Indian auto slowdown is gulping dealerships and employments; FADA has highlighted the issues being faced by dealers…
Federation of Automobile Dealers Associations (FADA) represents more than 25,000 auto dealerships in India and account for 90 percent of automobile sales and services in the country. These dealerships are a big source of employment and in an estimate it has employed 40 lakh people directly or indirectly.
The automobile sector has been reeling under tremendous pressure for the last 15+ months due to loss in sales in these months. Various manufacturers have blamed the regulation authorities for improper planning which has resulted in a very significant increase in the prices of almost all cars, two-wheelers and commercial vehicles.
According to an unofficial estimate, prices of 2-wheelers have increased by upto 30 percent or more in the last couple of years. This means that an entry level motorcycle which used to cost Rs 50,000 earlier now sets a buyer back by Rs 65,000! That is a humongous hike in a very short span of time.
As a result, people are postponing their auto buying decisions. Apart from the latest Coronavirus pandemic, another major reason is the overall slowdown in the country’s economy.
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FADA says that majority of the auto dealers in the country are family run small scale businesses which employ 70-150 people on an average. Due to the prolonged slowdown, it says, more than 275 dealerships had to shut down and thousands of jobs were lost as a result.
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FADA has written to the Indian Government yet again to seek help for the auto industry to sail through these extremely tough times. We will discuss their demands in a separate story.