FADA seeks legal guard for auto dealers
To safeguard interest of the automobile dealers in India, the Federation of Automobile Dealers Associations (FADA) has sought for a legal remedy as several foreign vehicle manufacturers have exited from the Indian market.
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New Delhi: To safeguard interest of the automobile dealers in India, the Federation of Automobile Dealers Associations (FADA) has sought for a legal remedy as several foreign vehicle manufacturers have exited from the Indian market.
The association on Wednesday issued a statement seeking enactment of the Auto Dealers Protection Act in India to defend small and medium sized auto dealers in the country which are either family-owned businesses or partnerships firms and have significantly lower bargaining power in comparison to their Original Equipment Manufacturer (OEMs) which in-turn are large corporations.
Ford became the 5th Auto OEM after General Motors (2017), MAN Trucks (2018), UM Lohia (2019), Harley Davidson (2020), to stop domestic sales which has further adversely impacted the auto industry including consumer segments and auto dealers. The apex national body of automobile retail industry has requested intervention of central government to level the playing field between financially strong OEMs and the smaller automobile dealers.
Commenting on the same, FADA President Vinkesh Gulati said, "Many countries in the world recognize the inherent power imbalance between OEMs and dealers within the automobile sector and have enacted legislation to level the playing field. Unfortunately, the existing legal regime in India is inadequate to address these specific concerns of dealers. While OEM-Dealer agreements are governed under the Indian Contract Act, the law does not contain any clear solutions for us." As per the association, the unethical and imbalanced power structures with OEMs have caused a great deal of anguish to Automobile Dealers as the existing laws are not adequate to protect their interests. Under the dealership observation trends in India, FADA stated that dealership agreements here do not have a standardized term with certain agreements having tenures as low as one year and a short term of agreement is detrimental to the dealers as they do not give adequate opportunity to the dealers to recover the heavy investments made by them.
