All about Automobile Dealerships – Part 2

Do find Part 1 on the Topic – Here.

Automobile Dealerships have been an integral part of the Automotive Industry and has made serious impact in terms of employment opportunities, brand building and even contribution to nation’s GDP. You may assume how a small automobile dealer is capable of doing so much. We’ll explain how –

  • Automobile Dealerships are small business entities which are staggered across all range of cities. You shall find an automobile dealer right from a Tier-1 town (say Delhi/Bangalore) to representation in Upcountry markets (can be anywhere in India – say Gadag in Karnataka to Madhubani in Bihar!). This is quite different from other industries (like IT / BT which are accumulated primarily in bigger cities/towns).
  • The sheer number of Automobile Dealerships in India is huge – Maruti Suzuki alone is said to have 3,598 Sales Outlets across 1,861 cities throughout India. Also; it has 3,792 Service Stations in the 1,861 cities/towns/villages (Wiki). It is beyond our capacity to even calculate the downright number of automobile dealerships across all channels (4W, 2W, Commercial Vehicles, Farm Equipments, Construction Equipments and more).
  • As we mentioned in our Part 1 – Automobile Dealerships are manpower intensive. An average automobile dealership in a Tier 1 town is equivalent to an IT Firm in terms of employees onboard! Ex: A small/medium IT firm in Bangalore shall employ ~100 people in the company. Equivalent amount of manpower is recruited by an average Car Dealer (having 1 Sales & Service facility) in a Tier 1 town! We shall be covering this topic in detail in rest of the post.
  • The Automobile Industry as a whole contribute near to 9% of India’s GDP! A big amount in this is supported by the transactions at the frontline dealerships.



Let us now understand in detail on how the automobile dealerships bear a big impact in terms of manpower employment across the country. According to a report, almost 25,000 – 35,000 jobs were lost 2018-2019 timeline when 271 car and two wheeler dealerships shut shop across India! If we assume 30k jobs were lost due to the closure of these 271 dealerships – that means each dealership employed an average of 110 people! At the outset, the numbers of people employed may look huge but the reality is very much the same. A normal dealership operation requires a lot of manpower across its Sales, Service, Stockyard and Backoffice operations.

We have considered a car dealership to highlight the case. In the said example we have assumed that car dealership does an average of 80-100 units sales per month and service of 20-25 cars per day. As per the targeted calculation, overall 116 people are required to run the show at a normal 3S (Sales, Service & Spares) dealership –

We have tried to extract each and every role in an automobile dealership and presented above. Seeing the sheer number of designations in the dealership can make you understand the dependence on manpower in this particular industry and how the industry employs a big section of the overall society. Hence; if an OEM says that it has 300 dealerships across the country – The dealerships in turn shall be employing almost 35,000 people! That’s the amount of jobs that the automobile dealership business is generating.

However; there is a catch in the aforementioned calculation. Do note that the overall number of manpower shall still be in place even though the targeted numbers/volumes is not achieved (Ex: 80-100 units/month as per the case we have assumed). Hence the years when a particular brand’s numbers drop; the overall dynamics change a put a lot of strain in the overall system. We shall explore the same in detail in our next post on the topic.

3 thoughts to “All about Automobile Dealerships – Part 2”

  1. Thank you for explaining in detail about various positions/roles in a car dealership. Very nicely explained. Would love to read more on topics like this.

  2. Very true.. very well explained still the company has to offer discount to beat a throughtcut competition and survive in the market…. with this Novel COVID19 Pendamic the markets have entered to rock bottom zone of industry. Most of the dealerships are running by finance and earnings take care of operating interest.. Due to this Promoters have to pay interest from their pocket and will be disastrous for many of the small dealership owners, startup’s.
    Regards
    Manoj negi
    DGM BMW Bird Automotive

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