FADA urges PMO and Allied Ministries to intervene in UM Lohia issue

by Autocar Pro News Desk , 03 Dec 2019

UM Motorcycles at Lohia Auto's Kashipur plant

Federation of Automobile Dealers Associations (FADA) has called upon the Prime Minister’s Office and Allied Ministries (Heavy Industries, Road Transport & Highways, Commerce & Industry and Corporate Affairs) to intervene in the matter concerning the exit of UM Motorcycles from India.

Earlier, Autocar Professional had reported that several UM Motorcycles showrooms were shutting down in India and the American bikemaker had stopped its operations in India. Its joint venture with Lohia Auto which included manufacturing and sale of the motorcycles in India by UM Lohia Two Wheelers, looks to be strained. 

In the month of October this year, FADA, through its counsel Khaitan & Co, had issued a legal notice to UM Lohia and its management, calling upon them to redress all grievances of dealers and to take steps to ensure the maintenance and servicing of motorcycles already sold in accordance with the warranty terms and law.

FADA chose to approach the PMO and the Allied Ministries after it received no satisfactory responses from the authorities at UM Lohia Two Wheelers. Auto manufacturers shutting shops and exiting India overnight now brings a strong urge to introduce ‘Franchisee Protection Act’ in India to safeguard the interest of the customers, dealers and employees.

FADA says at the time when the entire automobile industry in India was moving towards BS-IV emission standards, UM Lohia chose to enter the market by introducing BS III motorcycles in the second half of 2016, even though, the ban on sale of BS III vehicles was to take effect in a few months, from April 2017. As soon as the ban on BS III vehicles came into effect, the dealers of UM Lohia were left with a huge inventory of BS III motorcycles which was not only undesired by customers but now also legally unsellable. UM Lohia, however, refused to compensate dealers for this unsellable stock and also refused to return the advance payments given by many dealers, said FADA.

The dealer body says it is only after much cajoling that UM Lohia even acknowledged the problem. Even then, instead of buying back the BS III motorcycles from the dealers and returning their advances, UM Lohia came up with the scheme to sell BS-IV motorcycles to dealers in lieu of their stock of BS III motorcycles and advances. However, the BS-IV motorcycles supplied by UM Lohia were entirely unfit to ply on roads with several basic components such as EFI Module controller and Gear breaking down within few days of use of the motorcycles by the customers.

The apex dealer body says UM Lohia stopped production in October 2018, and had over 80 dealers who had invested around Rs 150 crore. 

UM Lohia Two Wheelers fact sheet

Factsheet credit: FADA

Also read: UM Motorcycles suspends operations in India

FADA serves legal notice to UM Lohia, cautions against legal action