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Automobile dealers have sought the support of vehicle manufacturers and lending institutions to tide over the slow down in vehicle sales caused due to restrictions on cash withdrawals.
Dealers’ body has sought help to reduce the inventory and increase in loan limits for buyers.
Vehicle manufacturers should come forward to help dealers reduce inventory levels at the dealerships. They should also to make available enhanced credits from banks to the dealers, said John Paul, President, Federation of Automobile Dealers Associations (FADA).
“FADA had taken up the issue with all banks & financial institutions as well, urging them to take a favourable stand so that the auto market would sail through this turbulent situation,” he said in a statement.
The association also sought increased limits from banks for vehicle/personal loans, including 100 per cent on-road funding for vehicle purchases. “Likewise, the Government should take steps to reduce the service charge levied by the banks for credit card transactions, which will go a long way in minimising cash transactions,” said Paul.
While FADA pointed out that the dealer fraternity supported Government’s move to demonetise ₹ 500 and ₹ 1,000 currency notes, there was an adverse impact on auto market now due to cash crunch and resultant slowdown. “The situation of retails is much more alarming than the dealer community could anticipate. The entire auto retail trade has come under severe stress. As a consequence, a majority of dealerships may not be in a position to honour their commitments to banks and financial institutions,” it said.
Vehicle sales across segments have been hit after the currency ban. “Sales are down by 50-70 per cent in passenger car segment. Enquiries are also down by 40-60 per cent. Turnaround time from enquiry to booking has increased to 12-14 days from 8–10 days earlier due to a drop in enquiries over the past couple of weeks,” according to findings of Motilal Oswal Securities.
“Also, dealers are willing to accept up to 30 per cent lower booking amount. In two wheelers, while financing is 35-40 per cent, down payment is made in cash (which has taken a hit), affecting financed sales, it said.
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