Fada urges MAN Trucks to device 'compensation formula'

Following German truck maker MAN Trucks' "abrupt" decision to exit India, automobile dealers' body Fada has urged the firm to device a "compensation formula" to help the affected dealers in settling the final accounts with the company.

The board of Volkswagen group's MAN Truck & Bus AG (MTB) in August decided to restructure its India business as part of its strategy to focus on premium segment markets.

As a result, MAN Trucks India would now become an R&D centre for excellence supporting global projects.

"Since this incident of you shutting sales in India affects all MAN dealers, they have approached us to take up the matter with you on their behalf.

"...We hence request you to kindly develop a compensation formula which will help them during their settlement with your company," John K Paul, president, Federation of Automotive Dealers Association (Fada), said in a letter to MAN Trucks India chairman and managing director Joerg Mommertz Wednesday.

There are around 41 MAN trucks dealers across the country, with a cumulative investment of over Rs 1,000 crore, who are out of business since August 10, when the company conveyed its decision to them, Fada claimed.

Of the 41 dealers, only four are into servicing, while the rest 37 are full-fledged outlets dealing with sales, service and spares.

The company has sold over 25,000 vehicles since its entry in the Indian market in 2006.

Stating that the dealers have invested huge sum of money in land, infrastructure, manpower, among others, Fada in the letter said "they have been left high and dry due to the company's abrupt decision of closing down the sales in India without even providing the (mandatory) three-month notice."