Would multi-brand superbike sales & service stores work in India?

I imagine a multi-brand Sbk sales and service store, which is officially licensed by manufacturers to provide motorcycles, services and spares from their end.

BHPian Samarth 619 recently shared this with other enthusiasts.

Note: I’m using the Sbk term quite liberally to include most high-capacity, expensive, high-speed motorcycles.

I can’t base this article entirely on research because it’s not my area of expertise, plus it will be expensive, so suitable inferences have been made.

About Me: I’m a biker for the last 18 years. Aged 36, I’m a Professor of Management in a private college in a relatively small city, but I’ve had enough travel exposure in India, and have stayed in Bangalore, Delhi, Mumbai, etc.

What I’m Trying to Do in this Thread: I’m trying to discuss an idea, which if it gains sufficient traction might just solve a few business problems related to high-capacity bikes. I invite people to be constructive critics, and add to or subtract from the idea I give.

The Problem (more like a list of Problems)

Well, here are some of the most common problems faced, based on my interaction:

For Customers

• Poor Quality of Service
• Non-availability of service in Tier 2 and 3 cities
• Parts availability problems
• Roadside assistance is not helpful everywhere, plus lack of standards, and sometimes, non-fulfilment / refusal.
• Limited range of products and after-service considerations, a few further potential products get rejected,

Problems faced by Dealers

• Poor revenue from sales and service both, it’s like the business isn’t even sustainable in most cities of India, especially Tier 2 and 3,
• Hiring and retaining talented mechanics and maintaining the quality of service
• Customer disputes due to dissatisfaction

The Solution

Before I share my solution, let’s just bust a few myths: Many believe there’s no market for Sbk’s in Tier 2 and 3 cities. It’s a false assumption. My own (relatively small) district city with a population of around 6 Lakhs has about 12 Sbk’s which I can confirm, and many more I don’t know of. This is when there’s not a single decent mechanic around, leave alone company branded dealership. Can you imagine what we’re getting at? Can you name one city without say, 10 Sbk in it?

I’m not trying to inflate a bubble here: I know the market is small. But are we saturating it enough? Are we handling it properly to ensure both the customer and the local dealership is happy?

Now, the solution. I imagine a multi-brand Sbk sales and service store, which is officially licensed by manufacturers to provide motorcycles, services and spares from their end. The model will be strictly a franchisee model, like Mcdonald’s.

The following should be the features of this store

1. It will be present in Tier 2 and 3 cities as well, in addition to the big cities. It will be present as a brand.
2. Per such centre, there will be a team of 4-12 mechanics to handle the service, and this will be scalable as per operations scaling up. These will be the very best in the city. At least two will be trained by the parent company, in each motorcycle.
3. To ensure zero accidents and even minor scratches, the entire service area will have multiple CCTV Cameras, but in such a way that each bike’s service/handling is recorded in full clarity. Plus, these recordings should be stored for up to 2-3 months to help in technical assistance later on and be accessible to customers.
4. Customer sales area and lounge to be lavish in all senses of the word with comfort, aesthetics, big screen TVs/ projectors for MotoGP show, motorcycle racing simulators (like video games), etc.
5. Roadside assistance on both basis- instant payment (calling helpline number on breakdown) and advance payment (yearly insurance). RSA vehicles should be purpose-built to securely transport the vehicle.
6. Monthly and annual promotional events to ensure fun for customers and cash flow for the dealership. Sometimes per brand, other times all brands.
7. Unsatisfied customers can use the CCTV footage, and approach the company to get the motorcycle properly re-serviced, maybe somewhere in another city, or with company mechanics, if not satisfied locally. The trucks carrying the bikes to be sold can be used to transport the bike for this other-city service.
8. Multiple showrooms in the same city are a “Yes!” to maintain competition, of course, as long as volumes exist.
9. Franchisee model will give the least freedom to mechanics and dealers, and more freedom to customers.

In short, all brands of Sbk’s will sell under the same big roof and customers can get it serviced from there. Even in your typical Tier 3 city.

Why is it an awesome business idea?

I’ll tell you why I’m convinced its the way ahead:

1. Outsourcing the entire service model to a third party, will put off a burden on motorcycle companies, so they focus on important things.
2. Due to higher sales amounts under one dealership, activity and sales will be very high, resulting in a profitable business model even in Tier 3 city. Imagine a Harley Davidson dealership selling 4 bikes in a month, now imagine a common dealership selling 25 (any) bikes in a month, yes you got me.
3. Due to multiple mechanics, there will be knowledge sharing among them in huge amounts. All will benefit.
4. Customer will also get a better service experience, as within mechanics, “none of us is smarter than all of us”, right?
5. Return on Investment should be high ideally because a lot of costs and fixed asset expenditures are shared among many more customers.

