To reduce the overall investment load on the company, Maruti Suzuki might get small format Nexa showrooms.
Small format Nexa showrooms are being taken into consideration by India’s largest car manufacturer. This will be the company’s attempt to improve its profitability and reduce the investment burden. This move will also aid in Nexa’s reach to small towns and rural areas.
Customers have been constantly requesting the company to get the Nexa showrooms to cities where they aren’t available. These customers will be served with smaller Nexa showrooms and will have two cars on display. It will offer the same Nexa experience as offered in the metropolitan cities. This move is expected to bring the company closer to people who want to get the Nexa experience.
The Nexa chain has established itself as the country’s fastest-growing retail channel in less than 4 years. It also contributes to more than 20 percent of the total Maruti Suzuki sales. There are over 360 Nexa outlets spread across more than 200 cities. The Nexa chain is limited to the top-tier cities and caters to the well-to-do urban buyers.
The cost of setting up a Nexa showroom in metros and tier-I cities are high. Thanks to the increased competition, sky-rocketing real estate prices, employee expenditures and other expenses. This has lead to low return on investment for dealers. The Indian car manufacturer aims to spread its reach to smaller towns and cities as the sales in the urban areas have seen a steady decline.
These small format Nexa showrooms will be beneficial to dealers as well as stakeholders to up their profits. These showrooms will require low investments and will provide some relief to dealer partners. The company is trying to lower dealer costs and this might also be visible in the workshops. Balancing finances between dealer partners and the vehicle manufacturers is a high priority as many dealers are working on stressed balance sheets.
Previous reports had also stated that Maruti would build new showrooms and then lease out to dealers. This would be done to minimise the capital costs of its dealer partners and maintain profits. The company’s Rs. 30,000 crore surplus will be used to kick-start this initiative.
Small Nexa Showrooms
– The company will implement this to increase its reach to small towns and cities
– Smaller showrooms will have two-car display
– Currently, the Nexa chain is limited to urban areas and well-off urban buyers
Source – Livemint.com