Ford India coercing dealers to sign non-disclosure agreement: Fada

Urges govt to set up task force to monitor compensation structure being worked out by Ford India for its dealer partners across the country

Automobile dealers' apex body, FADA (Federation of Automobile Dealers' Association) in a letter to the minister of heavy industries, Mahendra Nath Pandey has alleged that Ford India has made “coercive efforts” to get their channel partners to sign an non disclosure agreement (NDA) with an imposition of “unreasonably tight timelines, under economic duress.”

It has urged the government to formulate a task force to monitor the compensation structure being worked out by Ford India for its dealer partners across the country. The management of the local arm of the US automaker is currently in discussions with its dealer principals.

In the letter to the Union Minister, FADA President Vinkesh Gulati also requested the government to instruct Ford India to keep the industry body in the loop regarding the compensation structure for the dealerships.

Earlier this month, the Detroit-based US automaker announced that it will stop vehicle production at its two plants in India and will sell only imported vehicles going ahead as part of a restructuring exercise. Its decision will impact over 4,000 employees and about 170 dealer principals who operate over 300 outlets.

"We humbly request your Ministry's intervention... Create a task force which takes day-to-day updates from Ford India to monitor the compensation plan for automobile dealers and dealership employees," Gulati said in the letter.

Besides,he has also requested the ministry to make sure that Ford India indemnifies dealers from various consumer and civil cases, both under pendency and against any future cases that may arise directly or indirectly out of the automaker's restructuring announcement.

"Ford India is forcing its dealers to first sign Non-Disclosure Agreement (NDA) latest by September 14, 2021, before any compensation package is worked out. Many Ford dealers have directly or indirectly requested FADA to take up the matter for an amicable resolution," he noted.

The contents of the NDA, pointed out Gulati is very broad and doesn't mention whether it would take into account factors including damages towards costs of idle establishment and infrastructure, maintenance, employee retrenchment claims, among other things.

According to FADA close to 464 automobile dealers have lost a cumulative Rs2485 crore over the last five years and some 64,000 employed at the dealerships have lost their jobs due to the sudden exit of multinational automakers from India.

Among those that have quit India's automobile market, the investment of Rs2000 crore made by the dealers of  Ford India-- the fifth biggest and latest auto company to wind down its manufacturing and sales operations,  tops the chart, shows the data compiled by FADA.

The dealer body is seeking legislation for protecting dealers' rights. This would ensure that adequate information is available to the customers and protect dealers from sudden exits by OEMs, the letter said.