Auto Dealers Demand High Margin From Manufacturers in Market Slowdown


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Amid slowdown in the automobile market, dealers are demanding higher margins from car makers saying higher rental for showrooms, declining sales, increased interest rates and high labour cost are putting pressure on their business.
The Federation of Automobile Dealers Associations (FADA) has said it wants average margin on sales of vehicles to go up to 5 per cent from 2.5 per cent at present.

"The average margin now is pretty bad considering the market situation. Manufacturers should think about increasing it up to five per cent. The dissatisfaction among the members has increased a lot," FADA President Mohan Himatsingka said.

This scenario was even reflected in a recent survey by JD Power, where it was found that around 56 per cent auto dealers were making loss and 10 per cent planning to quit the business, he said.

"In other parts of the globe, the profit margin hovers around 15 to 20 per cent, but this is very low in India if compared to that figure," said Himatsingka.

Expressing similar views, Prem Bagga of Bagga Links said automakers should hike margins for the dealers to make it a sustainable, profitable and viable business.
"Our costs are increasing. Dealers in big cities are having huge pressure of increased rentals of showrooms, and the labour cost is also on the higher side," he added.

Only Tata Motors recently increased the margin up to 4 per cent and that too only on cars, Himatsingka said.

He further said that dealers in urban areas are also not very optimistic of jump in sales during the coming festival season due to the economic environment.
However, Ford India President Joginder Singh said that even the manufacturers are feeling pressure and it was a difficult situation for them as well, under the current circumstances.

FADA Vice President K V S Prakash Rao said that it was a tough time for the auto dealers and they should be prepared to overcome the current phase.

source
 
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Re: In slowdown season, automobile dealers demand higher margin from manufacturers

Down here in Kerala, Most dealers are already ripping off vehicle buyers and are illegally charging between 1000-2000 Rupees from two wheeler buyers and around 4000-10000 Rupees from car buyers in the name of Logistics and Facilitation [confused]
 
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Re: In slowdown season, automobile dealers demand higher margin from manufacturers

Hi jalex,
Is there anyway one can contest these charges?
Regards,
Aneesh.
 
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Re: In slowdown season, automobile dealers demand higher margin from manufacturers

Amid slowdown in the automobile market, dealers are demanding higher margins from car makers saying higher rental for showrooms, declining sales, increased interest rates and high labour cost are putting pressure on their business.
 
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Re: In slowdown season, automobile dealers demand higher margin from manufacturers

Hi jalex,
Is there anyway one can contest these charges?
Regards,
Aneesh.
One can refuse to pay any such amount before buying the vehicle and state that he won't buy the vehicle and look at other options if they charge any such amount.

What I don't understand is why the manufacturers themselves do not plain simple increase the prices of vehicles and pay the dealers a reasonable commission and make things easy for prospective buyers and dealers.

Instead the manufacturers are letting the door open for arguments, flared up tempers and law suits between dealerships and customers at the time of a vehicle sale. It ruins the whole buying experience for a vehicle buyer and he always has the feeling of being robbed whenever he looks at his vehicle.
 

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