Eleven showrooms, five OEMs, 30 products across four different verticals and close to 2,000 employees to manage means S Ravindranathan, managing director of the MPL Group of automobile dealerships, has his hands full. But with the gusto of a schoolboy, Ravindranathan says that he has just received the letter of intent from Ashok Leyland-Nissan to set up new dealerships in Pondicherry and Cuddalore and that plans are on to expand his current Ford dealership in Chennai to include a new service bay that will eventually be dedicated to the upcoming Ford EcoSport SUV.
As one of the first dealers for Ford in Chennai, MPL later went on to grab key dealerships from Mahindra & Mahindra, Honda Motorcycle & Scooter India, Ashok Leyland-Nissan (for the Dost SCV and in the future, the Stile MPV) and Polaris off-road vehicles. Within a few years’ time, MPL managed to expand its foothold outside of Chennai to various locations in Tamil Nadu, Pondicherry and Kerala. After close to 15 years in the dealership business, Ravindranathan says his most difficult challenge to overcome is still employee retention.
“The number of dealerships in this part of the country has always been on the up. Almost every manufacturer present in India has a minimum of one or two dealerships in Chennai. There are around 40 dealers with 100-odd showrooms and about 200 service stations. So there are around 10,000 people working in this area. But competition and bigwigs from the Middle East poach very regularly,” says Ravindranathan. While conceding that he too has taken employees from other dealerships, he maintains that he pays them well. “I give them good incentives, salary and training, but retention is very tough,” he adds. “Dealers from the Middle East come and pay almost five times the industry average here. We can’t match their pay. They recruit across the line, be it service engineers, service advisors or technicians,” he laments.
Another hurdle in Ravindranathan’s business is the model of operation he has opted for. MPL rents all of its facilities and doesn’t own any of its buildings. “I operate on a rental model. For Ford alone, I have five mechanical shops, three body shops, four showrooms in Chennai and Pondicherry. That’s a huge establishment. All of it is a rental model. We service around 200 cars a day. My inventory carrying costs is very high, rents are high and salary bills are high. All of this makes up 90 percent of my expense,” he says.
However, Ravindranathan is sure that he has bet on winning horses. “Ford and M&M are very concerned about dealer viability and customer satisfaction. They invest a lot of money in training. The manufacturers believe in training the technicians, service advisors, supervisors themselves. Ford has brought in a lot of its international practices with regards to training,” he continues. He goes on to say that he hasn’t faced any issues regarding overstocking or OEMs dumping stocks on him, even in his two-wheeler dealership. “I have customers with a waiting period for the Figo, Classic, Quanto, XUV500 and almost all the Honda two-wheelers. There is no case of dumping,” he says.
It’s not always rough winds for MPL as Ravindranathan says that he’s selling good numbers and making money in each and every showroom of his. “I am now selling around 300-400 units a month from the Honda two-wheeler showroom. I’ll need to sell around 600 a month to break even, but I want to set up another showroom in a different part of the city,” he says. However, Honda’s policy veers away from Ravindranathan’s optimism by dictating that a year has to elapse between the inauguration of two new showrooms by the same dealer.
Concurrently, MPL also runs a dealership for Mahindra First Choice (MFC) and it’s no surprise that the astute businessman is making money there too. “Since we have Ford and M&M showrooms, most customers go in for exchange offers. Already there is an established market available for the used cars segment. We also source cars from the market and buy them. We sell around 50-60 vehicles from MFC. It’s a good money-making model,” he says.
EcoSport coming up
Looking at the future, Ravindranathan says that he’s very excited about the EcoSport. “Ford expects to sell around 10,000 units a month and personally I hope to sell around 1,000 a month. So Ford will go from selling 2,000 units a month some five years ago to about 20,000 a month if their prediction works. By 2015, they are looking to introduce five more models and are looking at 40,000 units a month,” he says, reeling out numbers from the tips of his fingers.
Asked if he sees any difference between dealing with foreign OEMs and Indian OEMs, a diplomatic Ravindranathan says that both Ford and M&M bring their own strengths to the table and are very dealer-friendly and as someone who deals with multiple OEMs with different types of vehicles, Ravindranathan, like most progressive businessmen, aims to keep expanding.
KARTHIK H