FADA projects 30% jump in dealerships in 5 years

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By Jaishankar Jayaramiah & Anitha

The vehicle dealerships in India is growing significantly despite several challenges and it will witness 30% increase in the next five years, said Ashish Harsharaj Kale, President of Federation of Automobile Dealers Association (FADA), the apex body of vehicle dealerships in India

In an exclusive interview with Automotive Lead on the sidelines of Vyapar Karnataka, the state-level conference for the FADA members in Karnataka, Ashish Harsharaj Kale, said the country currently has around 15,000 dealers owning around 25,000 dealerships. The dealerships covers two wheelers, passenger vehicles and commercial vehicles.

The two wheeler dealerships accounts for 65% in the total followed by passenger vehicles 25% while the remaining 10% comes from the commercial vehicles. The growth will be witnessed in all these three sectors, Ashish said.

The contours and dynamics of retail automotive businesses are changing at alarmingly fast pace. The competition is intensifying.  With this aim, FADA is working to make the Federation every auto dealer’s one stop destination for any concern related to the automobile retail industry. To facilitate this in an organised way, the Federation has started organising state level conference called VYAPAR in every FADA State Chapter. After immensely successful Vyapar’s in New Delhi, Mumbai, Patna, Lucknow and Kolkata, Gujarat, the seventh edition of Vyapar: Vyapar Karnataka is happening today in Bangalore.

Already FADA has created 24 state chapters with North East region as one State Chapter and VYAPAR will be organized by all the State Chapters.

According to Saharsh Damani, Chief Executive Officer of FADA, the Karnataka chapter has around 1,760 members. Earlier the FADA has been conducted in Delhi and Mumbai but it was difficult for all 15,000 members from all across the country to attend the meetings. Now the state-wide meetings are comfortable for the members in that respective region.

Interview with FADA’s President Ashish Harsharaj Kale  

What are the challenges faced by dealers in India?

Manpower cost, real estate cost and infrastructure upgradation. The dealers requires highly skilled technical staffs since the way of running dealerships have changed in the past few years in the lines of improving technologies in the sales methods. Training the manpower and salaries of skilled manpower is growing up. Next is the real estate cost. The accommodation for dealerships have grown multiple times due to spurt in real estate prices. Thirdly the dealers are forced to upgrade their infrastructure to keep high standards, resulting in huge capital investments.

Can you elaborate on FADA’s contribution to economy?

Around 25 lakh employees are directly attached to dealerships while the industry also provides indirect job opportunity to 15 lakh employees. The auto industry is contributing around 7% to the GDP.

Your view on releasing vehicle registration data by FADA?

Earlier the vehicle sales were calculated in India by the OEMs selling vehicles to the dealers. Now the FADA in cooperation with the Ministry of Transport is releasing monthly vehicle registration data as it gives clear picture about the real number of vehicle sold in the country. We can also understand about the inventories at the dealerships with this data.

What kind of impact the dealerships will witness when BS VI takes off in April 2020?

When BS IV implemented in 2018, the pressure was more on dealerships to clear the inventories. However the OEMs have supported with huge discounts and taken back a few category vehicles for modification. Now we are preparing for BS VI implementation and regularly having meetings with OEMs. We will work our best to clear all the BS IV stocks before April 2020 as per the Supreme Court order. At the same time we are also approaching the Ministry of Road Transport and Highways (MoRTH) to approach the Supreme Court to allow to sell if in case some minor stocks are left over beyond the due date.