Every 29 hours Maruti Suzuki India (MSI) opened a new dealership in 2015-16. That’s a third more than what the country’s largest carmaker added in the previous five-six years on an average.
The dealerships were a mix of outlets in big cities, emerging outlets in smaller towns, rural outlets and the premium dealerships called Nexa.
MSI was followed by Honda, which opened 66 outlets in 2015-16. Rest of the carmakers opened 20-30 dealerships.
For MSI, the expansion wasn’t a flash in the pan. “It is not a knee jerk reaction, it is a well thought out strategy,” said Randhir Singh Kalsi, head of sales and marketing at Maruti Suzuki.
In 2017, MSI is coming up with its new plant in Gujarat with a capacity of 2.5 million units. The dealership expansion is part of the Mission 2020 under which the automaker plans to sell two million cars every year.
Dealerships need to keep pace with rising capacity and sales. Maruti opens a new showroom when a outlet reaches a certain sales number or to raise penetration. So, for villages there will be showrooms which will sell a couple of cars every year. “I will not be happy if a customer says that I have to drive 300 km to buy a Maruti car,” said Kalsi.
Honda too, is going deeper and expanding to newer cities. Last year it opened 40 dealerships in new cities and 26 in existing ones. It is also expanding capacity at its Rajasthan plant from 240,000 to 300,000. “Combination of product line-up, capacity and reach go hand-in-hand. Sales and services together lead to viability,” said Jnaneswar Sen, head of sales and marketing at Honda Cars.
For Hyundai, a dealership is the face of the company, and it’s important to just have reach. Rakesh Srivastava, head of sales and marketing at Hyundai, is unfazed by Maruti Suzuki opening five times more number of dealerships. “Just opening dealerships is not enough… The network needs to have a smiling face and it needs to serve the customers well. It is important to look at the financial health of each and every dealer,” said Srivastava.