Customers will be served better at less cost.

Dealerships will have a working, profitable business model.

Companies will sell more such bikes as Tier 3 markets open up.

It’s not just a Win-win. It’s a Win-win-win.

Challenges?

Couple of them. Getting the entire, or most of the industry to agree on this officially, for one. Maybe a few small brands will jump in before the larger ones.

Maintaining the quality & experience in a small city is another point of discussion.

Nothing impossible though.

So, what do you think? I know post corona period is hardly suitable for this discussion, but let’s think long-term, apparently, even e-bikes will have segments from commuter to super luxury.. so not much of a change here.

Can we work on this idea? Can we improve it? Is it even possible? I’m open to a discussion. Please let me know.

Here’s what BHPian no_fear had to say on the matter:

A noble thought and a good academic exercise. Unfortunately, the reality is different, in the case of new bikes.

I proposed a similar model to three large international superbike manufacturers in India. The proposal was promptly rejected.

1. By right, a dealer is part of a manufacturer. They are privy to confidential information, vehicle recalls, new launches, and intellectual property rights. A dealership works on a distributor model – where the dealer commits to investing a certain amount of money to run a dealership under a brand and in return buys vehicular assets, spare parts, and services at a margin (30-40% below MRP). The dealer’s employees work for the dealer but their training costs are borne by the manufacturer.
2. A dealer cannot onboard competitor names since it will clash with the principles in point 1. Unless two companies have synergies in place and agree to share resources, they won’t sell new vehicles under a shared roof. There is a lot at stake. The franchise model won’t work for multi-label dealerships, as a franchisee has to agree to the franchiser’s terms and conditions. You cannot expect McDonald’s to allow their franchise partner to use the kitchen to cook and sell Burger King burgers. The same applies to bike dealers.
3. What you are proposing is called an “aggregator” “reseller” or “consolidator”. These work well for online platforms such as airline, rail, hotel bookings, or consumables, like the stuff sold on Amazon / Flipkart. It won’t work for new vehicles due to a clash of principles in point 1.
4. The model will work well for used bikes. There are several service centres in Delhi and Bangalore that are trying this, but with limited success.

The key issue here is the training of service personnel. Most manufacturers in India train personnel through video and PowerPoint presentations. Hands training is minimal and the service guys are left on their own. Quality training is severely lacking and that results in shoddy service and customer complaints (famous example – Keerthi Triumph in Bangalore). To run competent service centres, you need qualified and well-trained staff and huge investments in tools and inventory. Sadly, in India, we don’t have many. Many is an overstatement. Qualified service personnel in India can be counted on one hand. No one wants to spend money to make money.

To give you a monetary estimate, it takes roughly Rs 10 crore annually to run a decent-sized motorcycle dealership. This includes the upfront cost of buying a minimum amount of motorbikes per month/quarter (whether they are sold or not), building rent, salaries, inventory and any associated costs. I have not included any licenses or permits needed (fire, security, toxic waste disposal, drainage, cleaning).

Once you calculate the costs and the return on investment, from a business sense, it makes 0 sense to run a quality dealership. To cut costs, dealers find ways, and that spirals into poor experiences for customers.

Here’s what BHPian Jhinchak had to say on the matter:

Although similar models exist in the western market. Here are a few problems likely to arise in India.

1. Favoritism of one brand over the other just because of higher margins being provided by the manufacturer.
2. Brands often share the test ride vehicles among dealers, especially the higher value and low volume products.
3. Huge Showroom and inventory would be required as many brands have many bikes on sale, eg. triumph and Honda have more than 10 bikes on sale at the moment and adding Suzuki, Kawasaki etc. would result in 50+ bikes to display and sell.
4. Knowledge sharing would not be preferred by the manufacturer.

Here’s what BHPian bf1983 had to say on the matter:

I knew only no_fear would be able to give a proper response to your thread and I am not surprised he had already had this idea and pitched for it in the past.

I have nothing much to add but I remember when Tata and Fiat shared the same dealer space and Fiat was given a very step-motherly treatment by the dealers with sales executives pushing hard for Tata cars over Fiat cars and I can see similar things happening here as well. Dealers will definitely push for bikes where they get greater margins or where the company looks the other way when customers complain about shoddy servicing or underhanded behaviour.

Keyword: Would multi-brand superbike sales & service stores work in India?