“We sell happiness and car buying is a celebratory experience occassion” says Vinkesh Gulati, President, Federation of Audomobile Dealers Association (FADA). Total Sales of four-wheelers fell over 50% m-o-m in May ’21 and over 70% compared to the same period last year. All other categories other than 4-W fell over 66% according to FADA. “People are still mourning the loss of loved ones and many families may not celebrate festivals for a year, quips Vinkesh.
His despise only pitiable. The second wave of the pandemic which commenced around early Apr. ’21 has caused not just loss of livelihood but precious lives as well, especially in some of the key markets including Delhi & NCR, Greater Mumbai region and Bangalore. as well across 8-10 states which are the top contributors of India’s GDP. This is expected to have a cascading effect on the economy, especially when it comes to automobiles which is usually indicative in many ways of the health of the economy.
The mainstay of the 4-W passenger vehicle industry, “the compulsive test drives” have been severely impacted over the past few months. “Earlier, even non-serious but potential customers would visit the dealerships for a test drive when new models or variants are launched, to understand the product features and compare with their current offering. While our conversions (to sales) were relatively low, we still had a database of interested customers. Since July 2020, footfalls have reduced to 1/3 of pre-pandemic levels”, says a worried dealer in Chennai who didn’t want to be named as his family operates multiple showrooms for various brands. He is concerned on his EMI payouts, Bank O/D interest payments and most importantly. Salary to staff for July 2021.
Most of the principal, read OEMs, have not supported the dealers in any way possible. Recently, Mercedes moved to an own-billing model where the dealers do not have to invest in the inventory and focus only on customer engagement. But that Mercedes has less than 1% market share among the 14 million vehicles sold per year in India is edifice that it would hardly impact the larger segment of dealers who have painstakingly built the brands over the years.
We are planning to downsize our dealerships and shut down a few by end of this Calendar year end if Diwali sales fails to impress, said a dealer in Bangalore who has been in the business of automobile retail for the past 27 years.
Grim days ahead indeed for the passenger vehicle retail segment. Unless the two biggies Maruti and Hyundai lead the way with sops to dealers. Perhaps, each of them are waiting who will wink first.