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Tata Motors loses 2 top dealers to rival cos, now gains 2

Discussion in 'Fiat India News' started by amogh, Oct 22, 2010.

  1. amogh

    amogh Staff Member Janitor

    Messages:
    1,377
    Pune
    Grande Punto 1.3
    Sometime back I had posted an email from Mr.Shailesh Bhandari about B U Bhandari shifting to VW. Here is a press clipping discussing the issue. For me : it is not ONLY about margins. I am pretty sure VW is using "all sorts" of muscle power to take away Tata-Fiat dealers

    MUMBAI | NEW DELHI: TATA Motors, India’s second-largest car maker, faces the prospect of a churn in its distribution network with rival companies luring away two of its top dealers by offering better margins.

    A slow-pick up in sales of Fiat Auto, whose vehicles are distributed in India by Tata Motors, may also have contributed to the exits. Pune-based BU Bhandari Auto , which became a Tata Motors dealer more than a decade ago when the automobile major entered the passenger car market by launching Indica, will distribute products of German car-maker Volkswagen , which is eyeing a larger market share in the booming Indian automobile market. Delhi-based dealer A-One Motors , promoted by Yadur Kapur, will focus on distribution of cars from Honda, BMW and Rolls-Royce.

    The promoter of Bhandari Auto, Shailesh Bhandari, is currently in Germany to get a feel of the operations of his new partner. These two dealers together contribute 5-6% of Tata Motors’ passenger car sales, according to automobile industry executives. Tata Motors sold 1.3 lakh units for the period from April to September.

    The Tata Motors spokesman confirmed the exit of the two dealers, but said that only seven dealers had left in the past three years. “This has nothing to do with their business or relationship with Tata Motors,” he added. Over the past six months, it has added 10 new dealers taking its total dealership network to 247 as its passenger car sales have been growing at the rate of 44% till September this year, the spokesman said. The company’s new CEO Carl Peter Forster is understood to be overhauling the entire passenger car segment by adding more dealerships to push volumes in a growing market.

    Some of the existing ones are expanding network. “Margins are improving, and in the product schemes offered by the manufacturer, the contribution of the dealers has significantly reduced,” said Vinod Sharma, MD, Fortune Motors, a major distributor of Tata Motors vehicles in Maharashtra. Car sales in India are set to rise 12-13% in 2010-11. The Society of Indian Automobile Manufacturers (SIAM) forecast car sales to rise to 1.7 million units in the year to end March 2011.

    Stagnating sales from Fiat was an issue, said one of the dealers. “There have been stagnant margins with our A-One business that caters to Tata Motors, while they are much higher in our other dealerships. The overall effect is also coming from Fiat cars whose sales have not grown as expected,” Mr Kapur said. Sales of Fiat cars dropped 8% to 11,863 cars during the past six months. “When we take up dealerships, we never leave it. However, this is a commercial decision,” said a senior offical at BU Bhandari. Multinational companies like Volkswagen, BMW, Nissan and Audi, which are ramping up their India presence, are poaching dealers of Tata Motors, Hyundai and Maruti-Suzuki to access central locations in major cities.

    These players are offering 6-8% of the price of a car against 3-4% being given by Indian majors. Not many new entrepreneurs are venturing into the auto dealership business as it involves heavy overhead costs. The dynamics of the auto dealership business is undergoing a change with companies forcing dealers to dole out freebies leading to major decline in margins.

    Source : http://economictimes.indiatimes.com...-dealers-to-rival-cos/articleshow/6790139.cms
  2. PaddleShifter

    PaddleShifter Staff Member Janitor

    Messages:
    2,697
    Chandigarh
    Grande Punto 1.3
    Re: Tata Motors loses 2 top dealers to rival cos

    :sad1
  3. Ravi

    Ravi Staff Member Janitor

    Messages:
    6,001
    Bangalore
    Grande Punto 1.3
    Re: Tata Motors loses 2 top dealers to rival cos

    No idea about A-One motors, but B U bhandari was one of the good service centers of Tata/Fiat.
    So any new dealership is coming to Pune? I am sure it will come.
  4. Re: Tata Motors loses 2 top dealers to rival cos

    Yes, I was fearing the same since last month when initially news came up that BUB is moving to VW. To be honest, one of the main reason behind purchasing punto was its close proximity to my house (pashan) showroom and service centre in wakad. So far I've excellent experience with them since last 1 year. Now finger crossed for pandit auto (or anything new coming up?). Just want to confirm from other pune owners, whether only tilak road branch of pandit does fiat work or I can get at some other nearby places to my house( I would always prefer mbai-blor bypass).
  5. amogh

    amogh Staff Member Janitor

    Messages:
    1,377
    Pune
    Grande Punto 1.3
    Re: Tata Motors loses 2 top dealers to rival cos

    @pinakin : we have no other choice but Pandit. So you will have to drive to tilak road to drop your car.

    But I can tell you that a new dealership is coming up in Pune. The procedure is in progress.
  6. Vroom

    Vroom Amatore

    Messages:
    234
    Mumbai
    Re: Tata Motors loses 2 top dealers to rival cos

    2 dealers contributing 5%-6%, that's huge if you consider 170 (or more??) odd dealers across India.
  7. Sumit

    Sumit Superiore

    Messages:
    607
    Munger
    Re: Tata Motors loses 2 top dealers to rival cos

    its a foolish decision by those dealers. VW & Honda dont sell as many cars as Tata does. polo is a boring car and honda sells only on reputation. Tjet is a much superior technology than i-vtec or whatever. MJD is far superior than tdi of vw.
  8. jumu

    jumu Superiore

    Messages:
    969
    Chennai
    Re: Tata Motors loses 2 top dealers to rival cos

    @Sumit,

    Those two dealers would have surely done their homework and would have got convinced by VW and Honda. If anyone is running a service center to make money, then my opinion is that TATA is a better company to be linked to as the parts quality is not super and hence requires more replacement and hence more money for the service centre.
    If the move has been borne out of a desire to be associated with a multinational car company and for status reasons, then it is a justified move for them, but it wont be before 5 years that they will start to see returns. Its like getting pregnant all over again !!
  9. Vroom

    Vroom Amatore

    Messages:
    234
    Mumbai
    Re: Tata Motors loses 2 top dealers to rival cos

    The point also is this: % revenue that these dealers earn for every product they sell. I read that VW is offering far more margins than Tata is doing (3%-4% per car sold of Tata v/s 11%-13% per car sold of a VW). That's the deal breaker for Tata. Now, who to go with if I was a dealer, is anyways speculation as nobody can predict what products will sell / what products these car manufacturers will bring into the market in the future.

    Cheers,
    Vroom
  10. Bala

    Bala Esperto

    Messages:
    1,070
    Villupuram
    Re: Tata Motors loses 2 top dealers to rival cos

    Oh my God,Has it already begun??

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