According to research reports, the Indian auto industry is likely achieve the projected sales target of 13+ million passenger cars a year by 2026. This also means that the industry needs channels to sell the manufactured vehicles to ensure customer delight. Domestic automobile production increased at 7.08 percent CAGR between FY13-18 with 29.07 million vehicles manufactured in the country in FY18. During April-July 2018, automobile production increased 16.69 percent year-on-year to reach 10.88 million vehicle units.
Rajesh Motors Group, one of the leading automobile dealers in India handles Ashok Leyland products for Rajasthan & part of Maharashtra (Kolhapur, Sangli, Satara), JCB products for Rajasthan, Volkswagen India for Udaipur Territory, Toyota Motors at Jaipur and Royal Enfield, Jaipur. Sharvik Shah, Director of the company speaks on the latest trends in the automobile industry.
SB: Is ownership is still the trend or people believe in rental or pay as you use?
Sharvik Shah: The industry is growing and is poised to grow. Come what may in terms of public transportation and, people are looking at best possible and comfort when for mobility. That way, I see a stable 15% growth in the coming years. While there is a consolidation happening in terms of brands, there is also a strong trend happening in terms of sizes. In my view, India will witness a huge sale in terms of small cars. Beyond transportation, cars had become a lifestyle, in fact, a status symbol for families. Thus, the Indian families, build a strong bond for cars.
SB: What is your view of the franchise laws to impart balance in OEM-Dealer relations?
Sharvik Shah: I[personally] do not believe in the concept terms of appointment of dealers or franchise etc. For me, it is a partnership between two organizations for the benefits of two business entities. It is an agreement between two entities.
SB: Can you compare the sale of commercial vehicles vs. consumer vehicles in India?
Sharvik Shah: Till the alternate mode of mass transport like Railways and waterways in India reaches a matured stage, roadways would be the best way for logistics. So, the comparison between commercial and consumer vehicle is not fair. In many countries, the waterways are used to transport the vehicles till the tail end of the goods and their further transportation happens through small vehicles. However, in India, from the factory, it is the large vehicles that carry the goods to the tail end of the logistics. Might be, from there medium or small vehicles might be used. In India, 65% of commercial transportation is through large vehicles and 35% is from the smaller ones. Once this hub and spoke model matures in India, this trend will change.
SB: What are the key markets for automobiles in India?
Sharvik Shah: India is the leading hub for automobile and we are a self-sufficient economy. India, as a market, we are dependent on the locally manufactured brands for 85%. Only 5 to 10% we import automobiles. In India, the key market for automobiles is Delhi/ NCR, Maharashtra, Tamil Nadu, Andhra Pradesh/ Telangana, Karnataka, Gujarat, and Rajasthan.
SB: Why the price drop is high in the automobile sector?
Sharvik Shah: The concept of second ownership is yet to get matured in India. That is the reason for the price drop of cars goes to 30% the moment it comes out of the showroom. In my view, India will soon become mature in terms of the second-hand car market in an organized way.
SB: How much technology playing the role in auto dealers in India?
Sharvik Shah: We are completely digitized. As our manufacturers are highly digitized, they demand state-of-the-art technology for the stakeholders too. For example, an organization like Rajesh Motors, with operations in more than 50 locations, we are completely dependent on technology. We had digitized our entire operations in the year 2012. Our entire sales team is enabled with hand-held tablets. Our digital journey started in 2007 and in fiscal 2012-2013, we had full-fledged technology operations in our entire organization thus making technology, let play a strategic role not limiting itself to the supporting role.