Breaking into the traditional (the already established brands like Skoda etc) dealership game is nearly impossible and requires extremely deep pockets.
BHPian pratyaksh recently shared this with other enthusiasts.
Dear BHPians, I come back again to you for your expert unbiased opinion once again. Truly blessed to have such an amazing cohort with us at all times.
I have been delaying this post for years now, whilst I have been toying with various business opportunities available in a Tier-II town in UP, where I currently reside. For background, we currently own what you may term an MSME, and since I have come from abroad I have been willing to get into something new, mainly to diversify.
The heartstrings keep pulling towards an automobile dealership, so I have looked into many dealership opportunities in the past few years, sprinkled with sometimes other types of businesses like Pepperfry, Linen club, etc. although the heart wants to get into automobiles.
For the record, breaking into the traditional (the already established brands like Skoda et al.) dealership game is nearly impossible and requires extremely deep pockets. So, I started looking at the new EV businesses, whilst making out unscathed of some really dodgy ones…I feel the EV revolution is an opportunity for people like us to be able to get into a business that has some high barriers to entry by the old guns. I know nearly all dealership owners here, and each family owns about 3-4 different brands whilst entry for new entrants is few and far between.
Here goes:
I started scoping Evolet near the time covid hit, and praise the almighty for the near-miss (hit). I had completed all formalities except for the initial payment by Nov 2019 and had nearly applied for this company’s dealership. It was a great lesson learnt, and I am happy that I did not join them then. I can’t really point out their varied issues here although I do not trust them, and do not really agree with the direction they have taken. Although, I loved how cheap it would be to get a start compared to the 7cr requirement by Skoda.
Dealer Insight Brochure attached for reference.
I also looked into Jangid Motors in 2020 which was doing really well in Eastern UP, but for some reason, I felt I couldn’t sell small rickshaws to a category that is hard to impress, and finance.
Dealer Insight Brochure attached for reference.
Without dwelling too much into the details of the ones that were left behind, let’s fast forward to 2023; and the bug has bitten again.
I have been looking at Euler Motors in the EV space for some time, and have been impressed by their product. Attached brochure for the uninitiated.
They seem to have a robust product in the EV Cargo L5 space. The only drawback is that it’s the only product they have, and I do not necessarily trust anyone on their pipelines of new and upcoming products (pipe-dreams, really!)
I feel better about this one, the financials seem robust too. Don’t want to divulge information about the dealership financials here as the negotiations are on-going.
Would love to hear the opinions of BHPians here, if I should take the plunge or avoid these new-age EV companies altogether.
Here’s what BHPian Redwood1970 had to say about the matter:
Not to sound pessimistic, but products from such EV brands are not what I would call well-finished. Further, while there is good demand in the EV space, customers will like to prefer known brands.
A dealership model might make sense, but I’m not sure about the margins on these products for the dealer. Unless they are higher than traditional companies – eg Skoda or Maruti, it doesn’t make financial sense to go into the same.
Today is the first time I heard about all three – Jangid, Evolet and Euler!
Here’s what BHPian Dhillon had to say about the matter:
Hi Pratyaksh, I have seen Euler 3-wheelers in Gurgaon and they seem to be a popular choice here. Regarding your request for suggestions on entering the automobile industry through a dealership, I have voted “No”.
My only suggestion would be to calculate yearly ROI. If you are able to manage a return of 6% and above on your investment, then it makes sense.
In my 10 years of experience in the auto industry and having been a part of a retail outlet as well as part of an OEM, getting a 6% and above return on your investment requires hard work and a lot of sweat.
Best of luck!
Here’s what BHPian Autolock123 had to say about the matter:
EV dealership at least in two-wheelers is now slowly moving towards the direct-to-customer model. Ola already did that and was successful, Hero – the ICE market leader is also talking about having 30% sales through digital channels. I presume in that case value added from the dealer will be Nil and hence the returns as well, even if the delivery is done through dealers. The opportunities for Service revenues will be also less given the lower maintenance required.
Though the EV adoption is certain I believe the model of business will not be the same as ICE. Though there could be newer streams of income that may emerge for EVs. Hence I believe entering solely for the EV dealership may have a much higher risk than it looks like.
Also, the Industry is evolving quite fast. Hero Electric which was the market leader in pre-covid is seen at the bottom of the charts in 2022. It has lost to new players like Ola & Ather. Predicting the winners and losers of the market is difficult at this time.
Here’s what BHPian Atul Kolekar had to say about the matter:
Dealership, particularly in the automotive sector is a hard game. Companies well-established in the market play hard to catch and prefer established partners with experience. New companies can’t attract established players and hence are willing to go with new entrants but try to take advantage of inexperience and make dealers pay for their gambles and often with customers as well. The products are hard to sell and take too much time to move. This is absolutely critical for perishable products such as batteries and EVs. So avoid new manufacturers unless there is palpable buyer demand in the market for such products.
Keyword: Is opening a 2 / 3-wheeler EV dealership in India a good business idea?