Financial Daily from THE HINDU group of publications
Friday, Jan 06, 2006
Financial Daily from THE HINDU group of publications Friday, Jan 06, 2006 |
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Marketing
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Channels and Franchises Shrinking margins worry auto dealers Our Bureau
New Delhi , Jan. 5 THE Federation of Automobile Dealers Associations (FADA) has said shrinking margins were emerging a matter of concern for auto dealers. "There is pressure from the customers for discounts on one side and from manufacturers to reduce dealer margins on the other. This has been putting heavy pressure on the dealers and is a matter of concern,'' said the FADA President, Mr Binod Agarwal. He said the current margins of 2-3 per cent of the maximum retail price of vehicles that the dealers got from manufacturers were under tremendous pressure due to intense competition. "Going forward it is going to be hard on the dealers and pressure would be very high on their margins," he said, however, adding this should not come in the way of automobile sales growth. With the automobile industry growth slowing last year to single digit, not only the manufacturers but the dealers had doled out freebies and discounts to push sales, resulting in added pressure on the dealers. The auto dealership sector, which employs some 2.5-3 lakh people, is also facing the problem of lack of trained manpower, he added. ``The estimate is that in the next five years the sector will need about 2.5-3 lakh trained manpower,'' he said, adding it was likely that in the long run there would be a shortage. The industry and educational institutes needed to work in partnership to produce employable graduates. The Federation has already initiated a step in that direction by initiating pilot projects in Pune and Mumbai, he added.
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