Automobile dealers look for strategies to revive sales, arrest job losses

Automobile dealers and manufacturers congregated at the Second Auto Retail Conclave on Wednesday amid poor sales, lacklustre demand, dealer shutdowns and mounting job losses. 

They deliberated on revival strategies for auto retailing even as improving profitability and margins dominated the discussions.

Auto sales have been declining for 13 straight months as a broader slowdown in the economy has crippled demand across the country.

Addressing the delegates, Ashish Harshraj Kale, president of Federation of Automobile Dealers Association (FADA), said dealerships have been forced to cut jobs in the recent past.  They had hired people last year, in anticipation of growth this year. “I am confident that by the time my tenure as president (of FADA) ends in 2020, we would not only have restored those jobs but additional jobs would be created,” said Kale. 

Kale also pointed out that automakers need to switch to retail sales reporting against the current practice of wholesale (despatches to dealers) data. This would ease the burden on everyone and make the entire value chain more efficient. Automobile manufacturers must calculate the market share based on retail sales as is done globally, he said. 

The need for a re-think on the retail format and make them more contemporary to the rapidly changing buyer profile as well as growing digitalisation came up during one of the panel discussions. 

“Dealers will have to think in terms of clicks and bricks as against the traditional bricks model,” said Som Kapoor, partner at EY. Given the growing influence of digital in buying, dealers have to think how many bricks (physical showrooms) will be required per click. With no sight on when the slowdown would end, the overall mood at the conference was sombre. 

But some like Vikram Modi, managing director, Modi Motors, remain optimistic and see the current situation as an opportunity to grow business inorganically.

A dealer for Jaguar Land Rover, Honda and Hyundai, over the past decade, has grown in scale by buying out stressed dealerships and is looking to buy out more as some dealers shut shop.

“I am confident that the current slowdown is just a passing phase and demand will be back by the end of October,”  added Modi.