In India’s automobile industry, a phenomenal surge has transpired since the advent of economic liberalization and delicensing in 1991. Marking a rapid growth at a noteworthy 7.08% CAGR from 2013 to 2018, the Indian automobile market has attracted a substantial inflow of approximately 20 billion FDI over the last two decades. This accolade is attributed to its standing as the sixth-largest producer of commercial vehicles globally.
In the pre-amendment era of the Competition Act, automotive companies wielded their dominant market positions to manipulate the sale of original spare parts and post-sales services, thereby distorting fair competition. The exclusivity of agreements hindered independent sellers, impacting around 2 crore car consumers in India.
The manufacturers were observed:
- Exerting control over authorized workshops and service stations engaged in the sale of automobile spare parts.
- Withholding crucial information on technology, diagnostic tools, and software programs necessary for the maintenance and repair of advanced automobiles from independent repair workshops.
- Restricting the sale and supply of genuine spare parts, diagnostic tools, and technical information required for maintaining, servicing, and repairing manufactured automobiles.
However, the tide turned with amendments to the Companies Act in 2009 by the Competition Commission of India, safeguarding consumer interests and curbing activities detrimental to competition. In the automotive sector, these amendments addressed distribution issues concerning motor vehicles and spare parts, particularly limiting the supply of original spare parts to manufacturer-owned or authorized dealers exclusively.
Automotive companies were now compelled to provide access to independent entities for selling their original equipment spare parts and supporting after-sales services. These changes reshaped the landscape of the Indian automobile industry, introducing challenges in distribution and dealer management due to the influx of an extensive network of independent and small-scale sellers. Dealers were granted wider control over sales territories, fostering the need for an efficient system to track sales from distributors and estimate the actual market demand for original spare parts.
Key Challenges in Distributor Management within the Automobile Industry include:
Inefficient Channel Management: The distribution and dealer channels involve a complex process susceptible to inefficiency when managed manually without automation for coordination.
Stock Mismanagement: The extensive network of distributors and dealers, coupled with high demand, leads to inevitable overstock and understock situations due to a lack of data availability. Tracking sales from spare parts and service stations complicates SKU mapping and management for automobile companies.
Lack of Tech Infrastructure: The majority of distributors and dealers are small, unorganized entities with limited capital, inadequate tech infrastructure, and substandard logistics, hindering the implementation of efficient systems.
Multi-Brand Management: Managing data for various brands poses a challenge for multi-brand distributors, struggling to keep track of sales for the different brands they handle.
Lack of Actionable Data and Information: Gathering information on sales from individual distributors in different regions becomes cumbersome, impeding decision-making for management.
Implementing a robust Distributor Management Software can significantly enhance the value for automobile manufacturers. It enables the acquisition of accurate secondary sales data from diverse distributors nationwide, providing complete control over pricing. Additionally, it facilitates the extraction of distributor-specific sales data, allowing for performance measurement and the rollout of discounts and other schemes. Real-time and precise market data insights empower manufacturers to make informed and strategic business decisions.
