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Neha Kaushik

While the volumes have decreased, the competition has only increased further, not only from rival car companies but also from the same company.

New Delhi , Sept. 9

LOWER automobile sales in urban areas seem to have found a victim, the unwary auto dealer.

According to industry officials, the past few months have seen at least 15-20 per cent of the dealers in urban areas either pack up or replaced with more upwardly mobile dealers.

Points out a dealer who has recently expanded his operations in Delhi. "In larger cities, the cost viability is under pressure. While the volumes have decreased, the competition has only increased further, not only from dealers of rival car companies but also from the same company. Thereby, in order to survive, dealers have to invest more in sprucing up their showrooms and in advertisements and at the same time also give the best discounts/offers in the city".

As a result, dealers who are not aggressive either pack up or are replaced by other well-off dealers who are able to make these investments.

Interestingly, an industry official points out, that this has resulted in the existing dealers diversifying into newer, related areas of operations such as insurance, workshops, used cars, and so on.

While the trend of dealerships may not be all that rosy in urban areas, the number of dealerships in the country is growing by 20 per cent per annum, with more and more auto manufacturers going deeper into semi-urban/rural areas in the search for potential markets.

"There is fairly a heavy growth in the number of dealerships in class two cities and smaller towns, more so with entry level cars and two-wheelers seeing higher growth in these areas", says Mr Rakesh Jain, owner of Gautam Motors and past president of Council of Federation of Automobile Dealers Associations.

According to market watchers, companies such as Maruti Udyog, Hyundai India, Tata Motors and Hero Honda are aggressively working on penetrating deeper into the country.

The official points out that post Maruti's tie-up with State Bank of India and its associate banks, the company is betting more on the inner region to contribute to sales of its entry-level models.

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