FINAL PRESENTATION

Dealer Viability (EXCEED Project) Strategy/Finance

Nikhil Sabharwal MBA (IB), 2010-12 Indian Institute of Foreign Trade (New Delhi)
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Objective
The dealership viability stream aims to study the existing revenue streams, costs and various performance indicators to figure out problem areas in dealership from profitability point of view, suggest solution themes to improve the profitability and implement the same in dealerships.

Project 1: Accessory Business Potential for 12 EXCEED Dealers Project 2: Financial template for Service Viability for 12 EXCEED Dealers

PROJECT 1
Accessory Business Potential for 12 EXCEED Dealers

Scope
As a part of the project, Accessories Business is identified as an existing revenue stream for the dealers and the project is done to study the revenue, cost and performance indicators for the same. The results of the findings can be used to establish the targets for the dealers in terms of: 1) Accessories sales (in Rupees) per vehicle 2) Penetration of the accessories sales (%age of retail captured) Enablers would help the dealers to increase their revenue and profitability from accessories business.

Deliverables
To do the potential mapping for 12 EXCEED dealers for Accessories Business To do price benchmarking for TML approved accessories vis--vis local market accessories To suggest measures to improve the accessory sales

Methodology
Two survey questionnaire prepared: 1) One for the dealers 2) One for the customers who bought Cars in last 3 months Local dealers (in Mumbai) visit to understand their accessories business through an interactive discussion Local accessories market (in Mumbai) visit to do the mystery shopping for the car accessories Both the survey questionnaires were also sent to get the response from the dealers and local market accessory prices in Delhi, Kolkata, Bangalore and Hyderabad Template being made to analyze the potential of accessories business for 12 EXCEED dealers Template being made for accessories price benchmarking To understand the customer buying behavior for accessories and help to develop or improve upon the Enablers for accessories sale

TAFE Ltd. Chennai

Accessory offtake per vehicle Vs Percentage of Potential captured
5000
per

Findings
Sales revenue Vs Percentage of Potential captured
39 40 33 28 22 17 20 11 15 10 5 0 9.86% 20% 30% 40% 50% 60% 70% 5

4792 4500 4000 3500 3000 2500 20 1 69 2000 1500 1000 500 9.86 20% 30% 2738
Sales Revenue in Rupees 25

4108 3423
(Lakhs) 35 30

Accessory offtake (in Rupees) Vehicle

(Lakhs)

Profit in Rupees

0% 50% 60% 70%

14 12 10 8

67

5
6

Profit Vs Percentage of Potential captured

13 11 9 7

4
4 2 9.86% 20% 30% 40% 50% 60% 70%

TAFE Ltd. Chennai

Est m t Y y s (in l ) Vs %age of Potent al Capt ed

154 160 140 110 120 88 100 80 60 40 20 0 .86% 20% 30% 40% 50% 60% 70% 22 44 66 132

Findings

Estimated Yearly Profit (in lakhs) Vs %age of Potential Captured

60 51 50 37 40 29 30 20 7 10 0 15 22 44

9.86%

20%

30%

40%

50%

60%

70%

Findings
N n Indi

TAFE Ltd. Chennai

Indi ri ri 0

Indig

Gr nd

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Man a 5% Indigo CS 6%

Indi a 8%

n 9%

Indig Gr nd ri ri Sumo 16%

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Indi 16%

Sumo Grand 11%

Sumo 15% Safari 9% Aria 14%

Indi

is

Nano 18%

Indi a is a 14%

' & %

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" !! ' &  %

even e

tentia V T pe f Vehi e

Margin

tentia V T pe f Vehi e

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d V T pe f Vehi e



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Findings
Actual accessory sales per vehicle Vs Potential sales/vehicle at 60% potential

7 Accessory Sales per vehicle 7 71 7 7 1 1 1 7

1 7 F

1 1 W s n

177 77 in n d n 7

Dealers Name

Findings
Current Yearly Profit (in Lakhs) and Estimated Yearly Profit (in Lakhs) at 60% potential

120 75 100 Yearly Profit (in Lakhs) 80 60 40 20 0 7 TAFE 18 4 Galaxy Autolink Wasan 5 4 Techno Corcorde 2 Roshan 3 Kamal VST Prerna 44 35 24 32 18 30 21 14 KB 16 Lexus 36 22 73

50 52 47

68

Dealers Name

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Findings
Accessory Potential Retention
5000 10% 10% 20% 30% 6846 20% 13692 6846 30% 2 539 1 269 6846 40% 27385 13692 9128 50% 34231 60% 41 77 70% 47923 80% 5477 90% 61616 100% 68462

3423

17116 1141 8558

2 539 13692 1 269 8215

23962 15974 11981 9585

27385 18257 13692 1 954 9128

3 8 8

34231

2282 1712 1369 1141 978

4564

2 539 154 4 12323 1 269 8802

22821 17116 13692 1141 9780

40%

3423

5135

6846

50%

2738 2282 1956 1712 1521 1369

41 8

5477

6846

Retail Penetration
60% 3423 4564 57 5 6846 7987

70%

2934 2567 2282 2054

3912

4890

5868

6846

7824

80%

856

3423

4279

5135

5990

6846

7702

8558

90%

761

3043

3803

4564

5325

6086

6846

7607

100%

685

2738

3423

4108

4792

5477

6162

6846

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Findings
Price Bench arkin for TATA otors Genuine Accessories is-- is Local arket accessories

Approx. price of accessories (in Rs.)

