Thank you Priyank Fatehpuria for taking the time to share his valuable industry knowledge with us! Priyank has been in the automotive industry for 2 years and has Hyundai, Skoda, Nissan and TVS dealers in Rajasthan. He is also a BHP Billiton.
Q: How did you enter the auto dealership industry?
A: After graduating in 2004, I was engaged in export business and was looking for opportunities. In 2010, I cooperated with Nissan. The brand was a new entrant at the time and they were looking for new entrepreneurs. The entire review process revolved around my enthusiasm for cars and my knowledge of cars, so everything started.
Q: Which brands do you represent?
A: Nissan is the first. We started operations in 2011. At the end of 2010, we got a letter of intent, and now we have two outlets, and then we got a Hyundai dealer in Jaipur, which is another 2 outlets. For TVS, we have 3 branches in Kota and surrounding areas. Recently, we joined forces with Skoda in Kota and Bhilwara 3S branches.
Q: How many outlets are there in total?
A: We have 9 outlets in total.
Q: So, what do you like most about the car dealership business?
A: Do what you like to do, and you will never work another day. This is indeed the mantra I believe in. In India, buying a car is still a big deal. At the end of the day, it is a great feeling to have the opportunity to convey this happiness. In addition, being able to follow my passion and use it as a career is a huge incentive for me. The idea of contacting new models throughout the year is always very exciting.
Q: Did you test drive all the new cars that came in?
A: Yes, it is the business, the model is like this. Therefore, if there is a vehicle being launched, usually all original equipment manufacturers will refer to their dealership principle as their factory or test track. Yes, we test drive before other people come into contact with it, and even before the media sometimes come into contact with it, we have participated in many conferences, so we know what the car of the future is. Sometimes OEMs want to get our input on the combination of variants and models. An OEM without a dealer is incomplete, and a dealer without an OEM is of course nowhere to go. This is complementary. This is the industry standard. Several OEMs have distributor groups representing all Indian distributors, so they visit their headquarters and even abroad. Yes, the input always comes from distributors, because they are the first customers of OEMs.
Q: What do you hate most about the car dealership business?
A: I don't like it very much... I can't be so specific. Of course, nowadays you need to pay great attention to the process in order to realize the system. Otherwise, there is always the risk of complaints.
After all, it depends on the product. So, if you don't have a product, you can't sell it. You can't make it yourself, so rely on OEM.
Q: What car do you personally drive?
A: I drive a BMW 3 series. And besides that, we also have a Kicks-one is diesel and the other is CVT. I recently purchased i20 DCT and Magnite CVT.
Q: What do you think is the cost of opening a dealer in a big city? In a B-class town?
Answer: This is completely variable and depends to a large extent on the relevant brand and the type of project undertaken. For a typical green space set up in the subway, the cost of an investment of Rs 7 crore in capital expenditure can quickly reach the north. At the same time, the brownfield model can save capital expenditures, but due to the required location and area, the rent is also high. Compared with other brands, mass market brands require more stock investment. On the contrary, in towns in section B, the cost is usually 40-50% lower, but opportunities are scarce.
Question: You mentioned green fields and brown fields. what is that?
Answer: Greenfield is a piece of completely bare land. You must purchase and build in accordance with the OEM requirements and the layout provided by the OEM. So this is the so-called green space. You have to build it from scratch. The brownfield is if you have a ready-made setting, then you can rent it out, and then you can redesign it to the current OEM layout. So if you talk about it and elaborate, in smaller towns, OEMs usually prefer green personal land-I mean land owned by the applicant. In larger towns, this is impossible, so you usually choose brownfields and rent them out. This is the difference.
Question: Compared with car dealers, how are the profits of two-wheeler dealers?
Answer: Both have different fundamentals, but profitability depends entirely on management and operating methods. Two-wheeler dealers are usually less capital intensive and have a higher vehicle turnover rate, but their profit margins are lower compared with car dealers. The cost of setting up car dealers is quite high, but their operating profit margins are appropriate.
Question: What is the difference between operating a two-wheeler showroom and a four-wheeler showroom?
Answer: We can divide the difference into 3-4 points. Perhaps the first one might be employees. Employees have lower expectations for the two-wheeler showroom. In the four-wheeler showroom, the dissatisfaction and expectations of the employees are the highest. Even for customers. Customers who walk into a two-wheeler showroom are usually first-time buyers. So his expectations are not high. The ticket size is also smaller. When the number of votes is small, it is easier to persuade. Then the third is of course setting. The two-wheeler showroom is almost a quarter of the four-wheeler showroom. So it is easier to maintain. It is easier to keep observation, the number of transactions is larger, but the transaction amount is lower. In the four-wheeler showroom, there are fewer transactions with higher value.
