the customer in choosing a good product. Also, customers are increasingly using alternate forms of information like the internet, automobile magazines and opinions from friends and relatives to decide on their purchase. Together, these two changes have evolved customers to be more knowledgeable than the dealerships sales force in many cases.

Customer experience and satisfaction has become a key differentiator between brands. The only avenue for the customer to touch and experience the products and service is at the dealership. Starting from pre-purchase, purchase, ownership, used car trade-in and repurchase, customers need to be pampered throughout to make them stick to a brand. Burgeoning volumes coupled with increasing customer expectations, the gap between ideal customer experience and reality is on the rise.

Pre-Sales and Sales:

Dealers and manufacturers should analyse various actions and facilities, which are required by them and their relative impact on the satisfaction level of the customer. It is essential to differentiate various factors based on their target segment and then work around it. Some of the key aspects which need to be taken into account during pre-sales and sales include:

Jose Paul Jose Paul, an MBA in Marketing and Systems, is an Industry Analyst at Frost & Sullivan's Automotive consulting practice in India. He is responsible for coordinating and delivering client specific custom consulting assignments and also driving off-the-shelf strategic market reports pertaining to the automotive industry. Strong knowledge of the new vehicle market is his forte. He has worked with leading automotive component suppliers of the industry like Mico Bosch, Delphi TVS and Emitec in developing strategies to address the opportunities provided by the aftermarket segment in the country. Providing clients, unique research methodologies with a mix of B2B research and end consumer analysis is one of his key strength areas. Jose previously worked with the Automotive Practice, one of the largest consumer research firms in the world. During this assignment, he was responsible for delivering various client based assignments and syndicated reports involving customer and stakeholder satisfaction measurement and their impact on the business of vehicle manufacturers. Significant assignments worked on include 'The annual customer satisfaction study for 2 and 4 wheeler markets" and "Dealer - Principal Satisfaction Analysis", among others.

 

▪	Responsiveness to the customer - there is somebody else stamping on your foot to get your customer.
▪	Product and technical knowledge of the sales force - the customer is well informed even before coming to the dealership; hence he would expect some amount of value addition from the sales force.
▪	Ability to develop in-depth understanding of the customer needs and advice on product that has the right fit - as against pushing the available product to make a sale.
▪	Purchase and delivery process - availability of vehicle for test drive, availability of stock by variants and colours, vehicle demonstration and delivery, explanation of warranty terms, explanation of service schedules, speed of processing.
▪	Overall quality of service - overall atmosphere and location of the dealership, integrity and commitment of the dealership, availability of finance options and accessories stocked at dealership, etc.

 
Many factors which might be delight factors in the lower end of the spectrum would be essential factors higher up in the spectrum. This might probably help us understand a recent incident, where customers of a premium segment passenger car brand in Ludhiana decided to go on a protest to register their resentment against the dealer and the company.

Consumers, who began the protest against the product, also alleged that they were not fairly treated by the dealer. To quote one of the customers, "The dealer has been avoiding us and been very rude even as we have been apprising him of the recurring problems. They were nice and polite while selling, but now that we have problems, they do not even want to see us."

It is no-brainer that none of these customers would probably ever repurchase the brand or go back to the dealer. With scores of other products, companies and dealerships waiting to woo customers, it wouldn't be hard for them to breakaway. Continued apathy from the dealers could go as far as taking down a company - even if one has the best in class products, as in the case of what Fiat faced in India.

Dealerships should invest in technology and developing innovative methods to keep customers involved. Right from the phase of pre-purchase interactions to repurchase, customer should be taken through an exhilarating experience, which should ensure continued relationship not just with the brand but also with the individual dealership.

Target segment oriented retailing would be a critical step forward. Expectations of customers buying a premium D or E segment car and the expectations of customers buying an entry-level car will be significantly different. Similarly, requirements and expectations would also vary based on the gender. Identifying these niches and developing solutions for them is precisely what Bajaj and Hero Honda have done with their Pro-Biking and 'Just4her' outlets, respectively. The Pro-Biking store targets the premium bike users with facilities, ambience and experience which are appreciated by customers of bikes like a Pulsar 180, Avenger and probably the yet to be launched Pulsar 220cc. Customers can go to a Pro Biking outlet and test drive bikes of their choice on the dynamometer, which displays real time view of performance and functional features. Hero Honda has about 22 Just4her outlets across the country. The exclusive women's outlets are designed to cater to their woman customers. The store, apart from giving prominence to the 'Pleasure' range of scooters, is also run by women staff, who help in understanding and serving the customer better. Customers are also entitled to the 'Lady Rider Club', which offers special benefits to women.

Service Experience

While most of these initiatives have been limited to the sales aspect of the ownership experience, service has been stuck in a time warp in comparison. Overloaded workshops, lack of service bays and lack of well trained personal have resulted in poor service experience. Cases of vehicles being mishandled during service, problems not being resolved at the first visit and non-availability of spares have been on the rise. Even premium cars like the Ford Fiesta and Skoda have been plagued with non-availability of spares at some dealerships.

Increasing number of customers are moving to independent garages for their service requirements. Chart-2 shows that large service chains can compete with authorised service certres in both access to technology and ability to invest in class leading facilities. It is only a matter of time that they ramp up operations and extend their reach to be on par with the company service centres. Big names like My-TVS, Bosch Car Service, Reliance, Castrol and Gulf Oil have already forayed into the after-sales service.

Dealerships need to develop comprehensive service interaction systems which would work towards improving internal systems, in turn improving the overall service experience. Post purchase, service is the prime aspect which helps ensure continuity of experience for the customer. After-sales service is also the prime revenue earner for the dealership. To this effect, it is essential that dealerships invest in retaining significant advantage over other service outlets both in terms of absolute service quality and also customer experience.

 
Some of the key aspects which are taken into consideration by customers while determining service satisfaction include absolute cost of parts and labour, ease of insurance processing, time taken to deliver, overall quality of service ability to diagnose problems professionally and solve them at the first visit, quality of workmanship, customer facilities available at the service centre, on road support provided by the dealership and manufacturer, pick-up and delivery options, overnight service option and ease of access to the service centre.

Dealer - OEM partnership

Dealerships must work along with the vehicle manufacturers in developing strategies to ensure that they not only lose a customer, but also work out ways to keep him happy and satisfied through out. Apart from this, dealers should work in tandem with OEMs to give valuable feedback on product and service so as to identify improvement areas. Manufacturers also must involve dealerships in a symbiotic relationship at various levels including new product development, customer feedback, process enhancement, developing customer loyalty programs and improving operational aspects of the dealer network.

At one of the Frost & Sullivan dealer training programs conducted for a leading commercial vehicle manufacturer, it was observed that there was a strong disconnect between what the dealers experienced on a day to day basis and what the OEM believed to be the fact. Lack of proper feedback systems, access to the top management and laxity from the dealers were found to be the key culprits for this. It was concluded that for optimal functioning, dealers and manufacturers will need to work as partners rather than operate merely as a distribution and service channel.

It is time to come to terms with the fact that vehicle sales in India do not depend on just the product and the brand but also the dealership, which contributes to the overall experience. Visit any online automobile forum in India and it will not be surprising to see many customers discussing which would be the best dealer for a brand in a particular city or region. Each dealer would be differentiated by their business ethics, customer responsiveness, quality of service and transparency of operations.

To stay abreast with times, dealers would need to constantly look into the future and foresee trends in competitive environment and changing customer preferences. As markets expand, vehicle dealerships will have to develop into strong brands- having their own identity arid brand value with strategies, which will ensure maximum customer loyalty.