Ford’s dealers in India are staring at unprecedented losses after the US car maker announced last week that it would stop manufacturing at both its plants in India.
What has caught the dealers off guard is that the company had appointed new dealers even five months ago.
New generation vehicles such as the Figo Aspire were launched in July, while the latest EcoSport model was to hit the markets soon.
Employees at the dealerships are not feeling assured by Ford India’s plan of continuing with niche products such as the fully imported Mustangs.
“Ford appointed new dealers in Noida and Delhi NCR five months back. No multinational corporation makes plans overnight. There were talks with new dealer principals even last month, I am told. This is absolutely unacceptable,” said Harsh Damani, CEO, Federation of Automobile Dealers’ Association (Fada).
While Ford’s decision to stop production would impact 4,000 workers at its factories, another 40,000 employees in Ford’s dealership network in the country are also facing an uncertain future.
Fada has stressed the need for a legislation to protect dealer interest in the case of such withdrawals by companies from the Indian market.
“Fada has been requesting the central government to roll out a Franchisee Protection Act. In the absence of such protection, auto dealers are not adequately compensated like their counterparts in Mexico, Brazil, Russia, China, Japan, Italy and many other countries, where this law exists. After General Motors, Man Trucks, Harley Davidson, UM Lohia and multiple fly-by-night electric vehicle players, Ford India is the fifth biggest exit from the Indian markets since 2017,” said Vinkesh Gulati, president of Fada.
The parliamentary committee on industry in its report released in December 2020 had recommended the ministry of heavy industries that the government should enact the Franchise Protection Act for automobile dealers in the country so that it is a win-win for both the auto original equipment manufacturers (OEMs) as well as the dealers.
“Ford is offering a three-year agreement to its dealers which has non-disclosure clauses. Most of the dealer principals are wary of signing such agreements. The only way is the legal option but that is a last resort. The dealer principals are small and medium business firms or partnerships who are now facing the biggest loss of their lives,” said Damani.