Daewoo Motor India revamps dealer network

By Our Special Correspondent

CHENNAI, MAY 8. Daewoo Motor India Ltd. (DMIL) has set in motion a dealer restructuring programme in seven principal markets as part of a fresh marketing initiative. The dealer revamp programme will cover Delhi, Mumbai, Chennai, Hyderabad, Kolkata, Ahmedbad and Kochi.

The company has zeroed in on eight out of a total of 25 dealerships in these cities to implement the programme on an experimental basis. The latest exercise is expected to beef up sales and marketing efforts.

According to company spokeswoman Ms. Renu Sharma, the programme will ultimately help Daewoo Motor India to implement - based on the feedback from the pilot initiative - best practices across other dealers in the country.

The dealer revamp programme provides couple of options for selected dealers. Under the first one, the company takes complete charge of the showroom for a specified period. The company will provide the entire working capital to the showroom concerned. However, it will take away the profits. Under the second option, the company will take over the showroom management. The working capital will, however, come from dealers who will have the right to take the profits. The option enables a dealer to continue to have his/her signage at the dealership. Vijay Sales Corporation in Chennai has agreed to the first option. Swarup Motors & Gravity Cars in Delhi has opted for the second one.

The restructuring of dealer network comes on top of cost revamp which saw the company save Rs. 62 crores during 2000-01. A further cost saving of Rs. 85 crores is expected in the current year. The cost saving is made possible by an assortment of initiatives including job cuts of the order of 865 through mutual discussion with the union.

The company has also decided to hive off its gear box plant into a separate unit for a possible sale subsequently. The three lakh capacity gear box plant is working at 7 per cent capacity utilisation. Nearly 75 per cent of the company's loss is attributed to this.

Even as they express optimism that the General Motors - which is having a close look at the parent company in Korea, will come out with a favourable decision before long, company sources are hopeful that the Indian subsidiary will break-even this year. Their optimism is based on a number of initiatives ranging from belt-tightening exercise to sales reorganisation and aggressive marketing.

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Section  : Business
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