Following Ford Motor Company’s announcement that it would stop manufacturing vehicles in India, the Federation of Automobile Dealers Associations (FADA) on Thursday said the move would severely impact almost 170 dealers across the country, who have invested about ₹2,000 crore and employ 40,000 people.
Renewing its demand for the ‘Franchisee Protection Act’, the association pointed out that Ford India had appointed multiple dealers as recently as five months ago. These dealers would be the most hit, it said.
The industry body noted that Ford India was the fifth big exit from India since 2017, after General Motors, Man Trucks, Harley Davidson and UM Lohia, besides multiple small electric vehicle players.
‘Shocking development’
Terming the announcement as “shocking”, FADA President Vinkesh Gulati said Ford India President & MD Anurag Mehrotra had called and assured him that the company would adequately compensate dealers who continue to offer vehicle service to customers.
“Though this is a good beginning, it is not enough as there are about 170 dealers who, in turn, have about 391 outlets and have invested approximately ₹2,000 crore for setting up their dealerships,” Mr. Gulati said. He added that while Ford India employed 4,000 people, these dealerships employed about 40,000 people.
The association also pointed out that Ford India dealers currently hold about 1,000 vehicles worth ₹150 crore via inventory funding from reputed Indian banks, besides hundreds of demo vehicles.
‘Compensation hit’
“FADA has been requesting the Government of India to roll out a ‘Franchisee Protection Act’... due to its unavailability, auto dealers are not adequately compensated like their counterparts in Mexico, Brazil, Russia, China, Indonesia, Malaysia, Japan, Italy, Australia and Sweden, among others,” FADA said.
It further pointed out that a Parliamentary Panel, in its report in December 2020, had recommended that the Ministry of Heavy Industries should enact the Franchise Protection Act to help protect the interests of automobile dealers in the country.
