Search the Internet          Tips  Sites: Finance, Investment

Dealers for more margins as costs rise

BS Bureau

Automobile dealers have stepped up their demand for better commission from manufacturers, in view of the escalating infrastructure costs and need for better customer service.

"Globally, the dealers' commission in automobile sector is around 6-10 per cent of the cost of the vehicle. In India, the commission is only 2-2.5 per cent," Vinay Nevatia, former president of Federation of Automobile Dealers Association (Fada) said.

"Even multinational companies, which pay 10 per cent commission worldwide, do not give us more than three per cent, arguing that it is the practice here," Anil Jhunjhunwala, dealer, Hyundai, said.

Dealers are incurring huge expenditure for improving infrastructure, recruiting trained manpower, and giving facelift to the showroom. Other problems are the negligible growth in the automobile sector in this financial year and the need to provide better customer service.

"Our business is still thriving because of the out-of-date rents that we pay for our showrooms. Setting up a new showroom is certainly not viable today because of the exorbitant prices of real estate. The new dealers are suffering, and the old ones are branching out to other businesses," a dealer said.

However, car dealers do not want to push their demand and would wait for the goodwill of the automobile manufacturers. The lack of unity among car dealers across the country seems to be a reason of their failure to push the demand.

Powered by

ALSO READ:
The Rediff-Business Standard Special
The Budget 2001-2002 Special
Money
Business News

Tell us what you think of this report