The Federation of Automobile Dealer Associations (FADA) has written to the Ministry of Heavy Industries seeking intervention in the exit of American car manufacturer Ford from India.
After 20 years of operation in India, Ford India on September 9, 2021 announced that it would stop manufacturing and selling cars in India, after having incurred a loss of over $2 billion in its two decades of business in India. However, it will continue to operate its engine facility, import cars such as Mustang, Mach-E and service its existing cars in India.
Vinkesh Gulati, President, FADA said in an interaction with Mobility Outlook that the association has written to Ford India seeking clarification on the compensation structure. Simultaneously, we have written to the Union Minister of Heavy Industries to intervene in this matter and appoint someone from his office to solve any grievances between dealers, Ford and FADA.
FADA has also requested Ford to share the board points of the compensation structure. “This will not just bring clarity but will also help to assist us to handhold our members in completing the process,” Gulati said.
Read Also: Ford Pulling The Plug On Indian Market – Its Impact, Implications
Franchise Protection Act
In the third edition of FADA’s Auto Retail Conclave last month, Gulati had pointed out the issue of automakers such as UM Motorcycles, Harley Davidson, and General Motors making a sudden exit from the market, leaving dealers in the lurch. Gulati also appealed for a Franchise Protection Act to protect dealers from unprecedented losses.
FADA has been requesting the Government of India to roll out a Franchisee Protection Act as due to its unavailability, auto dealers are not adequately compensated like their counterparts in Mexico, Brazil, Russia, China, Indonesia, Malaysia, Japan, Italy, Australia, Sweden and many other countries, where such a law exists.
In the case of Ford, the company has formed a dealer committee comprising eight to 10 dealers with whom it will discuss the compensation packages, which would then be taken to individual dealer partners, but after signing a non-disclosure agreement.
Ford India has about 170 dealers, who have 391 outlets and have collectively invested close to INR 2000 crore for dealership establishment with about 40,000 employees, who are faced with job losses.
In addition, Ford India employs over 4,000 employees at its plant, of which 2,600 are permanent workers and over 1,000 are contract staff. Worried about their future, factory workers in Chennai have also written to the Tamil Nadu government seeking intervention in saving their jobs.