Categories: Business

Auto dealers seek higher sales margin

Photo: GOOGLE

FADA seeks for higher margin

new Delhi. Vehicle dealer's organization FADA has sought to increase vehicle sales per vehicle sales margin to at least seven percent. The association has made this demand after a long period of lethargy in the vehicle market, with sales declining due to the corona virus epidemic. According to him, during the lockdown in the Corona crisis, the cost of dealers has increased, but the income pressure remains. The Federation of Automobile Dealers Associations (FADA) has asked vehicle companies to reduce costs at the dealership by at least 20 percent to make the business economically viable.

In a letter to the Society of Indian Automobile Manufacturers (SIAM), a vehicle manufacturers' association, FADA President Ashish Harshraj Kale has stated the need for immediate action on behalf of Original Equipment Manufacturers (OEMs) or vehicle companies. He said that his profits have been steadily decreasing due to high costs and low operating margins. Kale said that while staff payments, interest costs and rent have skyrocketed, dealers' margins have not been increasing compared to expenses. Kale said Indian dealers operate at a margin of three to five percent less. It is much lower than other countries of the world. He said that the average net profit on the total turnover of vehicle dealerships in the country is only half to one percent. The letter said that this margin of dealers has also been affected due to sluggishness in the vehicle market during the last 15 months. Declining sales have led to the loss of many auto dealers. Kale said dealerships in India have to spend on average 85 percent of their total cost. It consists mainly of manpower, interest and infrastructure expenses.

This post was published on May 31, 2020 3:20 pm

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