Recent growth in the light-vehicle market in India has spurred optimism among many automotive dealerships, with more than 60 percent indicating they expect to generate a profit by the end of their current fiscal year, according to the J.D. Power Asia Pacific 2011 India Dealer Satisfaction with Automotive Manufacturers StudySM released today. More than 80 percent of these dealers say they expect their 2011 profits to exceed their 2010 profits.
The inaugural study measures dealer satisfaction with vehicle manufacturers or importers and identifies dealer attitudes regarding the automotive sales business. Overall dealer satisfaction is determined by examining nine factors: marketing and sales activities; product; vehicle ordering and delivery; sales team; parts; warranty claims; after-sales team; training; and support from the manufacturer. The study is designed to provide manufacturers with insights about dealer opinions and attitudes to help them improve dealer relations. In addition, the study identifies key dealer-related opportunities and challenges to assist automakers in achieving their overall business objectives.
“India’s light-vehicle market is growing rapidly, and the changing market environment underscores the need for automakers operating in India to develop strong and competitive dealer networks,” said Mohit Arora, executive director at J.D. Power Asia Pacific, Singapore. “As the market matures, forming strong dealer networks will become more and more critical for manufacturers to secure greater market share.”
The study finds that dealerships that indicate they expect to generate a profit by the end of the fiscal year are notably more satisfied with their respective manufacturers than are dealerships that indicate they expect to experience a financial loss. Among dealerships that expect to be profitable in 2011, satisfaction averages 780 on a 1,000-point scale. In comparison, among dealerships that expect to incur financial loss, satisfaction averages 609—a difference of more than 170 points.
The study also finds that dealerships that receive regular and frequent visits from manufacturer sales representatives are notably more satisfied than dealers that have less-frequent contact with the OEM. Among dealerships that indicate they are visited by a manufacturer’s representative an average three to five times a month, satisfaction averages 787. In contrast, among dealerships that receive visits once a month, on average, satisfaction averages 740.
“This suggests the existence of a reciprocal effect between satisfaction and expected profitability for automotive dealerships,” said Arora. “Dealers that are more engaged with their respective manufacturers are also more satisfied, which may help improve dealer profitability. In turn, boosting profitability for dealers may also help manufacturers increase their bottom line.”
Despite the relatively high levels of expected profitability among dealerships in India, the study finds that dealers for domestic manufacturers (those headquartered in India) are significantly less satisfied with their expected profitability than are dealers for manufacturers based in the United States or Japan. Forty-two percent of dealers of manufacturers based in India say they are “dissatisfied” with their dealership’s expected profitability. Among dealers affiliated with manufacturers based in the United States or Japan, 16 percent and 19 percent of dealers, respectively, say the same. Conversely, 16 percent of dealers affiliated with U.S.-based manufacturers and 10 percent of dealers for manufacturers based in Japan indicate they are “delighted” with their expected profitability. However, only 4 percent of dealers of domestic manufacturers say the same.
In 2011, overall dealer satisfaction with automotive manufacturers averages 749. Among the manufacturers included in the study, Toyota ranks highest with a score of 890 and performs particularly well in all nine factors. Following Toyota in the rankings are Chevrolet (809) and Maruti Suzuki (798).
The study finds there is ample opportunity for manufacturers to improve in the factors for marketing and sales and support from the manufacturer, which are the least satisfying among the nine factors measured. In the marketing and sales factor, increasing subsidies for marketing expenditures and shortening the claims process for reimbursement of marketing expenses may have the most notable positive impacts on satisfaction. In addition, making it easier for dealerships to conduct business with the OEM would have a considerable positive effect on satisfaction in the support from the manufacturer factor, as would establishing processes for attracting and retaining highly qualified employees.
The 2011 India Dealer Satisfaction with Automotive Manufacturers Study is based on responses from 545 dealer principals or dealership general managers located in more than 170 cities throughout India. The study was conducted in association with the Federation of Automobile Dealers Associations (FADA), and was fielded between September 2010 and January 2011.
Source: Toyota
