Innovation and top quality services key to Nezavisimost Group’s success
Renat Tyukteev, the vice president in charge of premium auto brands segments at the Nezavisimost Group, shares his view on the current situation on the Russian car dealership services market today.
How would you briefly assess today's Russian and global auto dealership services markets, prevailing trends and other processes in this industry?
At present, both the domestic and global auto retail markets are on a steady course of recovery. Today, the gross sales volume is approaching the pre-crisis levels, thus justifying the AEB’s forecasts. Of course, consumers, and consequently, auto dealers are now a bit more carefully than they were prior to 2008. But, in general, we are very positive on market prospects in 2012.
During the crisis, the government adopted a policy of subsidizing acquisition of ‘Made in Russia’ cars. How would you assess this policy, compared with similar policies abroad?
This program was a real boost in the arm for domestic automakers as it enabled consumers to buy new cars during the crisis. However, we recognize that this support was a temporary measure, just as it was in the U.S. and Western Europe. For instance, in the U.S., a similar policy stimulated the demand for new cars only few months, after which the sales of leading U.S. manufacturers GM and Chrysler declined by over 40%. The French and German programs were more successful as they helped to limit the drops in sales. A much more significant progress was achieved by China, which in a bid to stimulate stronger demand for new cars and motorcycles focused mainly rural areas’ residents, and this enabled it to achieve sales growth of 25%.
For the purpose of a comparative analysis, how does the Russian auto retail market currently correlate to other markets, for example, in the other CIS states, EU, U.S., Japan and China?
According to AEB’s data, the Russian market, in terms of sales volume in the first 8 months of 2011, was second in Europe after Germany and continues to grow. The auto retail markets in other CIS countries, though much inferior to Russia in terms of size, are also recovering intensively as well. In Kazakhstan, for example, growth in car sales by authorized dealers in Q1 2011 was 70%, compared to same period in 2010. The devastating earthquake and ensuing tsunami that struck Japan in March pushed the local car market to the 1977 level. But today, the Japanese government is taking several measures to support the industry. China still retains the title of the world's largest retail market and continues to grow, albeit at a slower pace than before. The U.S. market is also recovering but at a smaller pace, compared with the Russian or other European states’ markets.
How can you explain the so-called ‘unique Russian phenomenon’ of being the only country among the world’s top ‘space superpowers’ with an uncompetitive auto industry?
In our opinion, the current state of the Russian auto industry is due to several factors. Firstly, the long and almost complete isolation of Russian auto manufacturers deprived the local companies the possibility to learn from the successful experiences of their foreign colleagues. Secondly, the Russian car industry for a long time had no real competitors on the domestic market, and hence lacked the incentives for introduction of new technological solutions. When in the 1990 this became a problem because Russians preferred more modern, convenient and safer foreign cars, the local auto companies did not have the required capital needed to overhaul and upgrade their production facilities. As a consequence, the Russian car industry entered the 21st century without competitive technological base and modern development platforms. This is why I view the comparison with the space industry as entirely inappropriate, because the latter actively evolved in conditions of constant rivalry with the West, forcing our government to continuously direct the nation’s best scientific and financial resources to its development.
“Our experience and the recent economic crisis of 2008-09 have shown that the most successful growing auto dealers on this market are those that have put their stakes on quality and expansion of services.”
Competition in this industry is very high, as all possible players are present on this market. In this context, what are your company’s main competitive advantages on this market?
The structure of our company enables us to effectively develop our four core business areas: sales and service of new vehicles, sales of ‘used cars’, production of car bodyworks and financial services. Thus, apart from buying cars, our clients also have accesses to a wide range of additional services, including insurance, remote regulation of losses, leasing and expert evaluations. Besides, our company also invests in continuous updating of its service centers’ technical base and employees training programs that ensure a consistently high quality of our services.
In this interview, I cannot do without asking about your attitude to the so-called ‘unscrupulous or ghost dealers’ and how to more effectively fight them in Russia?
An effective control of such fraud requires cooperation in several directions: the police must identify and prosecute these ‘so-called ghost dealers,’ the media must inform citizens about the existence of such dangers, while official dealers need to expand the range of services to attract customers. Most fraud victims are those trying to save money on buying cars, often without knowing that they can take advantage of authorized dealers’ special offers, credit programs or buy ‘second-hand cars’ at attractive prices. We always stress that buying cars from official dealers guarantees its quality and legal ‘purity.’ We need to more actively convey this information to all our potential customers.
Based on your personal experience, how would you formulate an ideal model for a successful business in this industry, taken into consideration so-called uniqueness of Russia conditions?
Poor quality of roads and a long period of cold weather inevitably have negative impacts on vehicles’ technical conditions. Russian car owners are interested in quality service. This is not just mechanical repair. This, above all, requires clear understanding of customer’s desires and the dealer’s willingness to quickly and efficiently satisfy them, as all clients’ expectations must be met. Our experience and the recent economic crisis of 2008-2009 have shown that most successful auto dealers are those that have put their stakes on quality and expansion of services.
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