Keeping the flock together

Maruti Suzuki is taking on the challenge of engaging second- and third-generation dealers with plans of newer retail formats

India's largest carmaker is at the steering wheel to dodge a unique hurdle - keeping the young flock of retailers together. Maruti Suzuki, which has been in the business of car manufacturing and retailing for over three decades, is witnessing the emergence of the second and even third generation at many dealerships. But characteristic of the present times, some of them are being wooed by the new-age retail opportunities and do not view car retailing as their cup of tea.

"We are in the market for over three decades now. At many of our dealerships, the second generation has entered or is entering business. In some places, even the third generation is ready. We have to retain them, offer them a sense of security on the professional as well as emotional front. The young generation wants to be in a more 'happening' retail business. There are some challenges to address. We need to keep them interested in the car retailing business," says R S Kalsi, executive director (marketing and sales) at Maruti Suzuki, which commands about 46 per cent share in the domestic passenger vehicle market.

The dealerships business and buyer behaviour has undergone a sea change since Maruti began retailing its first car, 800, in the mid-Eighties. From multiple visits to dealerships and arranging all the money at once due to lack of easy availability of finance, the buyer has come a long way today - a tech-savvy individual who makes up her mind before entering the showroom.

Dealers remain the front end and a company's principal touch point with customers. Maruti has about 300 dealer partners who run 2,000-odd showrooms. It is aiming to double its sales network by 2020 and achieve sales of two million vehicles, 40 per cent more than the current volume. But for that, the company must ensure all its dealerships are kept motivated and profitable.

Priyank Mathur, a 28-year-old dealer from Udaipur, had spent almost two years working with a data mining company in the US after completing his MBA. "I was a little reluctant to join the family business which my father had started in 1986. My father always wanted me to join the business. I came on board to see if it works for me, and after a while I realised it is an interesting business which also gives you high profits," says, Mathur who has now spent four years in the business.

But there have been instances of younger generations not taking on the mantle of the family trade of car retailing. HD Sikand was one of Maruti's first dealers and owned Sikand Motors in Delhi's Connaught Place. Sikand had got the dealership in his late sixties and his heirs never joined the business. After Sikand, the dealership had to be closed.

What is making some second- and third-generation members think of other avenues? "I can assure you it isn't the money. The key reason is one's personality and interests. Not every youth wants to do what his father has done for decades. There is a desire to find one's identity," says Mathur, whose father's Navneet Motors runs three Maruti Suzuki showrooms and a Nexa outlet.

Maruti is also changing its network expansion strategy. Unlike in the past, a number of future dealerships will be set up on company-owned land. Maruti is ready to build a bank of land parcels. While reducing the burden of investment on dealers, land owned by the company means dealers cannot migrate to other businesses. The company is also engaging in newer ways with the next-generation dealers. It has formed a dedicated group called "Junoon" with about a dozen dealers as members and top company executives.

"Youngsters have many disruptive ideas and they also represent the new generation of our customers. The name 'Junoon' is inspired from their desire to achieve new heights. We also invite speakers and mentors from outside to groom these youngsters," says Kalsi.

Junoon meetings, mostly off-site, are held every six months and the members change by rotation. "The forum helps us to bridge the gaps between the two generations. We get to interact with the top management and put across our thoughts," says Sunnyraj Agarwal, director with Mumbai-based company retailer Autovista. The 28-year-old, who studied management at the London Business School, founded an e-commerce firm, HeavenandHome.com, with two friends. In 2012, the venture was merged with Fabfurnish.com. And Agarwal joined the family business after that.

The company also runs an internship programme training second-generation dealers for a first-hand exposure of functions across departments. "We are giving all expansion opportunities to the existing dealers. In our business, network is very important and the success of the company is very much linked to the success of network partners," says Kalsi.

According to an official from a rival car company, the experiments of Maruti in cultivating the new generations will be an example that could be explored by others.

Command respect: BVR Subbu

The unfortunate reality is that since the mid-1990s, OEMs (original equipment manufacturers) have not managed to attract the best talent from either engineering or management schools. The "new" generation of auto dealership owners has typically studied at the best schools in India and abroad, and is often much better qualified professionally, and globally more aware, than the executives of auto companies. They find it hard to accept with having to kowtow to what they perceive as mediocrity, and are naturally preferring to stay away. I expect by using technology, they will professionalise their dealerships' operations even more, and prefer to diversify their business interests. I doubt much can change unless OEM executives learn to command respect for their knowledge, rather than demand it for their official "status".

BVR Subbu
Founder, Beyond Visual Range