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With the increasing number of automobile dealers in India, one in five dealers expect to be in the red in 2013, more than double the number compared with 2012, according to a study by market research firm JD Power.
Only 44 per cent of dealers expect to make a profit for the 2012-2013 financial year, according to ‘JD Power Asia Pacific 2013 India Dealer Satisfaction with Automotive Manufacturers Index’ released today.
“Declining profitability for dealerships in India not only highlights the impact that the slowdown in new-vehicles sales has on the viability of a growing number of dealers, but also underlines the importance placed on automakers to provide adequate support to their respective networks,” JD Power Asia Pacific Executive Director Mohit Arora said in a statement.
According to the study, there was a need to improve the supply chain with dealers expressing dissatisfaction over the time taken in delivery of parts and ease of ordering parts.
“This highlights the need for some automakers to further support dealers with an improved and more efficient supply chain,” Arora said.
Improving the speed of parts delivery not only allows for work orders to be handled more efficiently, but also ensures customers are not troubled by unexpected delays or extended wait times, he added.
The study also said the dealers felt an attractive range of vehicles was critical for them and the automakers to succeed.
Among the manufacturers included in the 2013 study, Maruti Suzuki India and Toyota performed particularly well in overall dealer satisfaction, showing improvement from 2012.
“The success of Maruti Suzuki and Toyota not only demonstrates the automakers’ commitment to ensuring the dealers’ operations are viable, but it also shows their active support regarding such areas as training, marketing and sales activities,” Arora said.
On average, 88 per cent of dealers believed that they definitely would continue to work with their automaker for two years, the JD Power study said.
Among dealers in the top quartile of satisfaction, 98 per cent expect to be working with the same automaker in 2015.
In contrast, dealers who rate their experience with the automaker in the bottom quartile of satisfaction, only 72 per cent expect to be working with the same nameplate in two years’ time, it said.
The 2013 India Dealer Satisfaction with Automotive Manufacturers Index was based on responses from 618 dealership general managers or dealer principles across all main manufacturers. The study was conducted in association with the Federation of Automobile Dealers Associations (FADA), and was fielded between February 2013 and April 2013.
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