NEXA: Fastest growing retail network

HIGH EXPECTATIONS

Randhir Singh Kalsi, Executive Director (Marketing & Sales) at Maruti Suzuki India (MSI), is elated to be associated with not only the country’s largest car manufacturer, but also with it’s growing retail network — NEXA.

Kalsi was in Bengaluru recently to inaugurate two NEXA outlets, Varun Motors (Rajaji Nagar) and Garuda Autocraft (Banaswadi). On a drive to the airport, he shared with DH, his thoughts about NEXA’s journey, what challenges it faced and what next is in store.

Take us through the journey of NEXA.

Maruti Suzuki has been in the Indian market for over three decades. Today, new customers who are stepping into our showroom are different. They are like third generation customers. Their needs are demanding. They don’t want the “dad’s car”, but a NextGen car with loads of technology. Their profile is unique, their approach to life different, and they like to be treated differently.

So they demand a car which is different. So keeping this in mind, we conducted research. And what we found is that this generation are the people who travel by air, enjoy five-star hospitality, have grown with computers, smartphones and connected devices, and look forward to IoT.

Their banking style is different. When they go to the bank, they deal with relationship managers rather than over-the-counter clerks. So they expect a similar experience when they visit a car showroom. Based on these findings, we came out of an idea of NEXA to give them the premium feel, be it ambience, monochromatic colour scheme, a digital experience and minimal paperwork.

As customers love pampering and fine hospitality, we have designed special menus and relationship managers are a change here from the regular showrooms.

How many jobs have been created through NEXA channel?

Over 3,800 jobs have been created. None of the employees from our existing showrooms were recruited at NEXA to ensure five-star services to customers.

They have been trained in five-star full-time residential training for a week, so that they can understand what is five-star hospitality to understand how customers visiting hotels are pampered. These people are trained by Dale Carnegie on soft skills. So these relationship managers will execute our vision at the showroom level.

How big is the network?

Till date, we have set up 200 showrooms in this small span of 17 months, which has also made NEXA the fastest growing retail network in the world. We positioned the S-Cross as our first car to be sold through NEXA, followed by Baleno. Till date, we have sold over 1.6 lakh units both put together.

The Baleno is already a market leader in the compact hatchback segment and is doing very well. On January 13, Ignis joined NEXA as an entry-level urban compact car. In future, Baleno-RS, a performance vehicle will join NEXA.

To sum it up, NEXA is a huge success. In fact, it has become a case study and it has certainly given us big boost in terms of image.

In fact, 50% of customers visiting the NEXA channel are the ones who never had Maruti Suzuki in mind, while buying a car. The NEXA is helping us in expanding the market for new generation customers.

What are the challenges you faced in setting up NEXA?

Well, there were many challenges both internal and external. The first challenge was the internal. A lot had to be discussed and debated about why we need to give a premium experience. People had to be convinced about the changing profile of car buyers. To think of it, today, we have 440 million millennials who are born after 1985. These people are different with unconventional approach.

Apart from this, there were external challenges. First of all, our existing dealers felt frightened because a new channel is coming up, so they might get eliminated. We had taken strategic decision that the NEXA channel would be given to our existing dealers. Initially, people are apprehensive, not everyone is aligned to our vision.

Because of the apprehension, many of them were not coming forward. In fact, we had three different categories of dealers. Some who are immediately willing to buy our vision and thought process. They were on board. Then there were some who were apprehensive that it may not work, and they were not coming forward. Then, the third group comprised fence sitters who said, “we will wait and watch”. Fortunately for us, the dealers who came forward had faith in us to set up their showroom and are doing well.

The idea was initially to have small number of showrooms and our strength is our biggest network at that point of time with over 1,700 showrooms. To cater to the needs of the regular showroom customers, we aligned them with NEXA dealers. It is like bonding the best of both. This was a short-term strategy. When we crossed over 50 outlets of NEXA, everyone appreciated the idea of a premium feel.

