Auto dealers want higher margins

FADA wants average margin on sales of vehicles to go up to five%

In what may put added pressure on automobile manufacturers, vehicle dealers are demanding higher margins from car makers due to higher rental for showrooms, increased interest rates and rise in labour costs.

The Federation of Automobile Dealers Associations (FADA) has said it wants average margin on sales of vehicles to go up to five% from 2.5% at present. "The average margin now is pretty bad considering the market situation. Manufacturers should think about increasing it up to five%. The dissatisfaction among the members has increased a lot," said Mohan Himatsingka, president, FADA.

In a recent survey by JD Power said around 56% auto dealers are making loss and 10% planning to quit the business. "In other parts of the globe, the profit margin hovers around 15 to 20%, but this is very low in India if compared to that figure," said Himatsingka.