FADA has raised the issue with the Ministry of Heavy Industries, citing a lack of transparency in compensation and uncertainty about future activities. FADA is concerned about more than just Ford.
They refer to a widespread issue that is posing major difficulties for dealers. Automobile businesses’ abrupt withdrawals are causing investment losses in the hundreds of crores. Thousands of individuals are also losing their employment.
Customers are also affected, as they may have difficulty finding services and components for their vehicles. The resale value of such vehicles would very certainly suffer as well.
Since 2017, the company has lost $2,485 crore
FADA has tallied overall losses experienced by dealers since 2017 to demonstrate the magnitude of the situation. Exits by Man Trucks, UM & Lohia, General Motors, Harley-Davidson, and Ford India are included in the statistics. Ford dealers have suffered the most investment loss, with a loss of Rs 2,000 crore. Ford’s leaving has also damaged approximately 40,000 jobs. As a result of these layoffs, 64,000 jobs have been lost.
Assault against the spirit of entrepreneurship
The majority of dealerships are family-owned small to mid-sized businesses and partnership firms, according to the FADA. Many dealers start out in the auto trade by putting all of their money into it.
Even when making a long-term investment, current business standards require dealerships to operate on an annual basis. Dealers confront substantial difficulties if an OEM abruptly exits the market.
FADA has pointed up potential vulnerabilities in the Non-Disclosure Agreement (NDA) that dealers are required to sign in the instance of Ford. According to FADA, the NDA does not provide accurate details on the various sorts of losses that dealers have experienced and the amount of compensation they are entitled to.
Various losses, such as idle establishments and infrastructure, staff layoff, maintenance, loss of business potential, moving from sales to service and parts business, negative impact on goodwill and reputation, and the expense of beginning a new enterprise, have been mentioned as concerns.
FADA’s most important requests
In light of these ambiguities, FADA has asked the government to establish a task group to oversee negotiations over the Ford dealer compensation package. It has been requested that all such discussions between Ford and its dealers be kept in the loop by FADA. FADA also wants Ford India to indemnify its dealers against any civil or consumer lawsuits that may exist or arise as a result of the company’s restructuring decision.
From the standpoint of the industry, FADA has requested that the government begin discussions on the Automobile Dealers Protection Act. The Parliamentary Committee on Commerce and Industry has already recommended such legislation in Report No.303. This is especially crucial now that a number of new auto companies, including multinational players, are setting up shop in the country. According to FADA, appropriate laws will protect the dealer and consumer interests while also preventing employment losses.
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