Price difference of TML accessories vis--vis local market accessories (in %)

TML Accessories Ex-Mumbai Ex-Delhi Ex-Kolkata Ex-Bangalore

23,166 17,900 18,095 17,400 20,525 -22.73% -21.89% -24.89% -11.37 %

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Findings
Accessory Music System Security System Power window Seat Cover (Art Leather) Car Cover Alloy wheels (4 PCS) Floor Mats/ Carpets Mud-flaps Steering wheel cover Sun Control Films Air fresheners Reverse Warning System Car Navigation System Roof rails Spoilers TATA 11000 4584 6800 4590 965 17000-25000 870-1195 164 215 620-7679 158-279 2600-5700 7800-20000 1770-7500 1398-2364 EX Delhi Local Market 8500 3000 4500 4500 500 20000-22000 500-700 150-250 100-150 750-6000 150-250 3600-4600 7800-20000 1200-1600 2200

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Findings
Customers View
Cus er ccess ry uy e av r

Pr ce 22%

va a y ccess r es 5% Serv ce 29%

a e access r es 12% Warra y 32%

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Findings
Dealers View
Factors Ser ice Ratin

arranty

Price

Features

Ran e

Discount

A aila ility of Accessories

Deli ery ti e

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Findings
O ser ations a out custo er uyin eha ior for Car accessories:

People generally do not spend much time on accessory buying as compared to buying a new vehicle. Accessory buying is a spontaneous phenomenon and people generally make decisions at the time of buying a new vehicle. f the accessories are properly displayed at the showroom, it facilitates buying of accessories. Some accessories like Music System, Seat Covers are purchased only after seeing their display and selecting them from range of brands, design and features. Thus, it is important that in a showroom Music System and Seat covers should be properly.

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Suggestions
DSE should be well informed and trained about the features of the music system to explain it to the customers. Stress should be given on service and warranty aspects of buying music system from the dealer as compared to buying from the local market. Another important accessory is Central locking/ remote locking. DSE should particularly explain about it and clearly list out differences of using branded central locking against the local made cheaper ones. Regular or routine accessories like floor mats, mud flaps, steering cover, car cover, air fresheners are the ones which involve less cost and customer is generally inclined to buy the cheaper ones as compared to costly ones. So dealer should keep wider range of such accessories. A separate display of accessories like alloy wheel, Spoiler, air fresheners, and other routine accessories other than music system and seat covers should be done. Discount schemes should be planned like giving FOC (costing upto Rs. 1500) of routine items to like air freshener, mud flaps, steering cover, car cover to customers who buy full accessories from the dealer. This would attract customers from going outside.
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Suggestions
Customer Delight Card Similar to one introduced for Tata commercial vehicles which gives the loyalty points that can be redeemed. Display of fully loaded (with accessories) vehicle in the showroom. mprovement in the supply chain & reducing of delivery time of the accessories. Perception needs to be changed regarding buying of accessories from dealers. Focus should be on warranty and service. Customers are willing to pay 10-20% higher for the assured quality which comes with warranty and after sales service. Product-wise brochure/catalogue required.

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Suggestions
Seat Co ers Brochure t should include the following points: mages showing the designs of various types of seat covers Different type of fabrics and colours to choose from mages should be glowing and attractive Catchy lines denoting the luxury, comfort and lifestyle should be printed Prices should be given in a separate price list as it keeps on changing usic Syste Brochure t should include the following points: mages showing different models of different brands along with their important features like USB, MP3, FM Radio etc. mages showing speakers of different models and brands showing their important features like atts, Surround sound, Bass etc. Prices should be given in a separate price list There should be two brochures: one for Seat covers and other for Music System & other routine accessories
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Suggestions
Seat Cover Brochure should look something like this:

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Conclusion

There is a huge gap in the potential and the existing accessory off-take per vehicle which needs to be tapped.

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Acknowledgement
Special Thanks to : Mr. Vivek angrade (Project Owner, EXCEED) Mr. Sunil Prabhu (A M, EXCEED Project) Mr. Pramod awas (Sr. Manager, EXCEED Project)

Thanks to HR department for coordinating this Summer nternship Program in a structured manner and making us feel comfortable during our internship and making it a very wonderful and memorable experience.

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THANK YOU

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