FADA seeks clarity from Ford on compensation, disclosures

Left in a lurch following Ford’s announcement to stop manufacturing of vehicles in India, automobile dealers have written to the U.S. automaker seeking clarity on the compensation structures the company might be planning for them.

The dealers have also asked for modifications in the non-disclosure agreement that the company had asked them to sign before taking forward any compensation-related talks.

In a letter to Anurag Mehrotra, president & MD, Ford India, the Federation of Automobile Dealers Associations (FADA) pointed out that following the announcement by Ford, customers had either sought cancellation of bookings or full refund for the vehicles they had purchased but were yet to take delivery of.

This had hit the dealers hard, especially during the festive season.

There are 170 Ford dealers in India, with 391 outlets. They had invested approximately ₹2,000 crore for setting up their dealerships. These dealerships employ about 40,000 people and currently hold about 1,000 vehicles worth ₹150 crore, besides hundreds of demo vehicles. The industry body had earlier pointed out that Ford India had appointed multiple dealers as recently as five months ago.

“The dealers are also worried about the amount of compensation which will be given by your company as there are many dealers who are not even five years old in the system and may not have even reached break-even point,” the industry body said in the letter, which was seen by The Hindu.

FADA added that the first communication sent by the company to the dealer members “has itself shackled our community where the non-disclosure agreement (NDA) at present includes all information of any nature whatsoever under the definition of confidential information”. “While dealing with confidentiality, one can understand that in case the financials owing to the proposed exit which gets discussed with each independent dealer should remain confidential... the recitals to the non-disclosure agreement should hence carry a specific description of the nature of things which need to be kept undisclosed,” FADA said. The dealers’ body added that the NDA should have a definitive meaning assigned to the term discussions and information, and cannot be left open-ended

“I hence request you to kindly modify the current NDA and also let us know the same so that we can fittingly explain it to our members,” FADA president Vinkesh Gulati said in the letter. “We will also request you to kindly share with us the broad contours of the compensation structure which you may have planned by now for compensating our members,” he added.

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Printable version | Oct 27, 2021 12:43:48 AM |

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