Dealers Brace For Post coronavirus lockDown woes
Even though the future has plenty of challenges in store, we need to come together and help the automobile industry stay afloat.
TStory: he year 2019 was one of the most difficult years for the automotive industry and the reasons varied from low buying sentiment to the general economical slowdown. in the new year, there was hope for some momentum, with a host of exciting new models being showcased at the auto expo 2020. that’s when industry stalwart anand mahindra, chairman of mahindra Group, expressed that he has ‘started to see green shoots in the economy’. and just as things were beginning to look up, the world was hit by one of the worst pandemics of our time – the coronavirus. with millions affected and thousands losing their lives, everything was thrown out of gear.
in the automobile industry, it’s the relatively smaller players, like the dealerships, that have been the worst hit. they were already struggling with poor sales performance as new bike buyers were hesitant and confused due to the more stringent Bs6 emission norms coming into effect. all Bs4 vehicles had to be registered before Bs6 became the standard norm from 1 april 2020 onwards. even though most of the twoand four-wheeler manufacturers stopped producing Bs4 vehicles in 2019, the stocks kept piling up due to the dismal sales. the government’s push for electric vehicles further added to the misery.
industry experts have estimated that two-wheeler dealerships are stuck with about 7 lakh unsold Bs4 vehicles, which is approximately rs 3,850 crore. an average-sized dealer has about 40 to 50 unsold Bs4 bikes, which is worth rs 50 lakh at least of dead stock. we’re not even talking about big, premium bikes which cost substantially more. and with the state borders being locked down, Bs6 models can’t reach dealerships on time either.
Giving dealerships sleepless nights apart from the unsold vehicles is the recurring cost like the staff salaries, interest on loan and property rent. established dealerships have close to 100 employees which include sales representative, admin and support staff, service executives, and an accounts department. and from the time the coronavirus lockdown has been implemented these companies have made practically zero revenue from two-wheeler sales, after-sales and service, or even from spare parts sales. unlike many industries, buying and selling cars online is neither seamless nor popular. indian car buyers might have become proficient to do their research online but still prefer to visit the showroom to have a closer look at the shortlisted cars and deliveries. so, there’s no way car/two-wheeler dealerships can work from home.
But not all is lost as the supreme court recently announced the
SIAM has projected that the country will witness a huge drop in auto sales which could be as high as 35 per cent for some segments. This is over and above the 18 per-cent de-growth of FY20
Auto sales slowdown in the last 15 months has resulted in shut down of over 275 dealerships, causing loss of thousands of jobs in the process
Automotive sector fetches high GST revenue for the government, with a net impact ranging from 29 to 50 per cent depending on the category of the vehicle
Two-wheeler dealerships are stuck with about 7 lakh unsold BS4 vehicles, which is approximately Rs 3,850 crore
Hero MotoCorp have offered to buy-back unsold BS4 vehicles to easy the plight of dealers. Honda Motorcycle and Scooter India have announced a similar scheme but for few Delhi based dealerships