71% auto dealers did not achieve revenue target for the year

Chennai: More than one-fifth of automotive dealers in the country expect reduced earnings in the year ended March, over a year-ago period amid the industry reporting some five per cent growth in vehicle sales during the period, a report said.

The domestic automotive industry saw a marginal increase of 5.1 per cent at 26,267,783 units in the financial year ended March 2019 as compared to 24,961,312 units sold in FY18, as per industry body SIAM.

The industry produced a total 30,915,420 vehicles including passenger and commercial vehicles, three and two wheelers and quadricycles in April-March as against 29,094,447 units in the same period of 2017-18, registering a growth of 6.26 per cent.

“More than one-fifth population (21 per cent) of dealers across the three automotive segments — passenger vehicle, commercial vehicle and two-wheeler — expect their financial performance to be poorer in the fiscal year ended March compared with FY18,” said JD Power-FADA India Dealer Satisfaction with Automotive Manufacturers Index (DSWAMI) StudySM, released on Friday.

The study was conducted by JD Power in partnership with Federation of Automobile Dealers Association (FADA). There are around 15,000 automobile dealers pan-India, as per FADA.

According to the study, among those who expect a poorer performance this year, 71 per cent said that they did not achieve their revenue target for the year.

Online purchase of vehicles is seen as an important future trend by almost one-third (31 per cent) of all dealers across the three segments, as per the study, indicating that digitalisation will lead the way.

In addition, as many as 43 per cent of dealers believed that investment in digitalisation is likely to bring about a reduction in manpower costs for their business.

“The automotive industry, especially the passenger vehicle and two-wheeler segments, are facing serious headwinds due to several external challenges on the revenue side,” said director and country head, India, JD Power, Kaustav Roy.

“Dealership business is facing its toughest challenges in recent times and the entire business model needs an overhaul to keep up with the changing dynamics of our trade,” said F A D A president, Ashish Harsharaj Kale.

NT Bureau