The Federation of Automobile Dealer Associations (Fada) is tying up with management institutes to offer customised courses that address the specific needs of dealerships. Initially on a pilot study, Fada is organising a three-month and a six-month course with the Pune-based Indsearch and the Mumbai-based Kohinoor Technical Institute. The courses would cost Rs 13,000 and Rs 22,000 respectively and candidates would have to clear a test, just like in B-schools ,to gain admission.
We hope to address both the training needs and the problem of attrition with this move, since only really interested candidates will apply for the course, said Fada president Binod Agarwal. Attrition rate in dealerships is as high as 20%.
The estimate is that in the next five years the sector will need about 2.5-3 lakh trained manpower. Only 15% of the graduates churned out today are employable and, therefore , we felt the need to train them properly, said Mr Agarwal.
Another concern facing the automobile dealers is shrinking margins. According to Mr Agarwal, dealers make gross margins of 2-3% of the maximum retail price of a vehicle, while in developed countries it ranged between 5-15%. There is pressure from the customers for discounts on one side and pressure from manufacturers to reduce dealer margins on the other. It has been putting a heavy pressure on the dealers, he said.
Overall, including margins on other businesses like accessories, finance, insurance etc, net margin is only 0.5%, he claimed. Going forward is going to be hard on dealers and pressure would be very high on the margins of auto dealers, he said, however, adding that this should not come in the way of automobile sales growth.