FADA urges govt to monitor Ford's compensation plan after announcing exit

Automobile dealers' body Federation of Automobile Dealers Associations of India (FADA) has urged the government to formulate a task force to monitor the compensation structure 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 also requested the government to instruct Ford India to keep the industry body in the loop regarding the compensation structure for the 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," Gulati said in the letter.

"Also, instruct Ford India to keep FADA in the loop for dealership related issues and compensation structure," he noted.

Besides, Gulati also requested the ministry 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 the automaker's restructuring announcement.

"Ford India is forcing its dealers to first sign Non-Disclosure Agreement (NDA) latest by September 14, 2021, before any compensation package is worked out. Many Ford dealers have directly or indirectly requested FADA to take up the matter for an amicable resolution," he noted.

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

FADA — which represents over 15,000 automobile dealers having 26,500 dealerships across the country — said automotive dealers have lost around Rs 2,485 crore since 2017 due to the exit of five OEMs from the country.

Almost 64,000 people have lost jobs at the dealerships due to the exit of companies like General Motors, Harley-Davidson, Man Trucks, UM, and Lohia, and now, Ford India, it added.

Gulati also urged the government to formally initiate a discussion on the Automobile Dealers' Protection Act.

"I would request that your Ministry work on protection of auto dealers' rights, possibly through legislation as suggested by the Parliamentary Committee on Commerce and Industry and create a sense of equilibrium in the industry as an increasing number of international players are entering the Indian auto market. This will not only safeguard the dealers' and customers' interests in India but would also protect the interests of people employed by the dealerships," Gulati noted.

Earlier this month, US auto major Ford Motor Co announced it will stop vehicle production at its two plants in the country and will sell only imported vehicles going ahead as part of a restructuring exercise.

The company, which invested about $2.5 billion at its Chennai (Tamil Nadu) and Sanand (Gujarat) plants, has accumulated operating losses of around $2 billion in India in the last ten years.

Its decision will impact over 4,000 employees and about 150 dealer principals who operate over 300 outlets.

With the shutting down of the vehicle manufacturing operations, the automaker will stop selling vehicles such as the EcoSport, Figo, Endeavour, Freestyle, and Aspire, which are produced from these plants.