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FADA urges govt to set up task force to monitor compensation plan for Ford dealers

Our Bureau New Delhi | Updated on September 23, 2021

A view of Ford India’s manufacturing plant in Maraimalai Nagar, near Chennai   -  Velankanni Raj B

Stresses on protecting SMEs, employees, customers

The Federation of Automobile Dealers Associations (FADA) has urged the government to formulate a task force to monitor the compensation structure being worked out by Ford India for its dealer partners across the country.

In a letter to Heavy Industries Minister Mahendra Nath Pandey, FADA President, Vinkesh Gulati, urged Ford India to keep the industry body in the loop regarding the compensation structure for dealerships.

“We humbly request your Ministry’s intervention...create a task force which takes day-to-day updates from Ford India to monitor the compensation plan for automobile dealers and dealership employees; initiate a formal discussion on Automobile Dealers’ Protection Act, and its importance to protect small and medium enterprises, their skilled employees and the customers,” Gulati wrote.

He also urged the Minister to make sure that Ford India indemnifies dealers from various consumer and civil cases, both under pendency and against any future cases that may arise directly or indirectly out of Ford’s restructuring announcement.

After General Motors (in 2017), Man Trucks (in 2018), UM Lohia (in 2019), Harley Davidson (in 2020) and multiple fly-by-night electric vehicle players, Ford India is the fifth biggest exit from Indian markets since 2017. While Ford maintains that this is not an exit, the modalities of the restructuring of Indian operations suggest otherwise, he said.

Non-disclosure pact

“Ford India is forcing its dealers to first sign Non-Disclosure Agreement (NDA) before any compensation package is worked out. Many Ford dealers have directly or indirectly requested FADA to take up the matter for amicable resolution,” he said.

He further said that on reading the agreement, FADA found that the definition of confidential information is extremely broad and does not explicitly mention the scope of the discussions that Ford intends to undertake with the dealers.

As a consequence, it is unclear if the discussions would include damages towards costs of idle establishment and infrastructure, maintenance, employee retrenchment claims; damages towards loss of opportunity and restrictions in availing dealerships of new manufacturer in the existing infrastructure, Gulati said.

“Such coercive efforts on Ford's part to get its channel partners to sign an NDA with an imposition of unreasonably tight timelines, under economic duress is not the right approach and adversely impacts dealer interests,” he added.

Published on September 23, 2021

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