275+ Dealerships Shut Down Due to Slowdown in India
According to recent reports, the ongoing economic crisis has made more than 275 dealerships shut their operations with thousands of people being rendered jobless. The reports have been announced by FADA, the apex body of automotive retail in India which represents more than 25,000 auto dealerships across India.
The FADA also accounts for more than 90% of sales in the automobile sector in the country which currently employs more than 40 lakh people under their wing.
Since the automobile sector was under severe pressure from the last 15 months because of the decrease in the overall sales and the loss of economy, several automobile manufacturers have blamed the authorities for improper planning that increased the official price tags of the vehicles.
The increase in the price tags all the way up to 30% have made the dealerships lose customers thereby altering their automotive buying decisions. In addition to all this, the ongoing nationwide lockdown to curb the COVID-19 has further made the dealerships fall deep in losses as the decreased footfall has made them lose sales further.
Thus to help the manufacturers and dealerships during the time of crisis, FADA has requested the government authorities for a complete waiver of interest on all loans from banks and NBFCs. In addition to this, the federation has requested the extension of a 4% interest subsidy on working capital loans to companies for nine months after the lockdown is lifted.
Commenting on the situation at hand, FADA in an official statement said – “The auto industry has already been under a severe slowdown for the past 15 months. More than 275 dealerships had to shut down during this period and thousands of jobs were lost in the process.”
Further adding to the statement, the authorities stated – “A new normal growth rate is going to be set post COVID-19, which is projected to be far lower than the one under which we have been operating in recent times. If not supported in such a scenario, many auto dealers will go out of business and the livelihood of hundreds of thousands of employees will be impacted.”