Then customer expectations are constantly changing. In this type of market, customers can expect anything in a four-wheeler showroom, especially with the introduction of social media and proximity to Google. Usually in a four-wheeler dealership, the customers who walk in have nearly 80% of the knowledge themselves. This makes it a somewhat tricky task. Your employees should be well-trained, well-behaved, and well-educated to entertain such customers. So expectations are high. If expectations are high, you must invest more in your employees. Finally, four-wheelers are the second most expensive property for men. Once his spending exceeds 500,000 rupees, he needs to be treated slightly differently from two-wheeler customers. As I said, the building is almost 4-5 times its size, so you have to pay the rent accordingly. If there are many variations, inventory costs are always high. The average number of votes for some OEMs is 500,000, other OEMs may be 1.5 million, so you need to keep inventory.
Q: How does the manufacturer provide you with test drive vehicle support and how do you maintain them?
A: TD policy varies from OEM to OEM, including all aspects, such as regular maintenance of the vehicle to the maximum time the vehicle can be deployed for TD. OEM support usually hovers around 10-20% of the base price. Strict standards are again defined when selling these vehicles, and OEM inspections and declarations must be carried out before the end of the final sale. Every dealer tries to keep their TD vehicles in top-notch condition, and these vehicles are regularly serviced and maintained, because in most cases, this is the first real interaction of any potential customer. Under normal circumstances, dealers will not resist this policy.
Q: How does Covid affect business at the car dealership level?
Answer: COVID-19 is a difficult problem, and I don't think any business is immune. In April 2020, the Indian automotive industry achieved zero retail and wholesale for the first time in its history.
This is indeed a daunting period, because the footsteps almost disappeared overnight. At the same time, fixed costs, maintenance, and wages continue to pile up. Nevertheless, the consequences of Covid did increase the adoption of personal cars. We gradually took over in May, and suddenly starting from June/July, due to the preference for personal travel, the four-wheeler industry is emerging. However, due to fewer buyers and reduced rural demand, the two-wheeler industry is still declining.
Yes, this is a big impact, but I want to say that due to demand, we have spent it well and peacefully, because more and more people decide to jump off the building after the lock-in. They want to get their vehicles right away because they have to withstand the impact of public transportation that has stopped absolutely for months.
The shortage of certain components is now also causing scarcity, which pushes the waiting time even higher. This also had a positive effect, because the customer thought the car was very popular! ! However, this is somewhat artificial. Not intentionally, but forcefully. Despite this, we still face a shortage of current product lines from Hyundai and Nissan OEMs.
Q: You talked about the perceived need for cars. If you say there is demand and there is a long waiting period for cars, would you say that customers are more likely to buy cars?
Answer: Yes. It had a positive impact. In India, it is usually a herd community. Therefore, if certain products have a waiting period, more and more people will be interested in ordering the same product. They think it's safer and they are selected by a bunch of people, so why don't we book it too. This of course will have a positive effect. Hyundai Creta has been waiting since its first incarnation.
Q: After Covid, have you seen an increase in passenger flow due to the risks of public transportation? Do you conduct more transactions remotely from the customer's home?
Answer: Passenger traffic will definitely increase, but I would not say that these transactions were conducted remotely, because there are two reasons. They are mainly first-time buyers of four-wheelers. As I said, this is the second most important property, so usually people want to touch and feel the product with their families. This is one of the reasons why it still hasn't happened to the extent possible. Secondly, the customer wants to come over and negotiate. This is not possible remotely. Yes, of course, then the third point here is-cars with a long waiting period, buyers know that they cannot be negotiated...These can also be booked online. That is an increase. This fact will not be denied, but for smaller cars, first-time buyers in smaller market segments will still not choose remote purchase or online booking methods.
Q: How much of your sales come from online bookings? What else have you done for online marketing?
Answer: If I talk about my Nissan dealer, I think it will not exceed 5% at the moment. Even if I talk about my Hyundai dealer, it does not exceed 5-8%. The towns we operate are relatively small towns-Kota and Jaipur, but nothing more. When I say people want to touch and feel, what they usually do is they have to come once. If your question is a bit different, they don't just come to the showroom, but book directly, then I would say less than 5%. But if you build it this way, they have visited once, but they still go back, decide and book online, then this has already started to happen. If I talk about Magnite, I will have about 10 online bookings out of 300 in December 2020. The remaining 290 people came, saw the car, touched + felt it, and booked it. So there is still a long way to go, and then the negotiations will never end in India, at least in this highly competitive world. This may cause some changes in the luxury car sector.
