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COVID-19 may pressure auto sellers to search for new biz fashions, some face ‘existential disaster’: FADA

MUMBAI: Automobile sellers may nicely be compelled to have a look at new methods of doing enterprise and a few might face an “existential crisis” in case the coronavirus pandemic continues for a chronic interval, a high official of trade grouping FADA stated.

While auto sellers are already engaged on contactless gross sales, the pandemic has accelerated implementation of such practices and precedence can be on sustaining security protocol.

As the auto trade continues to battle difficult occasions, FADA President Ashish Kale stated auto dealership fashions must bear adjustments.

The Federation of Automobile Dealers Association of India (FADA) represents over 15,000 car sellers having 25,000 dealerships, with 30 associations of car sellers on the regional, state and metropolis ranges, accounting for 90 per cent of car gross sales and repair within the nation.

“How long does this threat of coronavirus remain and is this going to be a way forward for us? If this is going to be a prolonged threat for customers, then it will affect the way we work also,” he informed PTI.

In such a state of affairs, Kale stated most likely dealership fashions would additionally need to be modified.

“We will also have to look at new ways of business, in which safety and health and social distancing protocols are maintained,” he added.

Earlier this week, German automakers Volkswagen, BMW and Mercedes rolled out on-line gross sales initiatives in India in an effort to assist clients ebook automobiles from the protection of their properties.

According to Kale, there can be some new strategies for promoting automobiles as soon as the lockdown is lifted. The trade would additionally need to see what are the form of threats from coronavirus infections in an effort to preserve security protocols, he famous.

“We will develop new methods of promoting a car. Virtual drives might be one, apart from new methods of deliveries and contacting a buyer. In a approach, strategies which don’t contain an excessive amount of of a bodily go to by the client.

“So, new ways of selling a vehicle will definitely develop post COVID,” he stated.

The car trade is already within the means of popping out with these initiatives. The mixed funding throughout car dealerships stands at round Rs 50,000 crore, as per Kale.

Regarding difficulties confronted by dealerships, Kale famous that at this stage, it was tough to say what number of sellers can be in a tricky spot.

“But both the demand and money supply are not going to be the same as it was before COVID-19. So, there will be dealers who would get affected by this. Yes, some may face an existential crisis as well,” he warned.

Earlier this month, FADA stated auto sellers’ enterprise ranges from Rs 10 crore to Rs 1,000 crore, with majority of them being family-run small scale companies.

More than 275Â dealerships have already shut store within the final 15 months on account of demand slowdown, which additionally resulted in 1000’s of job losses. Kale questioned what would occur to so many individuals related to the trade if the demand doesn’t choose up.

“Many sellers might be in misery if demand drops drastically and there’s no abundance of liquidity within the auto corporations. And there’s additionally the opportunity of a few of them going out of enterprise altogether.

“It will depend on dealer to dealer, how much leveraged he is, what is his cost structure. There are so many things which are unknown in this situation at the moment,” Kale stated.

The car dealership trade employs over 40 lakh individuals at dealerships and repair centres. These embrace 25 lakh direct staff and one other 15 lakh who’re depending on dealerships for his or her livelihood, as per FADA.

“So not solely each seller however each enterprise should regulate his complete enterprise plans based mostly on the demand. I do not assume within the speedy future there’s any risk to jobs within the (dealerships) trade.

“But after opening up, if we don’t see demand picking up or dropping very drastically, then there will be job losses,” he stated.

The grouping has sought various aid measures, together with working capital assist and discount in GST, to assist the trade submit the lockdown. The nationwide lockdown, which started on March 25 to curb spreading of coronavirus infections, is scheduled to finish on May 3.

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