In fact, there was a story in The New York Times about NEXA and as people started seeing its success, more and more dealers came forward. Today, we have close to 200 showrooms which are already operational. By the end of this fiscal, we have a target to touch the 250-mark across the country.

Which is the biggest market?

Well, I can’t say region-wise. Of the two models, S-Cross and Baleno. For Baleno, there is a waiting for 24 weeks. Waiting period depends on the number of bookings. The spread is even across the country.

How about the Karnataka market?

Recently, we inaugurated the eighth showroom in Bengaluru. In all, Karnataka has 14 showrooms. Moving forward, we will increase it by 50% in the next six months.

What are the terms and conditions to open a NEXA showroom?

Existing dealers of MSI get the first preference. But if they are already a NEXA dealer, then other dealers are considered so that there is widespread distribution and everyone gets the opportunity to be part of the network. Dealers should be willing to provide a 4,500 sq feet site at a premium location, and financially he should be sound.

Performance on quality parameters should be good in terms of customer satisfaction, service history and capability to expand market.

How many relationship managers man NEXA?

It depends upon the potential we see in a city. By and large, there are 15-20 relationship managers.

What are the targets you have set for them?

Since Baleno is in waiting period, setting a target at this point of time will not make any sense.

Has NEXA added value to MSI’s market share?

Roughly, 10% of our sales today is coming from NEXA. Market share gain for the last two years is 3%, and NEXA has potential to add value to MSI’s market share. Nationally, we are selling 12,000 to 13,000 units per month. In Karnataka, we sell over 1,000 units per month, which is about 8%.

What is the meaning of NEXA?

It means, Next Experience in Automobile Retailing. We just use the term ‘NEXA’, as it has become big brand. It is easier to pronounce and remember, not a tongue-twister.

How tough it is to convince a customer about long waiting periods?

Transparency is the name of the game. If a customer comes to buy a car and we inform him that there is a 24-week waiting period, and we do deliver the car within 24 weeks, I think he is happy.

We face a tough time only in unforeseen situations like shortage at plant, breakdown. But an informed customer understands this. In case of more delay, we ensure that the customer is informed in advance with valid reasons.

Buying a car is an emotional decision by a family. Customers are conservative about the day, date and time to get their dream machine. Hence, it is important to keep them posted about any delay or timely delivery.

Has Vitara Brezza eclipsed S-Cross?

Not really, because both are in two different segments. S-Cross is a crossover in a premium segment category. While, Vitara Brezza is an urban compact SUV. The concept of compact SUV is new to the Indian market.

They were talking about SUVs which will look only bold, wild and monstrous in appearance. But we did our own research and what we found was that today, ruggedness, strength, sportiness and glamour is the game-changer. The Vitara Brezza looks sporty, sexy and a big hit with the people desiring it. Within a span of about eight to nine months, we sold 80,000 units. It is a market leader in this segment.

What about S-Cross?

Actually, let me give you a little background. The S-Cross is a crossover vehicle. People look for a performance of an SUV, and the comfort and luxury of a sedan. The S-Cross fits into this slot.

This concept is yet to pick up in India. People think it is a big hatchback. Some others say it is down-fill version of an SUV. But actually, it is a crossover that gives comfort and benefits of both categories. Today, we are selling 2,500 units of S-Cross per month. We are already a market leader because this segment is not popular so far, and the next crossover would be selling 1,000-1,500 units per month in this category.

We are already number one at 2,500 units. Now issue is that Maruti is used to big volumes. Customers who analyse our performance, they also think that unless we sell 15,000-20,000 units per month, we are not successful. In case of S-Cross, it is not correct. Now, we are the market leader.

Any plans to enter smaller towns?

We have already covered tier II cities. As on date, we have presence in over 150 cities. So it is not just metros, mini-metros. We have gone to towns and cities. By this fiscal, we will have 250 showrooms, and would be covering 95-97% share of it.

