TNS
Automotive 2004 Dealer Satisfaction Study
Honda Dealers Most Committed for both Two and
Four-Wheelers
Four-wheeler dealers more satisfied compared to two-wheeler
dealers
According to the findings of the 2004 Dealer Satisfaction
Study released by market information provider - TNS, Honda
Motorcycle & Scooters (HMSI) and Honda Siel Cars (HSCI)
rank highest in dealer satisfaction with their principals
in the Two and Four-Wheeler industry segments, respectively.
The study represents the responses of 1238 dealers (which
included 846 two-wheeler dealers and 392 fourwheeler dealers)
on the key areas of product, management relationship, profit
& margin, order & delivery, sales & marketing activities,
after-sales & parts support, warranty, sales representatives,
after-sales representatives, and training support. Depending
on the respondent's convenience, a combination of face-to-face,
telephonic, or self-completion interviews were conducted
for this study. Over 150 cities including metros, minimetros,
state capitals, and other smaller towns were covered for
the study. The study was fielded from October 2004 through
December 2004. The 2004 Dealer Satisfaction Study is the
second in the series by TNS specialist division, TNS Automotive.
Importance of Dealer Satisfaction
Because of increasing competitiveness in the Indian automotive
industry, almost all automotive manufacturers have invested
valuable resources on customer satisfaction as a tool for
understanding the needs and expectations of their customers.
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While no one can argue against the importance of customer satisfaction, the key to success in a consumer-driven market lies in a broader effort of stakeholder management.
The DSS is based on TRI*M, TNS' proprietory stakeholder management system. TRI*M focuses on both internal and external customers. Automotive dealers form an integral link and are in a unique position from the standpoint of managing the end-customers, particularly during the sales and after-sales stage of the ownership experience. The TRI*M philosophy works on the premise that manufacturers who can fulfill the needs of their dealers are more likely to see that their end-customers are satisfied as well.
Indexing system takes into account both dealer satisfaction and commitment. The statistically derived TRl*M index score provides a measure of the relationship strength that a given manufacturer enjoys with its dealers. The following ranges have been established over time to understand the relationship strength:
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Highly Retained/ Committed |
TRI*M Score > 100. |
▪ |
Retained/ Committed |
TRI*M Score 70 - 100. |
▪ |
Possibly Vulnerable |
TRI*M Score 40 - 70. |
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Vulnerable |
TRI*M Score 10-40. |
▪ |
Virtually Lost |
TRI*M Score < 10. |
The study reveals that there are more 'uninvolved' (neither satisfied nor committed) dealers than 'partners' (both satisfied and committed) in the automotive industry. This is particularly true for the Two-Wheeler industry which has a significantly low percentage of 'partners'. The key to building partners is to focus on the most critical areas that impact dealer satisfaction and commitment to the manufacturer. Concern for dealer profitability, management relationship, sales & marketing support, and product strengths are some of the critical areas.
Dealers and end-consumers are the two main stakeholders in automotive business and a manufacturer's marketplace success is driven by its ability to manage expectations of both. While committed dealers tend to develop satisfied customers, it is not always true when comparing the results of this study with the past customer satisfaction study conducted by TNS Automotive in 2004.
DSS Rankings
Rankings for the DSS study are done at the industry segment-level to provide comparisons among similar groups of dealers. The fact that all three Honda affiliate companies rank among the top four manufacturers shows the level of commitment by the manufacturer for the Indian market.
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The two charts above provide the make-level rankings. The industry average score of 63 (59 for two-wheeler and 79 for four-wheeler) reflects a relatively low level of satisfaction and indicates that dealers are vulnerable to defections.