Question: Please tell us your offline and online marketing.
A: You cannot survive without internet marketing. Social media, group texting, etc., have been the norm for more than 90% of dealers since 2015. I have not seen any dealers that will be zero in online marketing. impossible. You cannot escape this. But then again, this is marketing material. I do Instagram and Facebook just to make sure that I stay in the minds of my clients. He might visit my showroom or my game, because if I talk about modernity, we have 6 showrooms in this city. So I need to compete with my competitors first, and then I need to compete with my co-dealers. This is how I need to create a dealer image, and now social media is inevitable. Even if you talk about social media, nowadays social media portals generate many potential customers. These potential customers are also sold on the open market, and you cannot avoid this. Social media portals that only provide car information capture your data and then sell it on the market to dealers and original equipment manufacturers. Sometimes OEMs also buy these products in bulk, and at the local level, you can always establish contact with the local website and set up some potential customers. Basically, the complete activity we are discussing is query generation. This is not the completion of the transaction, but the generation of the inquiry. So you post something everywhere on Instagram, Facebook, group texting, and portals. It's basically creating a query pool that can be distributed. There is a percentage that you expect to be mature.
Suppose you participated in 100 queries-there will be 20 popular queries. Out of these 20, you can expect 5 bookings. These 5 bookings will mature into 3 retails again. Therefore, if you see a total inquiry of 3%, you can expect that under the best circumstances you will be able to sell a car.
Q: What percentage of your income comes from car sales, accessory sales, insurance and after-sales service?
A: As an industry standard, about 40% comes from new car sales. The accessories depend on the situation, it may be 10%, 40% of which come from after-sales service. Insurance also contributed about 10%. The government/IRDA now has very strict regulations.
Q: What are the positive aspects of operating a service center?
Answer: I think the service center is the backbone, because in India, we have very few OEMs with independent service centers, and this is the only reason. Because you have a fierce competition with sales. It is between the product and the cooperative distributor. Therefore, sometimes the only thing that attracts us to sell is that at least we will make sure that the car reaches our service center. So we will leave the customer in the service center. The service center is of course the backbone of any good distributor, and this is also the source of comments, because when you make a sale, it is usually reached through negotiation. But the positive reviews come from the service station-they cannot be purchased. Now it is more important that you focus on the service center, because this has a direct impact on the growth of your new car sales.
Q: Do you have a used car department?
Answer: Used cars are once again a growing sector in India. At the very least, you would not be able to survive without the used car department of a four-wheeler dealer.
Q: What is the size of your used car department?
Answer: It depends. Some dealers range from 5% to 20-25%. OEM manufacturers also have some established principles. The evaluation and everything are done according to the guidelines set by the OEM. You have a permanent staff and a dealer team to handle this separate department.
Q: Which one is more profitable? Used car or new car business?
A: Used cars still have a long way to go in India. It is seen as an aid to new car sales. My used car department has no profitability issues, or if there is, then it can be ignored. You can’t compare it to new car sales. Not at all. However, it increased by 15% year-on-year. I think it will take at least 5-7 years to reach a certain level. We can say yes. The used car department is also very profitable and is an independent department of my dealer. So far, it has only helped us, maybe the department's payroller is being taken care of. That's it.
Q: What do you like about the used car department?
Answer: It increases the number. As I said, this is now inevitable, it helps to achieve your goals; it also provides a one-stop solution for customers who may want to trade in. If you provide all solutions under one roof, you will not lose customers, so you can keep customers.
Q: What do you dislike about selling used cars?
Answer: You cannot determine the actual price of a used car. This is the only thing I don't like. There is no decisive value, such as the new Maruti Alto retailed at X price in India. In a used car, you can't get the absolute true value. It is also a game of supply and demand for used cars.
Q: Customers always complain about dealers online. Can you share a story or two about the customer in question?
A: Indian consumers are a bit different. I will start from there. So usually you have to motivate them to write good things about the dealer, and you will find a lot of complaints. I would say this applies to everyone. Maybe you and me are the same. If you are not satisfied with some products or services and you complain, please find the helpline number and complain immediately. This is why you find that almost all distributors in India have received a large number of complaints. If I talk about recent developments, there are many challenges in this pandemic. Because of this, there are many parts problems, supplier problems, etc. Even if dealer employees are trained and know everything well, there are still many complaints just to solve the problem. Just as we have told the customer in full and detailed that this part is stuck due to import, we are working hard to arrange it. Or maybe in this variant, you can change the color choice, but if the customer is opinionated, he or she believes that if they file a complaint, her/his problem will be resolved.
