A nearby city which has the presence of all manufacturers is 70 km away.
BHPian CoconutCar recently shared this with other enthusiasts.
Greetings to fellow members.
I am along with certain other people, in the process of establishing a car dealership.
We already have land on the main road with a good front. I am intentionally keeping information about location and state confidential.
Brands for whom we are preparing an application are:
- Toyota
- Mahindra
- Kia
In my city, Toyota and Kia are absent. Mahindra exists but in a decrepit condition. A nearby city which has the presence of all manufacturers is 70 km away. So all purchases by our city dwellers are made from there. If we get Mahindra, It will not just be personal cars but pick-up and commercial vehicles as well.
We are from an established business background in the textiles industry but have no prior experience in the automotive dealer industry.
I request Inputs/insights/suggestions from members based on their knowledge and past experience.
I went through the FADA report for dealer satisfaction and Kia scores the highest while Toyota and Mahindra aren’t far behind and have respectable scores.
Regards
Here’s what GTO had to say on the matter:
Great shortlist of brands! All 3 are strong, well-invested in products and have profitable (premium) cars.
Start with applying to all 3. Get the ball rolling. It’s not that, if you apply, you will get approved. Start networking with car dealers to know the local market & understand the business. I don’t know what kind of demand is there in your local area & surrounding towns, so it will require a lot more research.
Since you’re going to be investing multiple crores in the dealership:
- Read this thread we have on dealership business.
- It would be great if you or your family members take up a job with a prominent car dealer. The knowledge you gain in the 1 or 2 years will be incredible. Think of it like an “MBA” in car dealer management.
- Research, research, research. Once you get talking to the OEMs, start getting very specific sales & demand data from them.
- Hire a couple of experienced & seasoned dealer folk in managerial positions at your showroom. It’s a very capital & operations intensive business.
Here’s what BHPian youknowitbetter had to say on the matter:
Go for Mahindra. Following reasons:
- Commercial vehicles will also be a reasonably big business which you will get along with passenger vehicle dealership.
- Great product offerings. They are investing heavily in EV space as well.
- I am guessing, Toyota with its collab with Maruti is technically available in your city.
Here’s what BHPian sf71vettel had to say on the matter:
I have a certain degree of experience in this field, so I’ll pitch in with my thoughts:
Apply as a single or family business owner. OEMs will not grant dealerships to any proposal which is a partnership of different families. There are too many instances of disputes and dealership collapse.
Generally, the online application section for OEMs is totally ignored. They will put ads out in newspapers or their websites when they are actively searching for dealerships in your area.
The area requirements differ per brand, but generally the showroom is 5000-10000 sqft and the workshop is 30000 sqft. The initial capital outlay apart from land is around Rs. 7-10Cr, depending on the brand.
The Vahaan website is very useful for market research. In July, your district had a TIV of 318 cars (Maruti 151, Hyundai 50, Mahindra PV+CV 87) Toyota/Kia have an all India market share of around 5-7%, which would equate a monthly volume of 20-25 cars. Not sure if that will be sustainable.
Here’s what BHPian anjan_c2007 had to say on the matter:
It is important to specifically get sales data for your proposed area of operation, of different models of the respective manufacturers and how these fare in your area. Toyota models other than those Maruti rebadged ones sell at a premium, cost wise to others. Hence if one Toyota Innova Hycross or a Toyota Fortuner is sold it would be equal to two to five Mahindra XUV 300’s or the Kia Seltos. A market value comparative chart of cars sold in your area will be a better indicator.
As regards the servicing, Mahindra commercial vehicles may frequent your showroom when under warranty but they will prefer “jugaad” jobs later on in non-ASC workshops.
All such pros and cons need to be studied but as GTO has rightly said you need to apply to all the three companies in the first instance. Because these carmakers are also very selective.
An interesting incident though could be off topic here. A particular company invited applications for its authorised service centre in particular city. Two of my friends applied. One was selected and he got his existing workshop revamped and then started the ASC. The other who also owned a workshop got jealous and since this ASC repaired cars other makes earlier, during its initial months post the ASC’s inception its loyal customers continued to send their cars of other brands here and the ASC owner obliged them. The other person (also a friend) who was deprived of the ASC, clicked images of cars of other brands parked here in the new ASC on the sly and sent them to the car maker. The ASC owner got a stern warning from the car maker and he thereafter curtly denied entry to any other brand. This shows how these carmakers and the ASC’s and those deprived of ASC’s operate.
Keyword: Toyota, Mahindra or Kia: What's the best dealership to own & run