FADA says state lockdowns are hurting dealers big time

by Mayank Dhingra 10 May 2021


Vinkesh Gulati: "Whenever we write to the Centre for help, we are getting no answers simply because this is not a centralised lockdown."

Vinkesh Gulati, President of the Federation of Automobile Dealers Associations (FADA), believes a centralised lockdown would have perhaps been better than what is happening right now during the second wave of the pandemic.

With showrooms shut in Maharashtra, Delhi, Rajasthan, Chhattisgarh, Madhya Pradesh, Karnataka and other states, the dealer community is under tremendous financial stress. “This is the major problem we are facing at this point as an association. Whenever we write to the Centre for help, we are getting no answers simply because this is not a centralised lockdown,” he rues.

As he puts it, this is turning out to be a “rollercoaster for us” since all pleas are falling on deaf ears. As FADA president, who represents over 15,000 automotive dealer principals employing nearly 50 million people, Gulati is fast losing hope of getting any compensation from the Centre.

“Seeing the lockdown situation for almost a month, we had to immediately write to the RBI and Finance Ministry for aid tranches, restructuring of loans as well as moratorium. . . but to no avail,” he adds.

FADA has also sought permission from the Health Ministry to vaccinate its manpower so that business can be brought back on track quickly. However, this is also hitting a stone wall thanks to the huge shortage of vaccines.

With all these pressures, Gulati remains optimistic since auto retailers are a “resilient lot” who will weather the storm. “We had gone through a lot last year and knew what was going to happen this time around. Most dealer principals are on the job to support employees and not thinking of retrenchments or cutting salaries,” he says.

The FADA chief is confident that the dealer fraternity will survive “even if along with April, the entire month of May also goes into a lockdown”. Beyond that, however, viability and survival will become a challenge.

A lean workforce, optimised overheads and adopting standard operating procedures were the key takeaways after the first wave of Covid last year and these are helping dealers stay afloat now. While cash flows are being affected, they have asked banks to extend the channel funding limit (among other things) and the response has been positive.

“We have also started contacting the OEMs, but the decentralised nature of the lockdown is making it difficult even for the manufacturers to formulate a common policy,” says Gulati. FADA expects waivers on inventory (interest) cost as well as wholesale and retail incentives from OEMs. “We are optimistic that support will come from our partners; it is a matter of how and when,” he signs off.