[pratyaksh]

Dear BHPians, I come back again to you for your expert unbiased opinion once again. Truly blessed to have such an amazing cohort with us at all times.

I have been delaying this post for years now, whilst I have been toying with various business opportunities available in a Tier-II town in UP, where I currently reside. For background, we currently own a what you may term an MSME, and since I have come from abroad I have been willing to get into something new, mainly to diversify. The heartstrings keep pulling towards an automobile dealership, so I have looked into many dealership opportunities in the past few years, sprinkled with sometimes other types of businesses like pepperfry, Linen club, etc. although the heart wants to get into automobiles. For the record, breaking into the traditional (the already established brands like Skoda et al.) dealership game is nearly impossible, and requires extremely deep pockets. So, I started looking at the new EV businesses, whilst making out unscathed of some really dodgy ones...I feel the EV revolution is an opportunity for people like us to be able to get in a business that has some high barriers to entry by the old guns. I know nearly all dealership owners here, and each family owns about 3-4 different brands whilst entry for new entrants is few and far between.

Here goes:
I started scoping Evolet near about the time covid hit, and praise the almighty for the near-miss (near hit). I had completed all formalities except for the initial payment by Nov 2019, and had nearly applied for this company's dealership. It was a great lesson learnt, and I am happy that I did not join them then. I can't really point out their varied issues here although I do not trust them, and do not really agree with the direction they have taken. Although, I loved how cheap it would be to get a start compared to 7cr requirement by Skoda.

Dealer Insight Brochure attached for reference.

I also looked into Jangid Motors in 2020 which was doing really well in Eastern UP, but for some reason I felt I couldn't sell small rickshaws to a category that is hard to impress, and finance. Dealer Insight Brochure attached for reference.

Without dwelling too much into the details of the ones that were left behind, let's fast forward to 2023; and the bug has bitten again.

I have been looking at Euler Motors in the EV space for some time, and have been impressed by their product. Attached brochure for the uninitiated.
They seem to have a robust product in the EV Cargo L5 space. The only drawback being that, it's the only product they have, and I do not necessarily trust anyone on their pipelines of new and upcoming products (pipe-dreams, really!)

I feel better about this one, the financials seem robust too. Don't want to divulge information about the dealership financials here as the negotiations are on-going.

Would love to hear opinions of BHPians here, if I should take the plunge or avoid these new age EV companies altogether.

[Aditya]

Thread moved out from the Assembly Line. Thanks for sharing!

[Redwood1970]

Not to sound pessimistic, but products from such EV brands are not what I would call well-finished. Further, while there is good demand in the EV space, customers will like to prefer known brands.

A dealership model might make sense, but I'm not sure on the margins on these products for the dealer. Unless they are higher that traditional companies - eg Skoda or Maruti, it doesn't make financial sense to go into the same.

Today is the first time I heard about all three - Jangid, Evolet and Euler!

[Dhillon]

Hi Pratyaksh, I have seen Euler 3 wheelers in Gurgaon and they seem to be a popular choice here.
Regarding your request for suggestion on entering the automobile industry through a dealership, I have voted "No"
My only suggestion would be to calculate yearly ROI. If you are able to manage a return of 6% and above on your investment, then it makes sense.
In my 10 years of experience in the auto industry and having been a part of retail outlet as well as part of an OEM, getting 6% and above return on your investment requires hardwork and a lot of sweat. Best of luck!

[Autolock123]

EV dealership at least in two wheelers is now slowly moving towards the direct to customer model. Ola already did that and was successful, Hero - the ICE market leader is also talking of having 30% sales through digital channel. I presume in that case value add from dealer will be Nil and hence the returns as well, even if the delivery is done through dealers. The opportunities of Service revenues will be also less given the lower maintenance required.

Though the EV adoption is certain but I believe the model of business will not be the same as ICE. Though there could be newer streams of income that may emerge for EVs. Hence I believe entering solely for the EV dealership may have a much higher risk than it looks like.

Also, Industry is evolving quite fast. Hero electric which was market leader in pre-covid is seen at bottom of charts in 2022. It has lost to new players like Ola & Ather. Predicting the winners and losers of market is difficult at this time.

[Atul Kolekar]

Dealership, particularly in automotive sector is a hard game. Companies well established in market play hard to catch and prefer established partners with experience. New companies can't attract established players and hence are willing to go with new entrants but try to take advantage of inexperience and make dealers pay for their gambles and often with customers as well. The products are hard to sell and take too much time to move. This is absolutely critical for perishable products such as batteries and EV's. So avoid new manufacurers unless there is palpable buyer demand in market for such product.

[Contrapunto]

The trend in EV sales increasingly "direct to consumer". Ergo, no scope of dealers in this picture. The manufacturer keeps all the margin to itself.

On servicing, EVs generally need less servicing not more. Especially profitable works on engine, transmission etc once the sold units start hitting high-mileage thresholds. Again, not very promising from the dealers' point of view.

The ONLY place where I can see some sense is "IF you already have retail space in busy city centers, you can create a "display showroom" for a commission/ rent from the EV maker.

[Oldschool guy]

The dealership won't make money by selling vehicles but it makes money in service and accessories. It's very lucrative to be dealer of ev even I was in dilemma of setting dealership but restrain from decision coz of following reason.
EV needs less service so our main goal of vehicle hitting service station is out of question. Even if it's hit it would be for brakes service or basic services.
Limited accessories to sell for vehicle as not much prescribed by OEM.
Substandard quality of parts, I am working in EV space and I had seen most of the manufacturer parts. You compared the parts with ICE vehicle you will realise the difference.
Buyers are fleet buyers who directly strike a deal with manufacturers. Even for ev two wheels lot of people are buying vehicle online.
I had seen some ev manufacturers not using can communication but using single wire system. In such case it will be night mare for technical team to find fault at service center.

[travelling owl]

As some one from batteries and a bit of EV background, I would suggest not to venture into EV dealership at the moment. Its too early stage, the products are still in early stage, and OEMs are not focussing on training the service centers, including the likes of TATA and Mahindra. Battery being the key part of the EV ecosystem, you are going to be dealing with black box for foreseeable future. I would wait for another 2 years until the products get stabilised.

[ghtg1]

My view is if money is not a problem, go for the learning experience if investment amount is not sizeable. As and when the right opportunity comes you can capitalise on your experience. None of the companies you have mentioned have pan India presence or the resources for R&D and EV being a constantly evolving thing for now this companies have high probability of being out of business in near future. However if investment amount is not material for you, the experience, connects, know how etc you will gain from it could be worthy for future.

[pratyaksh]

Update seen on Euler Motors today;

[blackwasp]

The only reason someone would start a dealership is if he has the required space (showrooms, service centre, stockyard, etc.) already owned and looking for a way to get more returns than giving it on rent.

Unless getting more than 15% ROI, I will suggest to stick with conventional companies in the 2 and 3-wheeler space.

If you are so keen on opening a dealership, start with a used car / bike dealership. You will have to procure vehicles, service them, and sell for a profit.