Auto dealers looking at rationalisation of infrastructure, manpower: FADA

Auto dealer body FADA on Thursday said dealers were looking for rationalisation of their assets as well as manpower, especially in bigger cities, to tide over challenging business environment.

The auto dealer body said the stress is more on dealerships in the bigger cities right now due to the prevailing situation as compared with outlets in the smaller towns and rural areas.

"Dealers are looking at moving to smaller places with relatively low rent and also looking at rationalisation of manpower in order to carry forward in these challenges times," FADA President Vinkesh Gulati told reporters.

In order to keep business sustainable, FADA is also talking to auto companies to keep inventory in check during the festive season this year in order to avoid over stocking at dealer-end as witnessed in the last two years, he added.

"We are speaking to SIAM and auto companies to keep inventory in check during this festive season as we don't want to get in same situation of over stocking as in last two years," Gulati said.

Kia Motors and Toyota Kirloskar Motor met expectations of their dealers better than other companies in the passenger vehicle segment during the COVID-19 lockdown, FADA said.

FADA in the month of July-August had conducted a survey, in association with PremonAsia, on support given by OEMs (original equipment manufacturer) to their Dealer Partners for COVID-19.

"Even before COVID-19 pandemic hit us, the Indian automobile industry was grappling with a prolonged slowdown. In fact, we were already de-growing for 15 odd months. Against this backdrop, COVID-19 outbreak has been a significant blow to the auto industry and especially to auto dealers," Gulati said.

Many OEMs came forward during these testing times and offered support to dealers with various means. FADA hence undertook this survey, he added.

"Our findings showed varying degrees of difference. While some dealers were better off, some received almost nothing in such trying times. It hence became very essential for FADA to gauge how the principals treated their channel partners, their first customers," Gulati said.

Elaborating on key findings of the survey, PremonAsia Founder and CEO Rajeev Lochan said all segments of the market have recorded a weak satisfaction score below 600 which is understandable given that no one can be prepared in advance for handling such a calamity.

The survey was conducted with a sample size of 1,144 dealership outlet from July-August 2020.

"However, OEMs like Kia Motors and Toyota Kirloskar (for passenger vehicle segment), Audi (luxury), Hero Motocorp (two-wheelers) and Mahindra (CV small and light) have met expectations of their dealers relatively better than others," he added.

Lochan noted that 46 per cent dealers had two biggest concerns -- support towards future business evolution and support towards re-starting business post lockdown.

"Also, what came out commonly across all the verticals was that dealers expect OEMs to improve their profitability," he added.