A long line of car dealers including the USA’s largest car retailer AutoNation and UK-based multinational Inchcape are trying to get a foot hold in India, a market second only to China in the speed of its growth.
Confirming the development, Sandeep Singh, deputy MD of Toyota Kirloskar Motor, said many international car dealership groups have been in touch with the company over the last couple of months. He would not confirm any specific details however.
The development reflects India’s growing status in the car world with every manufacturer betting on the country to fuel their sales and drawing up big investment plans for a market that, according to the Society of Indian Automobile Manufacturers, will hit $145 billion in 2016, up from $34 billion in 2007.
Industry watchers say that by bringing in professional retail dealerships, Indian carmakers can concentrate on new product development with dealers taking care of the distribution and service side of things.
However, Indian car manufacturers feel that global dealerships may find it a difficult proposition to set up operations in the country as the India still lacks the volumes they require.
Professional dealerships demand guaranteed volumes and margins as their overhead costs are high, said Jnaneswar Sen, Head of Marketing of Honda Siel Cars, India. “In India, many of the auto manufacturers prefer working with a number of local dealers.” An alliance with a global professional dealership will be possible when volumes start growing, said Toyota’s Singh.
At present, the volumes in the country are too low to justify assured returns to dealerships. India sold 1.4 million cars last year, compared to 13.6 million in China and just over 10 million in the US. Also the 2-3% gross margins currently enjoyed by Indian car dealers are much lower compared other markets.
Soure: Economic Times