Auto companies exiting India cost 64,000 jobs in 5 years: FADA

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Ford, General Motors, MAN Trucks, Fiat, Harley and UM Motorcycles: All these companies made the decision to exit the Indian market in the last five years. The Federation of Automobile Dealer Association (FADA) now says these exits resulted in 64,000 layoffs and dealer investment losses of Rs 2,485 crore.
The data was shared after FADA president Vinkesh Gulati met with the Minister for Heavy Industries Mahendra Nath Pandey.

Its release comes after Ford on September 9 announced its exit from making vehicles in India, with plans to focus on importing models instead.

According to FADA, Ford’s exit alone would cost an employment loss of 40,000 jobs, and notes the dealer investment of Rs 2,000 crore for its 170 dealers. General Motors, which left India in 2017, had 142 dealers and its exit caused an employment loss of 15,000 jobs (with a relatively low dealer investment loss of Rs 65 crore).

@FADA_India President @VinkeshGulati & I met @DrMNPandeyMP @MHI_GoI Explained losses #AutoDealers faced in last 5yrs due2 capital erosion & employment.Expect action on @FordIndia matter soon. Also explained y v need #AutoDealerProtectionAct pic.twitter.com/vb5DWESxbe

— Saharsh Damani, MBA, CFA, MS (Finance) (@saharshd) September 23, 2021
Vinkesh Gulati, President, FADA said, “Sudden exits by these MNCs cause great distress to the entire auto retail industry and hamper the entrepreneur’s zeal to do business and the customer’s interests, by leaving the customers high and dry with no proper after-sales support. Crores of rupees go down the drain as it kills an entrepreneur’s vision to get into the business again.”

Harley Davidson, which curtailed India operations as part of a general restructuring of the company, had 34 dealers in India and its exit cost 2,000 jobs and Rs 70 croe of dealer investment loss. German firm Man Trucks which left India in 2018 had 38 dealers and its exit resulted in employment loss of 4,500 jobs and dealer investment loss of Rs 200 crores. UM & Lohia which stopped operations in 2019 left behind 80 dealers and an employment loss of 2,500 on top of a dealer investment of Rs 150 crore.

The FADA release claims Ford India is “forcing its dealers to first sign Non-Disclosure Agreement (NDA)…before any compensation package is worked out” and claims many dealers asked FADA to take the matter up.

FADA asked the ministry to create a taskforce to take day to day updates from Ford India on its compensation plan for auto mobile dealers and dealership employees and instruct the company to keep FADA in loop for dealership related issues and compensation structure. It also called for a formal discussion on an Automobile Dealers’ Protection Act (in December 2020, a parliamentary panel suggested the Franchise Protection Act be enacted for automobile dealers in India).
On Wednesday, after holding a review meeting with the more than 50 auto parts suppliers to Ford hailing from Chengalpet, Tiruvallur, and Chennai, Rural Industries Minister T.M. Anbarasan said the government has received information that Ford was in the process of announcing a ‘settlement package’ to the employees.

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