Margin call: Auto dealers shift to luxury brands
FROM economy seat to business class, from one BHK flat to a penthouse, from a two-wheeler to a mini car and from a compact car to luxury marquees, now this upgradation bug has hit the Indian automotive industry. The entry of premium cars is prompting car dealers to diversify their portfolios. Better margins and exclusivity have led several dealers across states to sell luxury cars. Sample this. Nirmal Motors had been operating a small Hero Honda dealership at Karnal in Haryana. Now it deals in Mahindra-Renault cars. One of the largest car dealership in Punjab, AB Motors, has been selling Ford cars for long. Now it is the first dealer in India to sell the all imported Volvo cars—S80 sedan and the XC 90 SUV, which is priced over Rs 52 lakh. Similarly Navneet Motor in Mumbai has been doing brisk business for Maruti-Suzuki and Hyundai cars. Now it also has the famed German brand BMW under its belt. Delhi-based Yadar Kapoor has been managing two car companies, Ring Road Honda ( for Honda cars ) and A1 Motors for the Tata cars. However, he took a giant leap in his auto business and became one of the first dealer of BMW car in the capital. On the same count, one of the largest dealer in Hyderabad Acar Motor has moved up from its Maruti-Suzuki business to become an exclusive BMW dealer for the entire Andhra Pradesh. Chennai based Kone Motors, associated with Hyundai Motor and Ford Motor for more than a decade, has now added a BMW dealership under its umbrella. Industry watcher say the high margins in luxury marquees make all the difference for dealers. “The sale of 3Series BMW will fetch higher profit then selling 10 Swifts or 20 Alto’s. A dealer could get upto Rs 1.5 lakh per car depending upon the model. Dealerships for super premium cars are exclusive set-ups. A luxury car maker would operate through a single dealer in a city or state while competition is intense among dealers of Maruti, Tata Motors, Hyundai Motor as they have multiple outlets,” said Rajan Pental of HDFC Bank. The car dealers backed by superb first hand knowledge and experience of India’s auto mart are upgrading and venturing into luxury marquee business which offers much higher margins and exclusivity. And bigger cars offer better business opportunities.