Using the score range shown earlier as a guide, three manufacturers fall in the "highly retained/committed" zone, while eight manufacturers are in the "retained/committed" zone. Based on the dealer evaluations that TNS received, some of the key findings are as follows:
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Honda Scooters and Honda Siel lead the two and fourwheeler segments respectively. Honda Scooters retain its lead, with a six-point gain over 2002. Products fit with the market, marketing & sales initiatives, market lead trade and consumer policies and communication clarity are key areas that drive the segment leading scores for Honda Scooters. |
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Honda Siel moves up two places from 2002, significantly improving the index by 23 points. Honda dealers are very satisfied and committed and record high ratings in terms of product quality, technology, brand positioning, profitability and sales planning. |
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Hero Honda and Toyota rank second in their respective segments. Hero Honda dealers rate the company particularly highly on product quality, service & parts representatives, and manufacturer relationship. Toyota dealers continue to be committed and loyal reposing confidence in the company. |
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Bajaj Auto and Hyundai rank third in their respective segments. Bajaj's improvement in scores is driven by improved product performance, investments in branding, and a high dealer confidence on overall marketing strength of the company. Hyundai dealers are appreciative about the technology of the products and the brand initiatives of the company.
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Dealer Typology
Dealers are segmented into four groups based on their satisfaction with and commitment to the manufacturer. These groups are defined as follows:
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Partners: Dealers that are both satisfied and committed. This group is the most dedicated. |
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Mercenaries: Dealers that are satisfied but not committed. This group needs a compelling reason to stay with the brand. |
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Hostages: Dealers that are not satisfied but remain committed. Dealers can become hostages due to lack of viable options or other exit barriers. |
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Uninvolved: Dealers that are neither satisfied nor committed. |
Some key findings related to the typology for the two and four-wheeler industry segments are:
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Two Wheeler: As in 2002, the number of satisfied ('Partners' & 'Mercenaries') dealers remains around 40%. There is however an increase in the partners from 23% in 2002 to 29% indicating a positive trend. However, the percentage of 'uninvolved' dealers records a significant increase - at 40% from 32%. Almost, all manufacturers contribute to this increase, especially so by TVS, Hero Motors, LML and Kinetic. Manufacturers are not meeting and managing their dealer expectations. With significant growth in demand and manufacturers riding on higher sales, substantial strategic initiatives may be necessary for a longer-term sustenance, customer retention, and loyalty. |
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Four Wheeler: In contrast, the four-wheeler manufacturers do a remarkable job in almost doubling their 'partner' dealers in 2004. Honda Siel has significantly increased the proportion of "Partners" from 38% in 2002 to 70% this year. Also of significance is the drop in 'uninvolved' dealers - from 34% in 2002 to 22% this year at the overall level. The challenge for the manufacturers lies in converting the 'hostage' dealers into 'partners', since, at 28%, they form a very large section of the dissatisfied dealer community. |
GRID Analysis
In order to identify the unique needs and expectations of dealers for each manufacturer, dealer evaluations were taken on 92 performance attributes. The GRID analysis categories these attributes by examining the dealer claimed importance (y-axis) and impact on dealer commitment (x-axis). The attributes are categorised under four quadrants:
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Motivators: Attributes with a high stated importance and an equally high impact on commitment. These are the main drivers of dealer satisfaction and commitment. |
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Hidden Opportunities: Issues where dealer claimed importance is relatively low but impact on commitment is high. These issues are differentiators. |
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Hygienics: Attributes where stated importance is high but impact on commitment is low. These reflect the "must be" needs of dealers. |
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Potential Savers: Attributes with low stated importance and impact on commitment. Dealers are currently less sensitive to these issues. |
Two GRIDs below examine some of the key segment-level attributes. The attributes have been categorised according to the explanation provided earlier. Additionally, the performance rating (shown by different symbols) is also provided in these charts. This provides an indication of the relative strengths and weaknesses for the two industry segments. Some of the key findings are explained below:
Two – Wheeler
