Currently, there are up to 15,000 dealerships of all the passenger and commercialised vehicle across the nation. Due to the lockdown amid COVID-19 pandemic, it is expected that the auto dealers across the nation will face closure of at least 8-10% of these dealerships in the coming few months. As per the reports by FADA, most of the small and medium-sized auto dealers are either opting of shutting shop or merging their businesses due to disruption in sales.
Due to COVID-19 lockdown almost all of the auto- dealerships are suffering from an all-time low sales an profit. While most of the dealers have agreed to shut down their dealerships or merge with larger dealers, which may help in getting liquidity and prove as a good source for business continuity. While most of the dealers are situated in the tier-1 cities, where the cost of operation and cost of living for manpower is high.
As per the reports by the Vinkesh Gulati, VP of Federation of Automotive Dealer Association (FADA) says that for the current financial year 2020, the auto sales report will be very slow to pick up. While there are many dealerships in tier 3 towns are likely to sustain due to the low cost of living as compared to tier-1 and tier-2 cities. Even the VP added that witnessing the present condition the FY21 looks like a complete washout.
As per the reports, most of the dealerships have ought to reach out to the auto manufacturers to increase liquidity, which could help them to ease the present situation. One of the largest commercial vehicle dealers like MD, JMD, TVS & Sons has collaterally worked with the government helping other dealers, with the help of banks or the OEMs to generate cash flow.