Written By: Resham Daswani

Is the Indian auto industry something you're interested in exploring as a potential business venture? A profitable and expandable business opportunity exists in India for those interested in starting a franchised vehicle dealership. Investing in a car franchise in India is a great idea because the country is growing rapidly and could soon become the world's third-largest auto market. This comprehensive guide will help you develop a profitable car dealership by walking you through every element, including investment, license, profitability, and brand selection.

A Survey of the Indian Automobile Franchise Market

The automobile sector in India is highly influential, with a valuation exceeding ₹8.7 lakh crore (~USD 100 billion). In the fiscal year 2023–24, India sold more than 3.8 million passenger automobiles, as reported by the Society of Indian Automobile Manufacturers (SIAM). Dealerships are undergoing fast change as a result of a transition towards electric vehicles and smart vehicles, as well as a 15% YoY growth rate.

Many sales are facilitated by franchise-based dealership structures; this is especially true for Maruti Suzuki, Tata, and MG Motor, among others. This industry has become extremely competitive, but also very lucrative, due to the rise of organised the retail sector, online tools, and service-centric models.

Investment, space, and licenses that are necessary.

#1. Funding Required

Included in the overall capital needed are expenses for operational setup, brand fee (if necessary), showroom setup, and working capital. This is a rough breakdown:

• For entry level brands like Maruti Suzuki, Tata - the investment ranges anywhere from INR 70 Lakhs To 1.5 crores.
• For Mid segment and Premium range automobiles like MG, Kia - the investment ranges anywhere from INR 2 To 5 Crores.

Apart from these the other costs and expenses include:

• Training and staff recruitment: 10–15 lakh rupees
• A brand's inventory might cost anywhere from 30 lakh to 1 crore rupees.

#2. Area / Space Required For Setup

The majority of companies need:

• The showroom has an area of 3,000 to 5,000 square feet.
• Space required for service or workshop: 5,000 to 10,000 sq. ft.
• Around 2,000 to 5,000 square feet is dedicated to parking and the stockyard.

Also, the ideal location would be close to major roadways.

#3. Everything You Need to Know About Legal and Licensing

Legally conducting business in India requires:

• Commercial License from a local government agency
• GST Enrolment
• Approval of RTO Registration Facilities
• Businesses and Stores Permit
• If relevant, professional taxes and ESIC

Optionally, you may also require:

• Important approvals from b-i-s
• Approval from the Pollution Control Board (for the workshop)

Top Five Automobile Brands That Are Offering Dealerships in India

#1. Maruti Suzuki India Dealership

What Makes Maruti the Best Dealership Option?

• Head of the market: approximately 42% of the Indian market (FADA, 2024)
• Broad Service Area
• Great price point, excellent resale value

Cost to start a Maruti suzuki dealership [costs may vary accordingly to location, these are approximate figures]

• Required Investment: ₹70 lakh to ₹1.5 crore
• Workshop setup costs an extra ₹50 lakh or more (service centre is optional but highly recommended).

Area Mandatory:

• The showroom is roughly between 3,000 and 5,000 square feet in size.
• Workshop space requirements: 5,000 to 10,000 square feet.

#2. Tata Motors India

Is Tata Dealership the Right Choice for You?

• No. 3 Indian automaker
• Awarded five stars by the Global NCAP for safety
• Great urban and semi-urban desirability

The cost to start a Tata Motors Dealership is approximately between Rs 1 To 2.5 crores depending on the 3S Model - Sales, Service and Spares

For Showroom & Workshop together, the approximate space would range between 15000 To 25000 of square feet.

#3. MG Motors India

What Makes MG a Good Dealership Option?

• Exquisite tech-focused brand offering linked automobiles
• Rival electric vehicle manufacturer
• A legacy of the British people that continues to resonate today
• Dealer model that prioritises customers with an eye on return on investment

Capital Needed:

• 2–5 crore rupees
• Perfect for major cities and first-tier metropolitan areas

Minimum Area Needed:

• Space required for the showroom: 4,000 to 6,000 square feet.
• Space needed for the workshop: 8,000 to 10,000 square feet.