What about Karnataka market sans Bengaluru?

There are eight showrooms in Bengaluru. Two in Mangaluru, Hubballi, and one in Mysuru. We have showrooms coming in Tumakuru, Shivamogga, Belagavi and some more in Bengaluru.

Any plans for separate service centres for NEXA products?

As of now, we are leveraging our existing network for NEXA products. On NEXA workshops, we have started working on that and may be within Q4 of this fiscal, you will see some NEXA workshops coming up. On challenges, we are able to get good service areas close to showrooms. Wherever it is not possible, we are again going for innovative methodology that we will have collection centres near the showroom. If the workshop is 5-6 km away, we will pick up the car and get it serviced and by evening, deliver it either at customers’ place or at collection centres.

How was 2016 for Maruti Suzuki?

It was a wonderful year with lots of challenges. In between, there was an issue raised by the National Green Tribunal (NGT) on diesel. Otherwise the market was fairly stable and growth has been fairly consistent. In the beginning of the year, we set a target of double-digit growth. At the same time, we surpassed the SIAM forecast.

GST is getting delayed. Will it impact the industry?

The government has indicated more or less the tax structure would be the same because they cannot afford any revenue loss. So the GST (Goods and Services Tax) Council may recommend revenue structure. So whatever they have finalised will be acceptable. For Maruti Suzuki, GST will mean a lot as our plants are in North India.
We are distributing cars and spare parts across the country. If GST comes, it will bring uniformity (smooth) movement of goods. It will add to logistics efficiencies.

Airbags will be made mandatory. Is Maruti Suzuki ready?

Yes, we are ready and we are providing all safety regulations in our existing product line-up. Whatever the government is stipulating and in some of our models, we are ahead of government norms. 

How about Alto? Are customers willing to pay?

Once it is mandatory, then there is no option neither for OEMs (original equipment manufacturers) nor customers. And certainly, there would be some increase in cost. At the same time, there will be no competitive advantage as everyone has to do it. So the entire pricing of industry goes up. In the interest of the safety of the driver, co-driver and occupants of the car, and even road users, it is worth it. The cost may go up by Rs 5,000 to Rs 8,000.

How many plants does MSI have, and their capacity?

We have plants at Gurugram and Manesar with combined capacity to the tune of 1.5 million units. Now, that is installed capacity. There is a difference between installed capacity and what we can produce by using many innovations at the manufacturing level. So we can spread the capacity. At the same time, our Gujarat plant is coming up. In the first phase of this plant, we have set a capacity of 2.5 lakh units annually. Trial production will start in Q4 of this fiscal.

Which cars will roll out from the Gujarat plant?

We are starting with Baleno as it has a lot of backlog and then we will think of other models. The Baleno, which is exported to over 100 countries including Japan, will roll out from this facility.

Tell us something about the export market. Which is your biggest market?

We are exporting Alto, Baleno, DZire and a couple of other models. Currently, our export share is about 10% of our domestic production.

On the biggest market, this keeps on changing, depends on  policies of the government and taxation structure, followed by importing countries. At present, our major markets are in Africa, South America, and also some European countries.

Any value addition to MSI’s service network?

When we talk about service, there are two important elements, first is the reach. India, geographically is a vast country and reach is very important. Customers have to be given service at their door step. This is a big advantage for Maruti.  As of today, it has over 3,200 workshops across the country. Second, the availability of Maruti Genuine spare parts at the right time.

We are fully focused not only through our dealerships but through more than 600 distributor outlets. This gives a lot of comfort to customers.

Having said that we have to improve the way we provide service to our customers, efficiencies in our workshops, same-day delivery. If there is a small job to be done on the car, can we do it within two hours through express delivery is key to us. Also, we are working towards digital enabled workshops (Wi-Fi) and also designing apps where customers can know from their mobile phones the status of the vehicle.