Carmakers expand dealerships to boost sales: Do they have right products?

Maruti Suzuki India, the country’s largest maker of passenger cars, wants to add more layers to its dealerships with Nexa Studio and Arena Satellite outlets, to go with its existing Arena and Nexa showrooms. Clearly, the company has come a long way from 2015, when it raised eyebrows with its decision to start the Nexa channel for a more premium buying experience.

But Nexa, which started with the S-Cross, a crossover between a sedan and a sports utility vehicle, has come good. In nine years, it has sold 2.7 million vehicles and grown steadily to contribute 33 per cent of the company’s sales in 2023-24. Last financial year, the Nexa lineup — which now includes Baleno (the second Nexa vehicle after the S-Cross), Grand Vitara, Fronx, Invicto, Jimny, Ignis, XL6, and Ciaz — grew by 45 per cent.
 

Meanwhile, the Arena line has continued to offer more mass market vehicles such as the Swift, Brezza, Wagon R, Ertiga, and others.
 

India’s passenger vehicle market is the third largest in the world now, at more than 4 million units a year, but car ownership remains low, at 3 per cent of the population. This signals a huge potential to deepen penetration.

 

With its multi-channel strategy, Maruti aims to do that. And it is not alone. With the rise of electric vehicles (EVs), others, too, are compelled to look for differentiators. Tata Motors, for example, has started the Tata.ev range of showrooms.

 

A new Nexa a day
 

“In Tier-II and -III cities, there is more affinity for hatchbacks, while big cities prefer SUVs,” Partho Banerjee, Senior Executive Officer, Marketing & Sales, Maruti Suzuki, tells Business Standard.
 

According to him, in the digital era there is no real divide between rural and urban markets. “We have already had a concept of mobile showrooms in the Arena channel. We are testing markets and wherever we see potential, we can plan these satellite showrooms — Arena Satellite,” he says.
 

Arena Satellites would be smaller than Arena showrooms. They would work on each state separately as it is unlikely to work out as a pan-India strategy.
 

Nexa Studio that will cater to the country’s Tier-II and -III cities. These showrooms would be smaller than the usual Nexa showrooms and also have service workshops and spare parts areas within them.
 

A total of 100 Nexa Studio dealerships will be opened by March 31 next year. They will have two cars on display, a delivery area, workshop bay, and customer lounge. The idea is to extend the Nexa experience to customers in smaller cities like Kolar in Karnataka, Gohana in Haryana, Hathras in Uttar Pradesh, and Paonta Sahib in Himachal Pradesh.
 

Maruti has been in an expansion mode with its dealership presence and added 119 Nexa outlets between April 1 and August 23 this year, taking its overall Nexa count to 500. It has around 3,925 outlets across 2,577 towns and cities covering Nexa and Arena.
 

“By the end of this financial year, we plan to open 50 more Nexa outlets, taking their total number to 550… one new Nexa Studio would be inaugurated on almost every working day of the second half of this financial year,” says Banerjee.
 

The idea is to touch the customer at multiple points. Apart from the 3,000-odd Arena outlets and 500 Nexa outlets, Maruti has 380 commercial vehicle outlets, more than 580 TrueValue outlets for used cars, and 530 Maruti driving schools. “In all, we have over 5,000 touch points like this, and add to this the 5,000-odd service centres. These are all ways to connect with the customer,” he says.

 

Revenue per car
 

Ravi Bhatia, president and director, Jato Dynamics, says Maruti has tried to target different wealth segments to increase the average revenue per car. “You cannot place a Rs 20 lakh car besides, let’s say, an Alto. The service experience, the expectations are completely different. Customers seek experiences in line with their power to pay. That’s when they came up with the Nexa strategy.”
 

Bhatia adds that though Maruti enjoys a market share of more than 40 per cent in volumes, the revenue market share is lower. A Jato Dynamics analysis shows the company has a 28 per cent revenue market share. Growing the average revenue per car was critical.
 

“With the Nexa Studio and Arena Satellite, it is trying to be present in every neighbourhood,” says Bhatia.
 

 
Product pressure
 

Analysts say the multi-channel strategy also needs new products that would cater to the clientele.
 

An official at a Nexa showroom in eastern Mumbai says there is high traction for the Baleno and the Grand Vitara. “The Jimny and the Fronx have not really picked up, to be honest. We don’t even have those cars on display in the showroom at the moment. The Jimny had garnered much attention at the launch and I remember it had over 30,000 bookings,” he says.

Having a steady flow of products that click with the customer is thus critical.

Maruti has ensured that its Arena dealers get the option to open Nexa dealerships to help them make money from either or both.
 

The next wave of channel strategy would be for EVs.
 

The e-drive
 

The leading passenger EV seller, Tata Motors, says as electric vehicle adoption grows in the country, consumer buying behaviour is evolving. An EV customer now expects the brand to offer a unique experience through the purchase journey.

The company therefore created Tata.ev for its electric offerings and is opening a new range of dealerships for its EVs. A company spokesperson told Business Standard that these EV outlets had become centres of experience for people where they came to get educated about the EV technology and ecosystem.
 

The company now has four such showrooms, two each in Kochi and Gurgaon, and plans to expand them in phases. “It is a young and promising venture,” the spokesperson said.
 

The current Tata Motors showrooms that sell both internal combustion engine vehicles and EVs have limited space. “So, the experience has to be more immersive and holistic,” he added.
 

These showrooms also reflect the brand ethos. They have a different colour scheme (Teal, as against blue in Tata Motors showrooms), just like Maruti Nexa outlets are in monochrome.
 

The digital communication in these showrooms is in dark mode to ensure less energy consumption, and they use solar energy. As such, 30 per cent of Tata Motors EV customers use solar charging, and the EV outlets need to align with that.
 

At the launch of the fourth EV showroom in Kochi on August 30, Shailesh Chandra, Managing Director, Tata Passenger Electric Mobility and Tata Motors Passenger Vehicles, said: “We have seen how the discerning EV consumer has matured and demands a premium ownership experience... we will soon open a set of five exclusive EV service centres across key cities in Kerala.”
 

Overall, the customer profile has changed, say industry insiders. “From buying cars averaging Rs 5 lakh a few years back, now the average price of cars in India is Rs 11 lakh. 
 

The customer is fast changing, and she demands newer experiences that wealth can buy,” says an industry veteran.