The Federation of Automobile Dealers Associations (FADA) has said it wants average margin on sales of vehicles to go up to 5 percent from 2.5 percent at present. (Agencies)
"The average margin now is pretty bad considering the market situation. Manufacturers should think about increasing it up to five percent. The dissatisfaction among the members has increased a lot," FADA President Mohan Himatsingka said.
This scenario was even reflected in a recent survey by JD Power, where it was found that around 56 percent auto dealers were making loss and 10 percent planning to quit the business, he said.
"In other parts of the globe, the profit margin hovers around 15 to 20 percent, but this is very low in India if compared to that figure," said Himatsingka.
Expressing similar views, Prem Bagga of Bagga Links said automakers should hike margins for the dealers to make it a sustainable, profitable and viable business.
"Our costs are increasing. Dealers in big cities are having huge pressure of increased rentals of showrooms, and the labour cost is also on the higher side," he added.
He further said that dealers in urban areas are also not very optimistic of jump in sales during the coming festival season due to the economic environment.
However, Ford India President Joginder Singh said that even the manufacturers are feeling pressure and it was a difficult situation for them as well, under the current circumstances.
FADA Vice President K V S Prakash Rao said that it was a tough time for the auto dealers and they should be prepared to overcome the current phase.
The Federation of Automobile Dealers Associations (FADA) has said it wants average margin on sales of vehicles to go up to 5 percent from 2.5 percent at present.