Dealer’s profitability top priority for Volvo: MD Charles Frump2 min read . Updated: 08 Jun 2019, 12:08 AM IST
- Charles Frump said the top priority has been to maintain profitability and long-term sustainability for dealers
- We are very conscious of the fact that this affect dealers’ profitability and tightens up capital for them
Volvo Auto India Pvt. Ltd, or Volvo Cars, the latest entrant in luxury vehicle manufacturing, not only has a state-of-the-art manufacturing plant in Bengaluru, but also a significant number of dealerships, besides a spare parts warehousing facility to cater to the high growth potential of the domestic market. In an interview to Mint, managing director Charles Frump said the top priority has been to maintain profitability and long-term sustainability for dealers. He added that the current tax structure on battery-run EVs will provide immense opportunities to late entrants like Volvo. Edited excerpts:
What are you doing to help dealers?
I worry about some of the dealer profitability issues that are happening across the industry, especially in the National Capital Region, where we have seen a number of dealers going out of business. At Volvo, we are primarily making sure that dealers have the inventory they need, but not more than that. In times when business is slow, automakers tend to push a lot of their products to dealers. We are very conscious of the fact that this affect dealers’ profitability and tightens up capital for them. Volvo follows a one-state-one dealer policy, which also helps our channel partners financially. We look at all the dealerships and help them benchmark each other and, hopefully then, raise the whole level of profitability.
What is the long-term strategy in India, since it’s currently a low volume market?
There are significant structural issues in India compared to other markets in terms of taxation for luxury cars. We are at an inflection point now, and have built up an entire dealer network with 26 sales points. We are adding one dealership per month. About a year and a half ago, we opened our assembly facility in Bengaluru and that was a big move. We also brought in a parts warehouse, since earlier all our dealers had to import the parts. Now, we do the importing and it helps our dealers financially.
Where do you see Volvo compared to its peers?
In the medium-term and currently, I am happy to see that we have become a real alternative to German luxury cars. If someone is looking for a large luxury SUV, for sure, they are going to look at a Volvo XC 90. With other products, such as XC 40 and XC 60, we are sure that customers will consider Volvo’s products. From a volume perspective, we are still on the lower side, but from the customer’s point of view, we are there.