Automotive retail is the business of selling new cars, servicing them and selling them again as used cars, together with the software behind each step. In India, carmakers rarely sell cars to buyers themselves. They sell through dealers. A dealer is an independent business, appointed by the carmaker to sell and service its cars in one area.
A dealer earns money in several ways. It sells new cars. It takes old cars in part-exchange and sells them on. It arranges car loans and insurance for buyers, and earns a commission on each. It also services and repairs cars and sells spare parts.
Take, for example, a dealer in Vadodara that sells a hatchback for ₹9,00,000. After paying the carmaker, the dealer keeps only a small margin on the car itself. Say that margin is ₹30,000. The buyer takes a loan that the dealer arranges, and the bank pays the dealer ₹8,000 as commission. The buyer also buys insurance through the dealer, which pays another ₹10,000. Over the next five years the buyer returns for services and spare parts, and these can bring the dealer more money than the sale did. So a dealer wants every buyer to come back to its own workshop.
All of this runs on software. At the centre is the dealer management system, or DMS. It records every car in stock, every sale, every service job and every part, and it holds the accounts. So it is the dealership's system of record, the one database that the business treats as the official version. A dealer rarely replaces its DMS, because the whole business runs on it. This is the idea of an installed base.
Around the DMS sit other tools. A buyer can build a car on screen in a car configurator before visiting the showroom. A CRM follows up every enquiry. After the sale, dealer service software books each service and takes the payment. The loan that pays for the cars on the showroom floor is called floor plan financing.
Old cars are the last part. A dealer sells many part-exchange cars to other dealers at an online car auction. Buyers and owners also browse and list cars on a used car marketplace. Such marketplaces show a network effect: more listings bring more buyers, and more buyers bring more listings.
Some of the best-known dealer software is sold mainly to dealers in the United States. Indian dealers use the same kinds of tools, and much of the engineering for all of them is done in India.