Many OEM incentives are now also associated with these complaints for inspection. So OEMs have done a lot to ensure that we sail smoothly.
Q: Since Rakesh Srivastava joined Nissan, what is the atmosphere among dealers? We heard that all Nissan dealers had a party on the day his appointment was announced.
Answer: Rakesh Srivastava is certainly an industry veteran and one of the most famous leaders in the Indian automotive industry. The news that he joined Nissan was very positive for all dealers and NMIPL employees. It confirms Nissan's belief that it will continue to exist in India. We heard that the atmosphere was good on the day his appointment was confirmed. Of course, this is party time. We are sure that Nissan has no plans to leave the Indian coast. That's it. In fact, I even read on Team-BHP that people are happy.
When we started in 2010, we were sure that they would compete with double-digit market shares. We also believe this, because Nissan has good products that suit Indian tastes very well. So everyone wants them to stay. Mr. Srivastava’s joining guarantee is yes, the movie is not over yet, to put it simply.
To further elaborate, whether it is Nissan or any other OEM, they can cooperate with multiple countries/regions, they have multiple factories, for example, in Nissan, we have 17 factories around the world, and operate in more than 150 countries/regions business. So this is normal. If an enterprising leader, a well-known leader in the industry, and a leader who understands the Indian market, he will fight more with his boss, because there are hierarchical systems everywhere, and even the boss must Submit it to the board of directors for final approval. Hyundai and Skoda are the same, with strong senior management capabilities and obvious advantages.
Mr. Srivastava knows all four Ps of marketing. In fact, he may also know two other things that we don't know! ! ! The difference is the leader. He has proven this with Magnite.
Q: What is the general public reaction to Magnite?
A: In a word, it's great. No one expected it. Even we, as a distributor, are prepared for 80% of this action. The remaining 20% is unknown. We were told and we were sure that this would be a shocking price. But we don't know that this will redefine the segment, this will create its own segment, and it will redefine the definition of VFM. So this is a surprise. As a product, Magnite has done a great job. The waiting period exceeds 36 weeks. There are 40,000 bookings throughout India. I believe India has short-term memory loss. Even if it is a product, this is a huge blow, and you may return to the main business in 6 to 8 months. People will forget the past and look for new products. You need a product to be popular to return to the game. I think this is the product. Everyone is talking about it, even the game is talking about it.
Q: When a hot new car (such as Magnite) is on the market, how do you deal with it? What kind of preparations? Some releases caused the showroom to be crowded like a train station!
A: I would like to say that preparing for the release of new products on the OEM and distributor side is a difficult task. The product is manufactured, but it must reach the end consumer. OEM contributed 90%, trailer, release time, production plan, advertising, training, media drive, etc. Then dealers must plan for manpower, training, and capital investment. However, for Magnite, the plan was not 100% successful, because no one expected such a large capacity. We need to shape ourselves every day.
Q: How do the policies set by OEM restrict you? Do you find restrictions on the rule framework? For example, some OEMs specify the layout of the showroom, what advertisements can be placed, and so on.
Answer: 100%. Otherwise, how will customers experience the same product in the same atmosphere? This is how the power of the brand comes. If you choose a brand, regardless of town, location, showroom, you must feel connected and must have the same atmosphere. This is why millions of dollars are spent on layout and everything. This is a set of rules you need to follow. Did not escape it. Everything is set by the original equipment manufacturer. There is a central architect and a central audit agency to handle it.
Question: Is staff turnover a problem in the dealer business? How do you deal with it?
A: These few days have been a big problem. You must develop a better and appropriate human resources policy for the distributor. This is the only way, because if a well-trained manpower leaves, it will take twice the cost and energy to find a replacement. You have to be very specific, usually, the dealer will pay close attention to the human resources policy. This is our management method. Because of this, OEMs have begun to directly motivate dealers to make them feel connected with the brand. Attrition is a big problem in this industry.
Q: If you are stuck with the inventory of engines/variants that are rejected for sale, what will you do?
A: There is a buyer for every variant, every color, and every engine. But yes, there are some variant options that get stuck when you are dealing with mass market products. So you give them on-site rewards, you provide them with profitable consumer discounts, and you put them first, those potential customers. The general manager in charge of sales in the showroom had to adapt. If some stock is lying, it will pop up on his excel sheet every day. So this is why he reminds every day to find buyers and sell cars.
Q: Is luxury car dealership a good business? What are the advantages and disadvantages of operating a luxury car showroom and operating a showroom for mass market brands?
