Indian Automotive Dealerships Focus on Data-Driven Strategies to Navigate Market Challenges

Despite facing relentless challenges in recent years, the Indian automotive industry has emerged above those problems and presents substantial opportunities for growth and transformation, positively impacting the overall economy.

The Indian automotive sector has faced substantial challenges, including shutdowns, semiconductor shortages, shifting consumer preferences, and growing sustainability demands. Despite these challenges, several growth opportunities remain, providing a chance to tangibly transform the potential of their contribution to the overall economy.

For dealerships, resilience is no longer an optional trait but an absolute necessity. They must adapt to market volatility, use data-based insights, and align with evolving customer trends. It will ultimately determine which dealerships will thrive and which ones will struggle.

A notable example is in North India, which is essentially an innovator's market, where consumers seek new technologies and brands that have made a splash. Since 2015, the market has seen a trend where customers have moved away from traditional sedans and hatchbacks to SUVs and SUV-inspired crossovers-a trend that mirrors global preferences.

To remain competitive, dealerships must adapt their strategies and enhance the entire process, from inventory management to customer engagement, while embracing sustainability and digital transformation.

The Four Key Pillars in Building Resilience
The fundamental strategies that every auto dealership can fall back on to build resilience include:

• Empowering front-line teams with data-driven insights
• Hybrid approach to streamline inventory management
• Focusing on geographical diversification to mitigate risks
• Investing in worldwide green dealership infrastructure

Through all of these, dealerships have the chance to future-proof their operations and tap into emerging opportunities in the evolving mobility ecosystem.

Empowering Teams With Data
Traditionally, car dealerships in India relied heavily on experience and intuition. It was one of the primary reasons why many dealerships paid over market value for experienced sales managers who had a stellar record to their name. In today's market, data-driven decision-making is crucial.

• CRM systems and AI-powered systems can track customer preferences and help with targeted customer segmentation.
• AI chatbots, virtual showrooms, and predictive analytics can enable personalized interactions for a generation that does its shopping on phones and other devices.
• Monitoring social media sentiment and online trend results can help anticipate demand shifts, especially in urban clusters.

Streamlining Inventory Management
The pandemic and semiconductor supply disruptions have exposed glaring vulnerabilities in the inventory management system. A hybrid inventory system can be helpful, especially in Tier-2 and Tier-3 cities, through the following strategies:

• Predictive analytics can help with dynamic stocking based on real-time sales data.
• Flexible supply chains can be a lifesaver, as evidenced by their adoption by multiple car dealerships, which has reduced their holding costs.
• Offering pre-owned and subscription models to customers can also facilitate a stable inventory system.

A "hub and spoke" model where the core inventory is in a central city. At the same time, several satellite showrooms are established in a 20-30 km radius to supply local demand and reduce overhead.

Diversifying Geographically
Localized economic shocks can be hugely detrimental to dealerships. Certain regions can also experience economic slowdowns, which can cripple any dealership that relies on a single, central market.

• Tier 2 and Tier 3 cities are now emerging as major demand generation centers. Studies have found startups and entrepreneurial culture in those cities are contributing to a significant uptick in the demand for luxury vehicles there.
• Establishing an omnichannel structure where the marketing is done both online and offline, leading to digital sales complementing physical showrooms. This way, customers who prefer to visit a showroom can, and those who want to shop online also have an option.

Investing in Sustainability
Electric vehicles have been witnessing a steady rise in demand over the years. A McKinsey report found a $25 billion to $40 billion opportunity by 2030 for enterprises that foster innovation in new opportunities and maintain a global strategy. To achieve this aim, multiple dealerships are looking to go solar and adopt sustainable practices.

Conclusion: The Future is Agile
The Indian automotive sector is at a critical juncture in its overall development. Dealerships that adopt an agile approach are more likely to reap rapid dividends through data-driven decisions, enhanced processes, diversification, and prioritization of sustainability efforts.

These strategies would ensure dealerships not only survive but thrive. As SUVs and EVs redefine mobility, those who anticipate change and adapt quickly will emerge as winners. The road ahead is challenging, but it also presents renewed opportunities for dealerships that build resilience.

Vivek Datta is MD and CEO at Globe Toyota, JCBL Group. Views expressed are the author's personal.