#4. Kia Motors India

Why invest in a Kia India Dealership?

• Exciting premium category with consistently increasing sales
• Definitive style (Seltos, Carens)
• Dedicated dealer assistance and aggressive marketing

Required Investment:

• 2–5 crore rupees

Area Requirements:

• Space required for the showroom: 4,000 to 6,000 square feet.
• The workshop spans over 10,000 square feet indoors.

#5. Hyundai Motors India Dealership

Why Opt for Hyundai Dealership?

• Indian automaker ranked second
• Various products available, ranging from i10 to Tucson
• Pay attention to customer service and features that are tech-savvy.

The required investment amount is:

• 1.5 to 3 crore rupees
• Perfect for the first- and second-tier marketplaces

Minimum Area Needed:

• 15,000–20,000 square feet (including service)

Want to invest in an Automobile Dealership in India? Here is the application process.

#1. Gather Information through Market Research

• Evaluate local demand.
• Evaluate the demand in urban and semi-urban areas.
• Assess the local performance of the brand.

#2. Choose a car brand that suits your goals.

• Have a look at the Maruti, Tata, MG, etc. web pages.

#3. Fill out an Application for Dealership

• Almost every brand's website features a franchise or dealer page.
• Please include your location, investment, and level of experience in the form.

#4. Extensive Research and Site Evaluation

• Brand representatives survey the area, think about how easy it is to get to, and study the population.

#5. Legal Agreement and Documentation

• Finalise the dealership contract.
• Present licenses and documentation pertaining to land ownership or leasing.

#6. Get the showroom and service operational.

• Brand offers building plans and interior design specifications.
• Set up a D-M-S, signs, logos, etc.

#7. Staff Recruitment and Training

• The sales and service staff can get accredited training from the brand.

#8. Operations for Launch

• The launch will be carried out with the help of local marketing.

Is it profitable to start a Car Dealership in India 2025?

Elements related to profitability include:

#1. Primary Sources of Income

• Sales margin for vehicles (2.5–8%)
• Upselling insurance and accessories
• Extended guarantees and maintenance agreements
• Workshop repair and replacement components
• Compensation for RTOs and financial partners

#2. The moment of profitability for you

• Durations of 18–36 months are common, with exact durations varying by region, brand, and operational efficacy.

#3. Ways for maximising your revenues include:

• Significant foot traffic area
• A+ support after the sale
• Online prospecting
• Discounts for the holidays

A booster in the Car Dealership With The Growth Of EV Car Dealerships - Here’s What You Should Know

Below are listed some of the incentives provided by the Government of India to promote EVs in India.

• Electric vehicle (EV) dealerships in India receive financial backing from the government through programs such as:
• Incentives at the state level: capital subsidies, tax breaks
• Collaborating with Energy Distribution System Operators (DISCOMs) and Oil Marketing Services

Therefore, consider investing in an EV Dealership in India because:

• Increasing demand from customers
• Aiming for 30% EV uptake by 2030 is a government plan.
• Reducing operational expenses

Final Thoughts,

Want to be a part of a successful Car dealership in India? 

• Position is crucial: Select a location that is easily accessible and has good visibility.
• Customer loyalty is built through dependable service, so focus on that.
• Take use of digital marketing strategies: employ customer relationship management technologies and run geo-targeted campaigns.
• Inventory management: Do not keep too many units of models that do not sell well.
• Make use of OEM support: Take part in training and promotions organised by the brand.

Reach out to Franchisebazar for your favourite car dealership and start on in your own city right away!

Disclaimer: The brands mentioned in this blog are the recommendations provided by the author. FranchiseBAZAR does not claim to work with these brands / represent them / or are associated with them in any manner. Investors and prospective franchisees are to do their own due diligence before investing in any franchise business at their own risk and discretion. FranchiseBAZAR or its Directors disclaim any liability or risks arising out of any transactions that may take place due to the information provided in this blog.