Auto retail fraternity is shocked – FADA reacts to Ford’s exit plans

Ford's announcement to pull its plugs in India has sent shock waves to many, including the Federation of Automobile Dealers Associations (FADA). Here's what the apex national body had to comment about the decision.

By:September 10, 2021 12:38 PM
fada reacts to ford exit plansThe Ford name plate is seen on the interior of the Ford F-150 Lightning pickup truck during a press event in New York City, U.S., May 26, 2021. REUTERS/Brendan McDermid

Following Chevrolet’s exit a few years ago, Ford becomes the second American carmaker to exit Indian soil due to losses. The carmaker, despite having a decent portfolio of cars for the Indian market, failed to win customers the way Hyundai or Maruti Suzuki did. Ford has decided to shut down its vehicle assembly plant in Sanand and its engine assembly plant in Chennai.

Ford said that its dealers and service providers will receive all the help from the carmaker to liquidate assets and keep service, spares, and warranties honoured. Ford’s exit will affect employees and dealers alike, but Ford has promised to look after them and compensate them in the best way possible.

Commenting on Ford’s plans to leave India, the Federation of Automobile Dealers Associations (FADA) issued a statement. FADA President, Vinkesh Gulati said, “The Auto Retail fraternity is really shocked to hear another US Auto Major, Ford India’s announcement where it has said that it will shut down production with immediate effect. While trying to handle dealer anxiety, Ford India President & MD, Mr Anurag Mehrotra called me personally and assured me that they will adequately compensate dealers who continue to offer vehicle service to customers.”

“Though this is a good beginning, it is not enough as there are ~170 dealers who in turn have ~391 outlets and have invested ~Rs 2,000 Cr for setting up their dealerships. While Ford India employs 4,000 people, dealerships employ around 40,000 people without displacing them from their home locations thus being continuously skilled and up-skilled all this while.”

“Ford India dealers currently hold ~1,000 vehicles which amount to ~Rs 150 Cr via inventory funding from reputed Indian Banks. They also carry Demo Vehicles which are 100’s in numbers. Moreover, Ford India also appointed multiple dealers until 5 months back. Such dealers will be at the biggest financial loss in their entire life!”

“FADA has been requesting Governing of India to roll out Franchisee Protection Act as due to its unavailability, Auto Dealers are not adequately compensated like their counterparts in Mexico, Brazil, Russia, China, Indonesia, Malaysia, Japan, Italy, Australia, Sweden and many other countries, where this law exists. After General Motors, Man Trucks, Harley Davidson, UM Lohia and multiple fly-by-night Electric Vehicle Players, Ford India is the 5th biggest exit from Indian markets since 2017.”

Parliamentary Committee on Industry in its report number 303 which got released in December 2020 had recommended the Ministry of Heavy Industries that the Government should enact the Franchise Protection Act for Automobile Dealers in the country, so that it is a win-win for both, the Auto Original Equipment Manufacturers (OEMs) as well as the Auto Dealers, but will also be beneficial to customers in the long run.”

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