The Power of a Strong OEM-Dealer Partnership: Unravelling the Myth and Fostering Success in the Auto Retail Industry

A Robust OEM-Dealer Partnership: Essential for Thriving in the Ever-Evolving Auto Retail Landscape

In today's dynamic automotive retail landscape, the relationship between Original Equipment Manufacturers (OEMs) and Dealerships plays a crucial role in ensuring customer satisfaction and overall success. While industry disruptions like direct-to-customer and agency options continue to emerge, the importance of dealerships as the final touchpoint and experience enhancers for customers remains significant. A harmonious relationship between OEMs and Dealers is vital for delivering exceptional customer experiences. To achieve this, both parties must understand and adapt to their respective roles and expectations in a constantly evolving environment.

Roles and Responsibilities of OEMs and Dealers:

OEMs invest heavily in research and development to create products that resonate with customers, provide Dealers with the necessary tools and training and offer support for Dealers to succeed in the market. The entire process can span over six years for a single product.

Dealers, on the other hand, serve as the face of the brand to customers, delivering the experience designed by the OEM. They earn revenue from various verticals while adhering to contractual terms and meeting the Key Result Areas (KRAs) set by the OEM's leadership team.

When both sides have a clear understanding of their roles, expectations and the goals and needs of their partners, the relationship can thrive. Although not every OEM is easy to work with, implementing certain strategies can enhance the chances of successfully managing the OEM-dealer relationship.

Here are five key strategies for Dealers:

1.     Communicate proactively: Although OEMs invest heavily in R&D, launch new products, and spend on marketing and pricing, they cannot read minds. Dealers need to proactively share information and maintain open lines of communication. While Dealers typically convey customer feedback, they often fail to communicate misunderstandings about expectations, which can impact the partnership. Sharing information about innovative internal processes and methodologies helps ensure shared expectations for all deliverables.

2.     Provide genuine feedback: OEM leadership teams may not be aware of ground realities due to their focus on product design, government policies, and compliance issues. The internal feedback channels within the organization may not be open and genuine. Dealers have a responsibility to pass on accurate and genuine customer and competitor feedback. Any discrepancies between customer expectations and OEM products must be addressed.

3.     Understand the OEMs' perspective: OEMs partner with Dealers to address supply issues. During the initial phase of the partnership, OEMs may experience anxiety about whether they have made the right choice. While this might seem like micromanagement, it is rarely the OEM's intention. Prioritizing transparency and welcoming initial inquiries or requests can help put the OEM at ease and foster long-term trust. As the relationship matures, both sides can contribute valuable suggestions that capitalize on mutual competitive advantages.

4.     Efficiently manage operations: In the highly competitive auto industry, risk management plays a crucial role in decision-making. Customer expectations, warranties, service experiences, and government regulations and compliance are all significant factors. The sustainability of a strong partnership requires that dealers insulate OEMs from these risks by efficiently managing operations to provide a smooth and delightful customer experience, thus fostering a stronger OEM relationship.

5.     Think outside the box: OEMs have pre-designed processes to deliver minimum standards of customer experience across all aspects of the dealership. Dealers need to be creative and innovative in improving these processes to enhance customer experience and differentiate themselves from other dealers and competitors. Dealers should remember that these processes are just a starting point, and there is much more that can be done. Many examples in auto retail demonstrate how innovative process implementations by dealers have been adopted by OEMs.

In the ever-evolving automotive retail landscape, a harmonious relationship between Auto OEMs and Dealerships is essential for delivering exceptional customer experiences and achieving overall success. As industry disruptions continue to emerge, the importance of Dealerships as the final touchpoint and experience enhancers for customers remains significant. A strong OEM-Dealer relationship requires open communication, mutual understanding of goals and needs, and collaborative efforts towards success.

By ensuring a steady flow of information in both directions and focusing on shared goals, OEM-Dealer relationship management can lead to a successful symbiotic partnership that benefits both businesses.

In today's fast-paced and ever-evolving auto retail landscape, a strong partnership between OEMs and Dealers is essential for success. This symbiotic relationship not only enhances customer satisfaction but also drives business growth for both parties. Here, we discuss seven key relationship management tips for OEMs to build a lasting and mutually beneficial partnership with their dealers: 

1. Treat Dealers with respect: Dealers are the lifeline of the OEMs' business, connecting them with customers and generating sales. Treating them with respect and valuing their input is crucial for a successful partnership. This involves listening to their concerns, acknowledging their expertise, and involving them in decision-making processes. Respecting dealers fosters a sense of loyalty and trust, which in turn, creates a stable and productive working relationship.

1. Practice clear and effective communication: Transparent and open communication is the foundation of any strong relationship. OEMs must establish regular communication channels with their dealers to share information, updates, and expectations. This may involve hosting webinars, conference calls, or in-person meetings to discuss market trends, promotional strategies, and operational guidelines. Clear communication ensures that both parties are on the same page and working toward common goals.
2.  Respond to requests for support promptly: Dealers often rely on OEMs for technical support, marketing assistance, and guidance on business operations. Timely and effective support from the OEM is crucial in maintaining a healthy partnership. OEMs must have a robust support system in place to address dealers' needs and concerns, ensuring that they are well-equipped to navigate challenges and achieve success.
3.  Genuinely care about your franchisees' success: A successful OEM-Dealer partnership is built on a mutual commitment to growth and prosperity. OEMs must take an active interest in their dealers' performance, offering guidance and support to help them overcome obstacles and achieve their goals. By investing time and resources in Dealers' success, OEMs demonstrate their commitment to the partnership and foster a sense of loyalty and trust.
4.  Address conflicts swiftly: Conflicts and disagreements are inevitable in any business relationship. However, the key to a successful partnership lies in addressing these issues promptly and constructively. OEMs should be proactive in identifying potential conflicts and work closely with dealers to find mutually beneficial solutions. By tackling problems head-on, OEMs can prevent minor issues from escalating into major rifts that could jeopardize the partnership.
5.  Encourage innovation in customer experience: In the highly competitive auto retail industry, enhancing customer experience is vital for success. OEMs should encourage Dealers to innovate and experiment with new strategies to improve customer satisfaction. This may involve implementing cutting-edge technology, streamlining processes, or offering unique promotions. By fostering a culture of innovation, OEMs can help dealers stay ahead of the competition and drive business growth.
6.  Recognize and appreciate Dealers' contributions to the business: Dealers play a critical role in the OEMs' success, and their contributions must be acknowledged and appreciated. OEMs should establish a system of rewards and recognition to celebrate dealers' achievements, such as hitting sales targets or implementing successful marketing campaigns. Recognizing dealers' efforts not only motivates them to perform better but also reinforces the sense of partnership and collaboration.

In conclusion, fostering a strong OEM-dealer relationship does not have to be challenging. With effective communication, a focus on shared goals and a commitment to mutual success, both businesses can thrive in the competitive automotive retail industry. A structured Dealer Advisory Council is a very strong tool to get the best out of this relationship. Let’s work together towards making India the leader in Auto Retail.