Automobile Dealer Mortality Will Be High Amidst Covid-19 Distress

Automobile Dealer Mortality Will Be High Amidst Covid-19 Distress

Automobile Dealer Mortality Will Be High Amidst Covid-19 Distress
{data-social}

There are around 15,000 automobile dealers in India, with around 26,500 outlets

The coronavirus has caused large-scale devastation across the globe. And like most other industries, the automotive industry is bearing the brunt of the Covid-19 outbreak – in fact, the unforeseen misery arising out of the coronavirus has meant that industry stakeholders such as automobile dealers are staring at an exceedingly challenging market environment. The importance of the country’s automobile dealers does not need any over-emphasising - there are around 15,000 automobile dealers in India, with around 26,500 outlets, employing around 25 lakh people.

According to Nikunj Sanghi, President, Automotive Skill Development Council (ASDC) and former FADA President, the going will be exceedingly tough for automobile dealers in coming times. “Clearly, the automobile dealership business will not be easy in the wake of the Covid-19 outbreak. I believe that the dealer mortality will be high given the current scenario. Any automobile dealer who is overleveraged, will be in trouble. Further, automobile dealers that operate from rental premises in metros will be the biggest sufferers as these are cash outflows,” he noted.

So how will be the road pan out for the country’s automobile dealers? Sanghi threw his perspective. “The coming months will be tough for the country’s automobile dealers unless of course vehicle manufacturers come up with support packages for our auto dealers. This can go a long way in alleviating the woes of the automobile dealers. It remains to be seen how things unfold,” he observed.

With the government extending the country-wide lockdown till May 3, 2020, the pain points of automobile dealers will only enhance going forward. “Look, even if we want operations of automobile dealers to resume we have to understand that the space of such automobile dealerships is not very huge, where there is a free entry for customers. The point is how do you discipline your customers and how do you discipline your staff? How do you adhere to social distancing norms? Of course, this is in stark contrast to the manufacturing environment, where it is possible to have staggered shifts because workers in the manufacturing space operate under a controlled environment with one entry point and there is also scope for sanitising the area of operations,” he explained.

The former FADA President is of the view that the Covid-19 will see the industry taking many backward strides. “There is little doubt that the coronavirus will take back the entire auto industry by a few years if not more, and it will take a lot of time for it to rebound. Our economy is already crumbling – essentials will first need to return and vehicles are classified as discretionary purchase than a necessity,” he pointed out.

Surely, the road ahead for automobile dealers will not be a smooth one – one replete with challenges that have to be overcome before it limps back to some degree of normalcy.