Hyderabad-based AV Motors is driving its SML Isuzu’s dealership with efficient customer service and conviction. Rajesh Rajgor explores the reasons why this partnership has been such a success story
In the field of automotive dealerships, Hyderabad-based AV Motors is a well-known brand. The 19-year-old company draws its heritage from the prominent Hyderabad Tempo House founded in 1975 by Babulalji Tholia. AV Motors has been a reliable dealer partner of SML Isuzu since 2002. Managed by Babulalji’s sons, Ajay and Vijay, the company has also been the country’s top SML Isuzu dealer for nearly two decades. Reminiscing about AV Motors’ journey over the years, Ajay shares: “Even before I graduated in 1992 I got involved in this business and assisted my father at Hyderabad Tempo House.”
“We sold spare parts of Bajaj Tempo, DCM Toyota, Allwyn Nissan and over the years we started selling spares of Force Motors, Tata Motors, Mahindra and Mahindra, Eicher and SML Isuzu. It so happened that while we were pushing for SML Isuzu to have local presence, they offered us the dealership and we took the plunge. Having firmly established ourselves in the spare parts business, we grabbed the idea of diversifying with both hands and then there was no looking back,” he adds. It was the time when SML Isuzu too was expanding and finding its foothold in the truck and bus segment across India.
Riding the Bus Market
Within a couple of years of operation, AV Motors found its hold in the bus market, especially the school bus segment. “The first two years were difficult as selling even one vehicle was tough and it was always a moment of pride to record a sale. But we were able to increase our market-share gradually in the following years. Our turning point came in the year 2016 when we were able to change the way the school bus business was looked at and projected as in the market,” Ajay states. A successful business thrives on finding a niche and a niche market allows companies to tailor their marketing efforts to target the buyers’ requirements.
Having sensed this opportunity in the bus segment, AV Motors delved deep into keeping ready a stock of school buses and also tourist buses by customizing them as per market requirements. Elaborates Ajay: “For the months of October to December we used to get enquires for tourist buses, which is the beginning of the Aiyeppa season, a major festival in our region. We would approach bus and coach bodybuilders and provide our own designs to customize the buses in terms of body, lighting and driver comfort, all of which had been compiled after a lot of market research.”
“These tailor-made and customized luxurious buses were developed with the help of JCBL to suit the requirements of the market according to the comfort and convenience of passengers. At a time, we would have 10-15 buses ready and that gave us a lot of traction in the business,” he adds. Similarly, for the school bus season many schools placed orders in May or June and a few waited till July. For AV Motors it was therefore important to cut excess load at one time and manage the demand and supply scenario conveniently. Sharing details of how this was done, Ajay says, “We wanted to work around the behaviour of the school bus orders as only 5-10 per cent of the schools planned their bus requirements in advance. The rest waited till the last moment.”
“We used to place advance orders with SML Isuzu to tackle the sudden spurt of demand in June-July. We usually began as early as February to place orders to the tune of 75-100 buses every month so that by the time the orders came we had a ready stock of around 300-400 buses,” he adds. The planning and execution of this working style has worked wonders for both SML Isuzu and AV Motors in Telangana. “Our strategy spread through word-of-mouth publicity and this gave people confidence that if not anywhere else AV Motors would definitely have stocks. While the overall market-share for SML Isuzu in buses was 12 per cent, we managed to push it up to 50 per cent before the pandemic hit us,” Ajay informs.
Brand Expansion
In this particular segment, what is the prerequisite for brand expansion? A well-known product’s reputation, popularity and brand loyalty are the benchmarks for extending brand presence. Given that the company was doing wonderful work, AV Motors was offered two more dealerships for SML Isuzu, one in Mumbai in 2015 and another in Goa in 2019. “Having hands-on practical experience with the bus market in India, we confidently accepted the dealership options for both the territories. The fact that SML Isuzu could trust us for their brand extension and offered us the chance to diversify and further increase our market-share was an honour,” Ajay says.
Today, AV Motors has in its repertoire a wide presence of sales and service outlets. This includes SML Isuzu dealership in Jeedimetla spread across an area of 80,000 sq. feet with 25 service bays. There is another one in Auto Nagar with 10 bays and an area 25,000 sq. feet. It also has a very well-planned network of 3S (sales, service and spares) facilities in other districts of Telangana with combined service strength of 14 service bays in Karim Nagar, Warangal and Nizamabad. The company also has tie-ups and resident sales and service representatives throughout other regions of Telangana.
Its Goa presence with two 3S facilities in both north and south encompasses around 33,000 sq. feet with a total of 16 service bays. The Mumbai visibility is on the back of two 3S facilities across 33,000 sq. feet and 10 service bays. Additionally, AV Motors has also added spare parts’ distribution of Veedol Lubricants, Eneos Lubricants, Mahle Filters and Exide Batteries in Hyderabad. It is also a dealer for Piaggio Commercial Vehicles in multiple parts of Mumbai. “With growth and expansion, our market-share improved and we were able to bring good business for SML Isuzu. Of course this would not have been possible without the support of the OEM,” Ajay states.
The Business Scenario
“Before the pandemic disrupted the business, we registered sales volume of 1,079 units in FY19-20 while the service volume stood at 6,902 vehicles. The Mumbai market responded with 225 units in FY19-20 and served 1,306 vehicles. The newly launched Goa units didn’t disappoint either with sales of 85 units and servicing of 2,197 vehicles in FY19-20,” Ajay reveals. The pandemic, obviously, has tilted the scales, also for the fact that it coincided with the automotive industry’s transition from BS-IV to BS-VI. Many dealers, including AV Motors, have reported losses and negative growth. “Compared to the turnover in FY19-20 and FY20-21 our revenues dropped to around 10 per cent of what we did the previous year,” Ajay informs.
“Dealerships being capital-intensive, we felt the heat too. It was more so since we held on to the resources, both vehicles as well as people. Having witnessed many cyclical ups and downs throughout our CV dealership journey we have been patient and resilient. Our spare parts and servicing business kept us afloat,” he adds. The management is of the opinion that any surge in demand, both in trucks and buses, will only return post March 2022. It would require a fast-paced vaccination drive and confidence in people to spend on items over and above the essentials. Opines Ajay: “New orders in the tourist bus segment have dried up given the fact that people are not travelling. Similarly, the requirements for school buses will grow only after June 2022.”
“As long as people are working from home, the staff transportation market will hardly pick up. However, this phase is going to be temporary and as soon as a majority of people are vaccinated, things will return to normalcy,” he adds. As long as actual sales are subdued, AV Motors will continue to rely on the servicing and spare parts business. SML Isuzu too is working on research and development to create new products and a robust portfolio to attract new customers. “The OEM has invested a lot in research and development and the manufacturing plant to bring out new products. Be it the executive coach, GS cabins, S7 range of buses or the Hirohi range of products, the vehicles are compact and superior in quality. They are second to none in terms of the pricing, built quality, performance and durability,” Ajay states.
“Despite the pandemic and transition to BS-VI we were able to sell 150 buses from our three areas of operations in Telangana, Goa and Mumbai. Even if the current phase is difficult, the company takes care of the dealers and does not dump stocks or pressurise the dealers to sell and purchase a certain number of vehicles. We know the current phase is extremely difficult, but whoever stays will gain in the long term,” Ajay states. With the next generation also joining the business and learning the way to go ahead, there is optimism about getting back on the growth track once things are back to normal. “The new generation is learning the way to handle business in these tough times and it will help them grow faster,” Ajay says.