Mr. Nikunj Sanghi is the MD of J S Fourwheel Motors Pvt Ltd, Alwar, Rajasthan, which is a 3-S (sales, service, spare parts) dealership of Mahindra & Mahindra. Mr Sanghi also manages a 4-S (sales, service, spare parts, survey) dealership of Hero MotoCorp. He has received a number of awards for his dealerships.Amongst the various positions held by him, he is also the chairman of M&M’s Dealer Advisory Council. He is a member of FADA (Federation of Automobile Dealers Association) Council for a number of years and has held various offices in FADA, including the offices of Honorary Secretary and Treasurer as well as Chairman of FADA’s various committees. He was the President of FADA for FY11 and FY12.
Demand for smaller cars and petrol models has definitely gone up. We at M&M are yet to see a major jump in volume or demand and are expecting volume pick up from the new Scorpio launch. We expect 30% increase in Scorpio volumes after the new launch from 45-50 per monththat it is at now. Demand for diesel vehicles is likely to take longer to recover due to reduction in price gap between both the fuels. However, Bolero and pick-up volumes remain strong — both are primarily driven by commercial usage (around 85% of Bolero sales are driven by commercial usage).
Alwar is small market — customer profiles are largely farming-income-based people and traders. As you can see, agriculture income is one of the key demand drivers in this region. Key agriculture produce in the region is mustard, wheat and onion. Prices of these commodities are critical for demand. Real estate or land prices,which have also jumped in the last 5-10years, have also aided M&M’s vehicle demand. farmers and traders both are the users of M&M vehicles. Given high level of commercial sales of Bolero, commercial mobility is one of the key drivers for these vehicles.
Mahindra’s small SUV product launch is still sometimes away, I guess it will be launched in a year’s time. Probably next festive season is what they are targeting.
We do not see any competition for Bolero as we have virtually the entire market share. Both Renault/Nissan and Ford are present in the region. They are doing pretty well. However, Duster volume has come down significantly and it is also impacted by Nissan’s launch of Terrano. Duster has a huge inventory pile-up at the dealership level now. I think EcoSports volume will also come down after the initial euphoria.
Most companies’ dealerships are present in the region. In the four-wheeler space, Maruti and Hyundai are the biggest players. Mahindra in big on the SUV side. Other players like Ford, Renault and Nissan are primarily single-product companies.Take the case of Ford – earlier Figo was selling and now only EcoSports is selling. Likewise, Renault sales is mostly Duster-driven and its other models are not getting any traction.
Actually discounts haven’t come down and are still going on. But the practice of intra-dealer discounting to lure away other’s customer has definitely come down. When the demand was much weaker, dealers were giving extra discounts to sell their products as the customer pie was limited and dealers were vying to get those in-spite of discounting from their own pocket.
Post-harvest agriculture season (April-June)sees the best sales. Also, festive seasons like Diwali/Dussehra are very good months. People use bikes here for commuting as there is no public transport. Most people rely on their own motorcycle for transportation. Agriculture production and profitability is the primary driver for the mass market segment. Around 30% of the volumes happen in festive times and another 30% after the harvest season.
This is predominantly a motorcycle market (~85%). Scooter volumes, although growing fast,are only about 15% of the market. I think scooter sales will grow, but motorcycles too are growing fast. It will be in the same range in near future. Rural folks still prefer motorcycles due to their sturdiness and their endurance in tough conditions.
We are having a dream run for Hero bikes with about 20% growth with similar growth in walk-in conversions. We sell around 3,000-3,200 bikes per month.
Dealership inventory is around three weeks and there is no pressure from manufacturers to lift volume as demand is strong. Vehicle inventory has definitely come down in the last one year. Hero’s 14-days credit period scheme is applicable if paid stocksare above a certain level — it is not applicable to all the inventory stock in the dealership.
Hero is mainly into commuter bikes and will remain so. We have about 80% market share in the commuter bikes segment in Alwarand 80% bike sales are in the three brands —Deluxe/Splendor/Passion. As far as performance bikes (or premium bikes)go, people don’t visit the Hero showroom for these and Hero’s name does not come up if customers are thinking of buying premium bikes. Hero needs to create and aggressively brand itself to get customer attention in the performance bike segment. This segment is led by Bajaj’s Pulsar.
An M&M dealership is more profitable than a Hero one — and both have different dynamics. While services contributesabout 30% of revenue for M&M dealership, it contributes 70% of the profitability.In the case of Hero, services revenue is lower as a lot of services are done by non-organized service centres and road-side mechanics. For Hero the revenue break-up will be 50:50 for product and services.
At Hero, the dealership has a 3-tier structure where you have the main dealer along with sub-dealers and authorised representatives under them. All the three channels perform sales independently.Hero appoints bothsub-dealers and authorized representatives—we don’t have a role in appointing those. However, vehicles are routed through us to that channel as well and we have to share revenue with them; so, profitability has come down due to the presence of sub-dealers in our territory although incremental volume compensates partially.
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