Low earnings for automotive dealers in FY19: JD Power Survey

Sales in the automotive sector are only up by about 5 percent in the Financial Year ending 2019. The limited growth is also reflecting in the revenue generated by dealers

Financial Year 2018-19 hasn’t been a very fruitful one for the automotive industry. The three automotive segments – passenger vehicle, two-wheelers, and commercial vehicle could cumulatively register a growth of just 5.1 percent in the domestic market.  In fact, sale of passenger vehicles in the domestic market grew by a measly 2.7 percent.

According to a study conducted by JD Power in union with Federation of Automobile Dealers Associations (F A D A) India, nearly 21 percent dealers estimated poor performance this year. Of these, more than 71 percent say that they did not achieve their revenue target for the year.

Speaking about the findings of the survey, Ashish Harsharaj Kale, F A D A President said, “Dealership business is facing its toughest challenges in recent times and the entire business model needs an overhaul to keep up with the changing dynamics of our trade. This is the first joint survey between J.D. Power and F A D A and we have received a high number of responses from our members. We are hopeful that the findings of the survey will act as a beacon for the entire automotive ecosystem, leading towards a healthier business environment for the Industry, especially for the automotive dealer fraternity at large.”

The study also revealed that almost one in every three dealerships felt that digitization will help them grow faster. In fact, 43% of dealers believe that investment in digitalization is likely to bring about a reduction in manpower costs for their business.

Kaustav Roy, Director and Country Head, India at J.D. Power said, “The automotive industry, especially the passenger vehicle and two-wheeler segments, are facing serious headwinds due to several external challenges on the revenue side.”

The study also revealed that Hyundai ranks the highest in the customer satisfaction survey leading the charts with 937 points on the board. Maruti Suzuki took second place with 918 points. In the two-wheeler business, TVS took top honours with a score of 800. Hero MotoCorp stood a close second at 799 points. Tata ranked the best in the commercial vehicle business.  

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