Mindset change and trust will strengthen bonding between OEMs, dealers

Rajeev Chaba, President & MD, MG Motor India, said it was time for dealers to "speak up” and share their views to make sure that their voices are heard. 

"We must have agreements due to certain rules/regulations. Yet, we trust you unless you give us a reason not to do so.” He was speaking at a FADA-organised panel discussion at its third Auto Retail Conclave, 'Strengthening out Relationship’.

According to Chaba, the OEM-dealer relationship is not the same across companies and are of “different dimensions” where it is difficult to bracket everyone together. “It takes a change in mindset and both sides need to understand this. Newcomers should not waste the opportunity,” he maintained. 

As Chaba said, change is visible and coming at a quicker pace. The foundation is the same across both old and new players. “The DNA is the same: mutual trust and relationship, win-win solutions are all the same. We need to find solutions together," he said. 

The MG Motor India MD’s comments were made in the context of what dealers at the panel had to say about their own relationships with their OEM customers. Vinod Aggarwal, Managing Director & CEO, VE Commercial Vehicles, echoed these sentiments and said it was important for dealers and OEMs to understand each other and work closely.

"The relationship between a dealer and manufacturer starts with a dealer agreement but these agreements are one-sided and inclined towards manufacturers,” said Samir Choudhry, Dealer Principal, Trident Automobiles. Trident Automobiles has been a long-time dealer-partner of Hyundai. Over the years, they have also added other brands like Renault, Isuzu and Bharatbenz.

According to him, there are “hardly any clauses” on what OEMs need to do. For instance, the dealer must take permission from the OEM to take another brand. OEMs can even terminate a contract if they want and these “kinds of clauses do not help building a relationship”.

Choudhry said Kia's dealership agreement has commonalities with Maruti Suzuki’s.  "There is a clause from a certain 1954 dealership agreement. It was a single page agreement and it states that a dealer should not have another manufacturer's dealership. We are in 2021 and it has not changed still,” he rued. Many dealers “are afraid to share their thoughts” and all this needs to change to foster a healthier relationship, added Choudhry.

Santosh John Rodrigues, Dealer Principal, Karnataka Agencies said dealers invest quite a bit but still do not have a say on products. In his view, OEMs have over the years focused on making their brands more visible than those of their dealers. Karnataka Agencies are the dealers for Mahindra & Mahindra.

Shashank Srivastava, Senior Executive Director, Maruti Suzuki India admitted these were important points while insisting that his company adopted a different approach. “In our case, the relationship between the company and dealer starts even before the contract and both have an equal say,” he said. 

Dealers, he continued, “know what is best for them” while Maruti’s job was to train its brand managers and make sure that “they do not tell the dealers what to do”. Srivastava reiterated that traditional mindsets needed to change and stakeholders have now “realised this and are making great efforts”.

Yadvinder Singh Guleria, Director, Sales & Marketing, Honda Motorcycle & Scooter India, said the bonding with dealers had strengthened over the last two years of the pandemic and lockdown. Dealers need to have TRP (trustworthiness, responsiveness and problem solving) as part of their focus areas. 

On dealership agreements, Guleria said one needed to be open minded rather than think in black and white. “The agreement is there because of the (existing) norms. The document will be looked at only if there is a dispute and so far this has occurred with just two to three percent of dealers. It is all about trust,” he said.