COVID-19 may result in job losses in dealerships worse than last year's auto sector slowdown: FADA

Automobile dealers' body FADA fears that the coronavirus pandemic could result in job losses in dealerships which could be worse than what was experienced last year when over two lakh jobs were lost due to a prolonged slowdown in the automobile industry, according to a top federation official.

The Federation of Automobile Dealers Associations (FADA), however, said a clear picture will emerge only after the end of this month when it will roll out a survey to understand how its dealer members are planning with regards to reduction of outlets and manpower.

When asked if there is a fear that there could be bigger job losses in dealerships due to the COVID-19 impact than 2019 when the automotive industry was hit by a prolonged slowdown, FADA President Ashish Harsharaj Kale told PTI: "Yes, if demand doesn't pick up. Obviously." Between May and July last year, the automobiles dealerships across the country shed around 2 lakh jobs to tide over the impact of an unprecedented sales slump.

Kale, however, said, "To really understand the indication of what kind of job losses we are staring at (due to COVID-19), it will only be (possible) after this month. April and May have been completely under lockdown. You can't really gauge what is the demand situation (now)." He further said a clear picture is expected to emerge only at the end of this month in terms of how the pandemic has affected the economy, which market segment has been hit more -- urban or rural or a combination of both and whether it is the upper class or the middle class who have been hit harder.

"We will get clarity only in June on what kind of demand situation is there for different kinds of vehicle categories. Only towards the end of June we will be rolling out a new survey to understand what kind of changes dealers are working with regarding reduction of outlets and manpower reduction," Kale said.

He, however, asserted cutting jobs is the last option that automobile dealers resort to.

"It is not easy for us to let go of our manpower as that is the most valuable resource. We train them over many years and they gradually rise through in our organisations. That is the last call we take.

Inventory would be the first call we take and other variables expenses, manpower would be the last," Kale asserted.

Therefore, he said, "It will be at least after a month of routine business that we see, based on which we will take a call. If demand doesn't pick up, there will be a reduction of manpower." When asked if there has been closure of any dealerships due to the coronavirus-induced lockdown, he replied in the negative.

"There has been no closure of dealerships as yet. In the dealership business, as we are traders, the decisions are not so sudden. For us, one good thing is that the service business is slowly coming back. A dealer will not take a call so soon on whether he wants to exit his business or if he wants to survive based on the current demand and financials," Kale said.

He further said, "We will get those indications in July. Manpower reduction, we will know by June-end because each and every dealer will assess the demand situation, how does he forsees what are the problems and he is facing and take a call."

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