8-10% auto dealers face closure, Auto News, ET Auto

MUMBAI: Quite a few smaller and medium sized vehicle dealers are staring at the prospect of shutting store or merging their corporations with greater dealers as vehicle profits keep on being unsure even after the lockdown is ultimately withdrawn.

There are currently about 15,000 vehicle dealerships (contains 2,3 and four wheelers) across India. It is envisioned that there will be closures of at least eight-ten% of these dealerships in the future 6 months, people in the know reported. A 12 months again, all over 275 as well as dealerships have been forced to shut store citing unviability of the company when a slowdown choked profits.

Dealerships are about leveraged and profitability is at an all-time low. While dealers concur that possibly shutting down unviable kinds or merging with greater dealerships will assistance them through, at the instant it truly is all about receiving liquidity and inventory funding for company continuity. Most of the dealerships are concentrated in the metros and tier 1 markets, where by manpower and price tag of operations are really superior.

“During the present fiscal, our profits will be quite sluggish to decide up. While there are many dealerships in tier 3 cities, they can sustain even while expenses have gone up there too, though the kinds in metro metropolitan areas will experience the pinch”, claims Vinkesh Gulati, VP, Federation of Automotive Supplier Affiliation.

Dealerships have achieved out to OEMs to maximize margins and liquidity, expecting them to appear out with a sustainable package else they will have to lay off workforce.