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Manufacturer relationship related aspects like 'concern for dealer profitability' and 'management willingness to resolve dealer problem' are the key concern areas for the dealers. They are 'motivators' where the manufacturers are not able to meet the expectations of the dealers. Honda Scooters, which leads the segment, has been rated 'average' for both these attributes. |
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Marketing related aspects like 'Effectiveness of brand/ product positioning' & 'Relevance of advertising' have a high impact on dealer commitment and are areas where the dealers want improvement from the manufacturers. |
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Aspects like 'Fair Settlement of warranty claims' & 'Availability of spare parts' are "must-be" attributes (Hygiene factors) and must definitely be provided by the manufacturer. |
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The difference in expectations from the sales reps and after-sales reps can be seen in the chart - sales reps related aspects fall in the 'motivator' segment, while after-sales reps related aspects are 'hygiene' areas. |
Four - Wheeler
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As in the two-wheeler segment, manufacturer related aspects are critical "Motivators" where performance is below average. Segment leader, Honda Siel has scored above average in 'Concern for dealer profitability'. This clearly brings out the importance of these attributes with respect to the overall satisfaction. |
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The impact of 'Effectiveness of brand/product positioning' on commitment is relatively lower among 4-wheeler dealers. 4-wheeler manufacturers are also delivering as per their dealer expectations on this aspect. |
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'Fair settlement of warranty claims' & 'Communication to dealer in case of delay', which were hygiene areas for 2-wheeler dealers have moved to the motivator segment for 4-wheeler dealers. |
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'Sales & service training support' has a greater impact on commitment among 4-wheeler dealers as compared, to 2-wheeler dealers. |
Profitability Measures
A separate index was computed to understand dealer evaluations on profitability. The chart below provides makelevel profitability index scores for both industry segments. At the segment-level, the profitability index score is lower than the DSS index. This clearly indicates that it is more challenging to satisfy dealers on profitability compared to the overall DSS. The decline is sharper for the four-wheeler segment, possibly reflecting higher expectations driven by the larger investment for establishing a four-wheeler dealership.
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Make-level performance shows that the profitability index score for all manufacturers is lower compared to the DSS score. This is not surprising given the difficulty in satisfying dealers on profitability.
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Two-wheelers: The rank order is similar to the DSS rankings with Honda Scooters leading the segment and Hero Honda coming in second. |
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Four-wheelers: Unlike the DSS index, Toyota leads the profitability Index among Dealers, with Honda coming in second. Otherwise, the rank order is similar to DSS. It is worth noting that the mean scores on satisfaction with profitability are relatively lower for Toyota as compared to Honda Siel. However, Toyota records segment-best mean scores on future orientation (company's market strength) question. This clearly reflects that a company's future outlook can positively influence its dealer's perception on current profitability. |
Regional Information
The table below provides regional information that reveals the following trends:
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The two-wheeler dealers record an average of 6 days to receive delivery of new vehicles and 12 days for fast-moving parts. The corresponding figure for four-wheeler segment is 7 and 9 days, respectively. Dealers in east and south for both segments report a relatively longer time in receiving delivery of new vehicles and parts. |
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Percentage of dealers recording 80% or more service capacity utilization is similar across regions. It is critical to maintain this threshold of 80% capacity utilization as the profitability of a dealer records a significant decline below this number. |
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North |
East |
West |
South |
All India |
| Two-Wheeler |
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| Time for delivery of new vehicles (avg. days) |
5 |
8 |
5 |
6 |
6 |
| Time for delivery of fast moving parts (avg. days) |
10 |
19 |
12 |
12 |
12 |
| Avg. monthly sales volume in units |
156 |
140 |
214 |
207 |
186 |
| Avg. monthly service volume in units |
736 |
448 |
1016 |
871 |
826 |
| Service capacity utilization (% responding over 80% utilization) |
57 |
60 |
60 |
60 |
59 |
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|
|
|
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| Four-Wheeler |
|
|
|
|
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| Time for delivery of new vehicles (avg. days) |
7 |
10 |
7 |
7 |
7 |
| Time for delivery of fast moving parts (avg. days) |
8 |
14 |
9 |
8 |
9 |
| Avg. monthly sales volume in units |
130 |
107 |
102 |
127 |
117 |
| Avg. monthly service volume in units |
788 |
596 |
742 |
960 |
790 |
| Service capacity utilization (% responding over 80% utilization) |
69 |
63 |
66 |
70 |
68 |
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