A: Just like low risk, low return and high risk, high return. If it is a high-volume brand, it needs to invest more and more time, and there is a risk of slow sales. Among luxury brands, we have smaller inventory, niche products, a higher customer base and possibly higher returns. So both have their pros and cons. It goes hand in hand. Usually, the luxury car dealership principle will also be interested in mass market brands, and similarly, the mass market car dealership principle will always be interested in luxury car dealers.
Q: What is the biggest challenge in this industry?
Answer: Inventory (unsold cars on your lot), manpower and changing dynamics (Covid, GST, BS6...).
Q: What is the OEM upgrade matrix?
Answer: You can easily protect ASM emails according to dealer-level requirements. Nowadays, all OEMs associate distributors with complaints, so even whispering can cause confusion, but it must also be true. Most of the complaints are because the car was not delivered on the promised date. No matter what measures we take to ensure, this is always a gray area. Production capacity is fixed and cannot be increased overnight. Supply chain problems (Covid), shipping delays, etc. may occur, so we cannot determine the date. Yes, the correct escalation in this area may bring you to the priority list, but again, you should have real evidence of commitment. Today, OEMs have developed an incentive-based complaint structure for distributors.
Q: How do you deal with inevitable human error?
A: Sometimes, customers must understand and consider the 1% chance of human error. The right model combination for booking or some good things missed on delivery. If the customer provides it in written form, it will also be 100% realized.
The minimum investment for any four-wheeler dealer is Rs. 50 million. Therefore, the dealer principle never requires his employees not to fulfill their small promises to customers. Sometimes this is inevitable, but with polite follow-up, things can be easily resolved.
Q: How does the sales allowance play a role in the negotiation?
Answer: A smart salesperson has many advantages and can entice you to buy the brand, style and color of his choice. In the first negotiation with them, please always make two choices among all three. He or she will always try to sell you variants that are suitable for on-site rewards (for him), so a little flexibility is always beneficial. Salespeople meet 10 or more potential customers a day, so they think they are smarter than ordinary customers.
Q: What is the salary package? How is the incentive structure formulated?
Answer: The CEO of a large dealership can get all the benefits, such as housing allowances, cars, and even a reduction in the dealer’s overall profit and loss. GM is usually tied to OEM incentives, so if the distributor earns X amount per month, then they will get a share. Salespeople are the most unstable people. They are constantly shifting from one brand to another, which is not always beneficial (very few OEMs have very strict policies, do not hire manpower, and do it in the city Deals between dealers-such as Hyundai Motors).
Q: What to do and not to do when visiting the showroom, trial rides and negotiations.
A: Few customers come to the exhibition hall on a white horse, eager to make a deal or test drive. Usually 10% of them are real buyers, but the rest are not treated appropriately due to their bragging attitude. TD: More than 70% of customers will drive TD cars like there is no tomorrow-speeding, hard braking and reckless driving are common. The customer must understand that the car he buys is not for rally racing, and the salesperson sitting with them also has a family. This is common in small towns and accidents are also common. Customers should drive in the way they usually drive and interact more with salespeople to understand hidden features and politely offer better prices.
Respect the time of the salesperson who serves you. Sometimes people will call them in the office/home and let them sit for a few hours.
Q: What vulnerabilities exist in the process of signing documents, making payments, etc.?
Answer: Keep copies of all the documents you have signed, and check with the sales staff for every commitment you have made.
Q: How and when did you know about Team-BHP?
A: I grew up reading several car magazines, such as Autocar and BS Motoring. In those days, my motto for family outings on Sunday was to grab the latest edition of one of them. Fast forward to the Google era, and I was fascinated by Team-BHP since its inception. I am happy to find that many people treat their machines like me. At that time, Team-BHP became a daily dose, and magazines took a place.
I remember that I applied for membership in 2016-17, but even though I tried my best, I was rejected. I am disappointed, but always keep avid readers to satisfy my enthusiasm. I applied again in 2019 and I was well prepared. I was lucky to be admitted this time.
Q: Do you see Team-BHP as a community or a source of information?
A: I would say both, because Team-BHP is a one-stop solution for all my car needs. This is indeed a community that I can connect with; I feel connected with members, and I like to read new car reviews, travel notes, BMW updates and latest news/exclusive news. My eyes also spotted the Team-BHP sticker on the road!
Q: What do you like the most about Team-BHP? Does it help your enthusiasm?
A: The moderators maintain strict rules and disciplines in order to provide a unified experience for all oil heads, which deserves warm applause. The facts are completely undiluted and there is no OEM investment, so it is 100% trustworthy.
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